<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 7, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
(ISSUER WITH RESPECT TO OFFERED CERTIFICATES)
GREEN TREE FLOORPLAN FUNDING CORP.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 9999 APPLIED FOR
(STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
ORGANIZATION)
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
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)
--------------
JOHN W. BRINK
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 RENWICK D. MARTIN
DORSEY & WHITNEY P.L.L.P. BROWN & WOOD
220 SOUTH SIXTH STREET, MINNEAPOLIS, ONE WORLD TRADE CENTER, NEW YORK, NEW
MINNESOTA 55402 YORK 10048
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
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
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<S> <C> <C> <C> <C>
% Accounts
Receivable Trust
Certificates, Series
1995-1, Class A....... $ 500,000 100% $ 500,000 $172.42
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% Accounts
Receivable Trust
Certificates, Series
1995-1, Class B....... $ 500,000 100% $ 500,000 $172.42
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Total.................. $1,000,000 100% $1,000,000 $344.83
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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).
--------------
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>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
ITEM AND CAPTION IN FORM S-1 CAPTION IN PROSPECTUS
---------------------------- ---------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front Forepart of Registration Statement; Outside
Cover Page of Prospectus... Front Cover Page of Prospectus
2. Inside Front and Outside
Back Cover Pages of Pro- Inside Front Cover Page; Outside Back Cover
spectus.................... Page of Prospectus
3. Summary Information, Risk
Factors and Ratio of Earn-
ings to Fixed Charges...... Prospectus Summary; Risk Factors
4. Use of Proceeds............. Use of Proceeds
5. Determination of Offering
Price...................... *
6. Dilution.................... *
7. Selling Security Holders.... *
8. Plan of Distribution........ Underwriting
9. Description of Securities to The Trust; The Transferor; The Receivables;
be Registered.............. Description of the Offered Certificates
10. Interests of Named Experts
and Counsel................ Legal Matters
11. Information with Respect to
the Registrant............. The Trust; The Transferor
12. Disclosure of Commission Po-
sition on Indemnification
for Securities Act Liabili-
ties....................... See Part II
</TABLE>
--------
*Not applicable
<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 , 1995
PROSPECTUS
LOGO
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$ (FLOATING RATE) FLOORPLAN RECEIVABLE TRUST CERTIFICATES, SERIES 1995-
1, CLASS A
$ (FLOATING RATE) FLOORPLAN RECEIVABLE TRUST CERTIFICATES, SERIES 1995-
1, CLASS B
GREEN TREE FLOORPLAN GREEN TREE FINANCIAL CORPORATION
FUNDING CORP.
TRANSFEROR SERVICER
-----------
Each of the (Floating Rate) Floorplan Receivable Trust Certificates, Series
1995-1, Class A (the "Class A Certificates") and each of the Floating Rate
Floorplan Receivable Trust Certificates, Series 1995-1, Class B (the "Class B
Certificates," and, together with the Class A Certificates, the "Offered
Certificates") will represent an undivided interest in the Green Tree Floorplan
Receivables Master Trust (the "Trust"), created pursuant to a Pooling and
Servicing Agreement among Green Tree Floorplan Funding Corp., as transferor
(the "Transferor"), Green Tree Financial Corporation, as servicer (the
"Company" or the "Servicer") and , as trustee (the "Trustee"). The
fractional undivided interests in the Trust represented by the Class B
Certificates will be subordinated to fund certain payments with respect to the
Class A Certificates as described in "Description of the Offered Certificates--
Application of Collections," "--Reallocated Principal Collections," and "--
Investor Charge-Offs." The property of the Trust will include wholesale
Receivables (as defined herein), generated from time to time in a portfolio of
revolving financing arrangements (the "Accounts") with manufactured housing
dealers to finance their inventory of manufactured homes, all monies due or to
become due in payment of such Receivables and the benefit of funds on deposit
in the Excess Funding Account (as defined herein).
Concurrently with the issuance of the Offered Certificates, the Trust will
issue the Floorplan Receivable Trust Certificates, Series 1995-1, Class C (the
"Class C Certificates"), which may be privately placed, and the Floorplan
Receivable Trust Certificates, Series 1995-1, Class D (the "Class D
Certificates," and, together with the Class C Certificates and the Offered
Certificates, the "Certificates") to the Transferor. The Offered Certificates,
the Class C Certificates and the Class D Certificates constitute "Series 1995-
1." The fractional undivided interests in the Trust represented by the Class C
Certificates will be subordinated to fund certain payments with respect to the
Offered Certificates and the Class D Certificates will be subordinated to fund
certain payments with respect to the Class C Certificates and the Offered
Certificates as described in "Description of the Offered Certificates--
Application of Collections," "--Reallocated Principal Collections," and "--
Investor Charge-Offs." The Transferor will own the remaining undivided interest
in the Trust not represented by the Certificates and any other investor
certificates issued by the Trust, which retained interest will be represented
by the Exchangeable Transferor Certificate (as defined herein). The Transferor
from time to time may offer other series of certificates that evidence
undivided interests in certain assets of the Trust by exchanging a portion of
its interest in the Trust therefor. Only the Offered Certificates are being
offered hereby.
Interest will accrue on the Class A Certificates from , 1995 through
, 1995 at the rate of % per annum above the arithmetic mean of the
London interbank offered quotations for one-month United States dollar deposits
("LIBOR") (calculated as described herein) determined on and from
through and with respect to each Interest Accrual
Period (as defined herein) thereafter, at a rate equal to % per annum above
LIBOR determined on the related LIBOR Determination Date (as defined herein),
but in no event in excess of % per annum. Interest will accrue on the Class
B Certificates from through at the rate of % per
annum above LIBOR determined on , and from through
and with respect to each Interest Accrual Period thereafter, at a
rate equal to % per annum above LIBOR determined on the related LIBOR
Determination Date, but in no event in excess of % per annum. Interest with
respect to the Certificates will be distributed on and on the 20th
day of each month thereafter (or, if such 20th day is not a business day, the
next succeeding business day) (each, a "Distribution Date"). Principal on the
Class A Certificates is scheduled to be distributed on each Distribution Date
commencing on the Distribution Date in but may be paid earlier under
certain limited circumstances described herein. Principal on the Class B
Certificates will be payable monthly on each Distribution Date on or after the
Distribution Date on which the Class A Invested Amount is paid in full.
Application will be made to list the Offered Certificates on the Luxembourg
Stock Exchange.
There currently is no secondary market for the Offered Certificates, and
there is no assurance that one will develop or, if one does develop, that it
will continue until the Offered Certificates are paid in full.
-----------
POTENTIAL INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH IN "RISK FACTORS" ON PAGES 22 THROUGH 27 HEREIN.
-----------
THE OFFERED CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR RECOURSE OBLIGATIONS OF THE TRANSFEROR, GREEN
TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THE
OFFERED CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECU-
RITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING THE
PUBLIC(1) DISCOUNT TRANSFEROR(1)(2)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A Certificate.............. % % %
--------------------------------------------------------------------------------
Per Class B Certificate.............. % % %
--------------------------------------------------------------------------------
Total................................ $ $ $
--------------------------------------------------------------------------------
</TABLE>
--------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from , 1995.
(2) Before deduction of expenses estimated to be $ .
-----------
The Offered Certificates are offered by the Underwriters as described in
"Underwriting," subject to prior sale, when, as and if issued to and accepted
by the Underwriters and subject to approval of certain legal matters by counsel
for the Underwriters. The Underwriters reserve the right to reject orders in
whole or in part. It is expected that the Offered Certificates will be
delivered in book-entry form on or about , 1995 through the facilities
of The Depository Trust Company, CEDEL S.A. and the Euroclear System.
-----------
MERRILL LYNCH & CO. BEAR, STEARNS & CO. INC.
-----------
The date of this Prospectus is , 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates (as defined herein) are issued,
monthly and annual reports, containing information concerning the Trust and
prepared by the Servicer, will be sent on behalf of the Trust to Cede & Co., as
nominee of The Depository Trust Company ("DTC") and registered holder of the
Offered Certificates, pursuant to the Pooling and Servicing Agreement (as
defined herein). See "Description of the Offered Certificates--Book-Entry
Registration," "--Reports to Certificateholders" and "--Evidence as to
Compliance." Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Servicer will
file with the Securities and Exchange Commission (the "Commission") such
periodic reports with respect to the Trust as are required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder.
AVAILABLE INFORMATION
Green Tree Floorplan Funding Corp., as originator of the Trust, has filed a
Registration Statement under the Securities Act of 1933, as amended (the
"Securities Act"), with the Commission on behalf of the Trust with respect to
the Certificates offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement and amendments thereof and
exhibits thereto, which are available for inspection without charge at the
public references facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549; Suite 7 World Trade Center, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of the Registration Statement and amendments thereof and
exhibits thereto may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Periodic reports with respect to the Trust that have been filed under
the Exchange Act and the rules and regulations of the Commission thereunder and
other information filed by the Servicer can be inspected and copied at the
public reference facilities maintained by the Commission referred to above.
OTHER INFORMATION
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Transferor or the Underwriter will promptly deliver, or cause to be
delivered, without charge, a paper copy of the Prospectus.
The distribution of this Prospectus and the offering of the Certificates in
certain jurisdictions may be restricted by law. Persons into whose possession
this Prospectus comes are required by the Underwriters to inform themselves
about and to observe any such restrictions.
The Transferor has taken all reasonable care to ensure that the information
contained in this Prospectus in relation to the Transferor and the Certificates
is true and accurate in all material respects and that in relation to the
Transferor and the Certificates there are no material facts the omission of
which would make misleading any statement herein, whether fact or opinion. The
Transferor accepts responsibility accordingly.
As used in this Prospectus, all references to "dollars" and "$" refer to
United States dollars.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Certain
capitalized terms used herein are defined in the "Glossary of Terms" or
elsewhere in this Prospectus. Unless the context requires otherwise, certain
capitalized terms, when used in this Prospectus, relate only to the
Certificates and not to other certificates which may exist from time to time.
Offered Certificates......... $ aggregate principal amount of Class A
Certificates and $ aggregate principal
amount of Class B Certificates are being of-
fered hereby. The Offered Certificates will be
available for purchase in minimum denominations
of $1,000 and in integral multiples of $1,000
in excess thereof.
The Offered Certificates will be issued in cer-
tificated registered form. See "Description of
the Offered Certificates--General."
The Offered Certificates represent obligations
of the Trust only and do not represent inter-
ests in or recourse obligations of the Company,
the Transferor, or any affiliate of either of
them.
The Class B Certificates will be subordinated to
fund certain payments with respect to the Class
A Certificates as described herein. See "De-
scription of the Offered Certificates--Subordi-
nation of the Class B Certificates."
Other Certificates........... $ aggregate principal amount of Class C
Certificates, which may be privately placed,
and $ aggregate principal amount of
Class D Certificates are being issued concur-
rently to the Transferor. The Transferor from
time to time may create other Series of certif-
icates that evidence undivided interests in as-
sets of the Trust (other than any Enhancement
for, or Collections allocated initially to, any
other Series), by exchanging a portion of its
interest in the Trust. Only the Offered Certif-
icates are being offered hereby.
Transferor................... Green Tree Floorplan Funding Corp., a wholly
owned subsidiary of the Company, is the Trans-
feror. The principal executive offices of the
Transferor are located at 500 Landmark Towers,
345 St. Peter Street, St. Paul, Minnesota
55102-1639, telephone number (612) 293-3400.
See "The Transferor."
Servicer..................... Green Tree Financial Corporation (in such capac-
ity, the "Servicer"). The principal executive
offices of the Servicer are located at 1100
Landmark Towers, 345 St. Peter Street, St.
Paul, Minnesota 55102-1639, telephone number
(612) 293-3400. A substitute Servicer may be
appointed in certain circumstances. See "Green
Tree Financial Corporation" and "Description of
the Offered Certificates--Certain Matters Re-
garding the Transferor and the Servicer."
Trustee ..................... , is the Trustee. Under
certain circumstances specified herein, the
holders of the Certificates will have the right
to remove the Trustee. See "Description of the
Offered Certificates--The Trustee."
3
<PAGE>
Trust........................ The Trust will be formed pursuant to the Pooling
and Servicing Agreement, which will be supple-
mented by the Series 1995-1 Supplement relating
to the Certificates, and the Supplements appli-
cable to any other Series that may be issued in
the future. See "The Trust."
As more fully described below and elsewhere
herein, the Trust's assets will include (a)
wholesale receivables (the "Receivables") gen-
erated from time to time in a portfolio of re-
volving financing arrangements (the "Accounts")
with manufactured housing dealers to purchase
their inventory of manufactured homes, satisfy-
ing certain criteria described herein, (b)
funds collected or to be collected in respect
of the Receivables, (c) monies on deposit in
certain accounts of the Trust, and (d) security
interests in the manufactured homes held by
such dealers. Collections on the Receivables
will be deposited into the Collection Account
to be maintained in the name of the Trust and
allocated on each business day between Interest
Collections and Principal Collections. See "De-
scription of the Offered Certificates--Interest
Collections; Principal Collections." Interest
Collections and Principal Collections will be
allocated on each business day among the Trans-
feror Interest and the respective interests of
the certificateholders of each Series issued
and outstanding from time to time in accordance
with the Pooling and Servicing Agreement and
the applicable Supplements. In general, in ac-
cordance with such allocations and the provi-
sions of the Pooling and Servicing Agreement
and the applicable Supplements, (i) Interest
Collections and certain other amounts will be
applied on each business day to fund interest
on the certificates of any Series then out-
standing, to pay certain fees and expenses, to
cover investor default amounts, to reimburse
investor charge-offs and to make required pay-
ments to the Transferor, and (ii) Principal
Collections and certain other amounts will be
applied on each business day to fund principal
on the certificates of any Series then out-
standing, except that during any revolving pe-
riod applicable to a Series, Principal Collec-
tions otherwise allocable to the
certificateholders of such Series will be paid
to the holder of the Exchangeable Transferor
Certificate or, with respect to amounts allo-
cated to any class of certificates of such Se-
ries which is not retained by the Transferor,
paid to the certificateholders of any other Se-
ries then outstanding. See "Description of the
Offered Certificates--Application of Collec-
tions--Payment of Fees, Interest and Other
Items."
Trust Assets................. The Trust assets will include (i) all Receiv-
ables arising under the Accounts from time to
time satisfying certain criteria described
herein (see "The Receivables--Eligible Receiv-
ables"), (ii) all funds to be collected from
Obligors in respect of the Receivables, (iii)
all right, title, and interest of the Trans-
feror in, to, and under the Purchase Agreement,
(iv) the benefit of
4
<PAGE>
funds on deposit in the Excess Funding Account,
(v) Recoveries and (vi) proceeds of the forego-
ing. The Offered Certificates will not have the
benefit of any Enhancement other than the sub-
ordination of the Class B Certificates, Class C
Certificates and Class D Certificates for the
benefit of each Class of Certificates with an
earlier alphabetical designation as described
above.
Pursuant to the Purchase Agreement, the Trans-
feror will purchase all of the Receivables
arising from time to time under the Accounts,
whether such Receivables are then existing or
thereafter created. See "Description of the
Purchase Agreement--Purchases of Receivables."
Pursuant to the Pooling and Servicing Agreement,
the Transferor will automatically transfer to
the Trust all of its right, title, and interest
in and to the Receivables. See "Risk Factors--
Transfer of the Receivables; Insolvency Risk
Considerations" for a discussion of certain le-
gal considerations relating to such transfer.
The Accounts................. The Accounts pursuant to which the Receivables
will be generated will be revolving credit
agreements entered into with the Company by
manufactured housing dealers to purchase manu-
factured housing inventory. The Accounts will
be selected from all such credit agreements of
the Company that meet the credit criteria spec-
ified in the Pooling and Servicing Agreement
and the related Series Supplement ("Eligible
Accounts"). Under certain circumstances Ac-
counts may be added to, or removed from, the
Trust. See "Description of Certificates--Repre-
sentations and Warranties," "--Addition of Ac-
counts" and "--Removal of Accounts."
Receivables.................. The Receivables owned by the Trust will arise
from the related Accounts. The Receivables will
consist of advances made by the Company for the
benefit of certain manufactured housing dealers
in the United States (the "Dealers"). Such ad-
vances are used by the Dealers to finance pur-
chases of new manufactured homes from the manu-
facturers. Generally, the principal amount of
an advance in respect of a manufactured home is
equal to the manufacturer's invoice price and,
subject to certain exceptions, is due upon the
retail sale of the manufactured home. The Re-
ceivables will bear interest at an adjustable
rate described herein. All new Receivables will
be purchased by the Transferor pursuant to the
Purchase Agreement and thereafter will be auto-
matically transferred to the Trust. According-
ly, the amount of Receivables will fluctuate
from day to day as new Receivables are gener-
ated and as existing Receivables are collected,
written off as uncollectible, or otherwise ad-
justed.
Collections.................. The Servicer will deposit all collections of Re-
ceivables in the Collection Account on each
Business Day. The aggregate of (A) all collec-
tions on the Receivables with respect to inter-
est or other fees, (B) investment earnings on
amounts on deposit
5
<PAGE>
in the Excess Funding Account on such business
day and (C) Recoveries, will be treated as "Fi-
nance Charge Collections." In addition, in or-
der to provide additional yield to the Trust,
the Transferor may elect at any time to in-
struct the Servicer to allocate a specified
percentage (the "Discount Factor") of Principal
Collections to be treated as interest collec-
tions ("Imputed Yield Collections"). The Dis-
count Factor, if any, may vary from time to
time. Finance Charge Collections and Imputed
Yield Collections, if any, are collectively re-
ferred to as "Interest Collections." The re-
mainder of the collections on the Receivables
received on any business day will be treated as
"Principal Collections" (Principal Collections
and Interest Collections are collectively some-
times referred to herein as "Collections"). See
"Description of the Offered Certificates--In-
terest Collections; Principal Collections." All
such amounts will then be allocated in accor-
dance with the respective interests of the
Certificateholders, the certificateholders of
any other Series, and the holder of the Ex-
changeable Transferor Certificate in the Prin-
cipal Receivables and in the Interest Collec-
tions Receivables in the Trust. See "Descrip-
tion of the Offered Certificates--Allocation
Percentages."
Allocation of Trust Assets... The Trust's assets will be allocated among the
Class A Certificateholders' Interest, the Class
B Certificateholders' Interest, the Class C
Certificateholders' Interest, the Class D
Certificateholders' Interest, the interest of
the certificateholders of any other Series is-
sued pursuant to the Pooling and Servicing
Agreement and applicable Supplements, and the
Transferor Interest. The interest of the
Certificateholders of any class of any Series
in the assets of the Trust will be limited to
the Certificateholders' Interest for such class
and Series, and such Certificateholders will
not have any recourse against any assets of the
Trust other than those allocated to such
Certificateholders' Interest pursuant to the
Pooling and Servicing Agreement and any appli-
cable Supplement. The Transferor Interest will
represent the right to the assets of the Trust
not allocated to the Certificateholders' Inter-
est or the interest of the holders of any other
Series issued concurrently herewith or in the
future pursuant to the Pooling and Servicing
Agreement and applicable Supplements. The prin-
cipal amount of the Transferor Interest will
fluctuate as the amount of Receivables in the
Trust, the invested amount of each Series, and
the amounts on deposit in the Excess Funding
Account change from time to time. See "Descrip-
tion of the Offered Certificates--General" and
"--Excess Funding Account."
The Class A Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class A Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class A Certificates at the
6
<PAGE>
Class A Certificate Rate, the payment of prin-
cipal to the extent of the Class A Invested
Amount (which may be less than the aggregate
unpaid principal amount of the Class A Certifi-
cates, in certain circumstances, if the In-
vestor Default Amount exceeds funds allocable
thereto and the Class B Invested Amount, the
Class C Invested Amount and the Class D In-
vested Amount are reduced to zero). See "De-
scription of the Offered Certificates--Subordi-
nation of the Class B Certificates," "--Alloca-
tion Percentages" and "--Investor Charge-Offs."
The Class B Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class B Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class B Certificates at the Class B Cer-
tificate Rate, the payment of principal to the
extent of the Class B Invested Amount (which
may be less than the aggregate unpaid principal
amount of the Class B Certificates, in certain
circumstances, if the Investor Default Amount
exceeds funds allocable thereto and the Class C
Invested Amount and the Class D Invested Amount
are reduced to zero). See "Description of the
Offered Certificates--Subordination of the
Class B Certificates," "--Allocation Percent-
ages" and "--Investor Charge-Offs."
The Class C Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class C Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of interest
on the Class C Certificates at the Class C Cer-
tificate Rate, the payment of principal to the
extent of the Class C Invested Amount (which
may be less than the aggregate unpaid principal
amount of the Class C Certificates, in certain
circumstances, if the Investor Default Amount
exceeds funds allocable thereto and the Class D
Invested Amount is reduced to zero). See "De-
scription of the Offered Certificates--Alloca-
tion Percentages" and "--Investor Charge-Offs."
The Class C Certificates are not being offered
hereby.
The Class D Certificates will evidence undivided
interests in the assets of the Trust allocated
to the Class D Certificateholders' Interest and
will represent the right to receive from such
assets funds up to (but not in excess of) the
amounts required to make payments of principal
to the extent of the Class D Invested Amount.
The Class D Certificates are not being offered
hereby.
As of , 1995 the Receivables con-
sisted of $ of Principal Receiv-
ables (the "Invested Amount"). The aggregate
principal amount of the Certificates, except as
otherwise provided herein, will remain fixed at
the
7
<PAGE>
initial amount thereof during the period begin-
ning on the Closing Date and ending with the
commencement of the Amortization Period. No
payment of principal with respect to the Class
B Certificates may be made until the final
principal payment of the Class A Invested
Amount with respect to the Class A Certificates
has been made. No payment of principal with re-
spect to the Class C Certificates may be made
until the final principal payment of the Class
A Invested Amount with respect to the Class A
Certificates and the final principal payment of
the Class B Invested Amount with respect to the
Class B Certificates have been made. No payment
of principal with respect to the Class D Cer-
tificates may be made until the final principal
payment of the Class A Invested Amount with re-
spect to the Class A Certificates, the final
principal payment of the Class B Invested
Amount with respect to the Class B Certificates
and the final principal payment of the Class C
Invested Amount with respect to the Class C
Certificates have been made. See "Description
of the Offered Certificates--Principal Pay-
ments."
The Class A Certificateholders' Interest, the
Class B Certificateholders' Interest, the Class
C Certificateholders' Interest, and the Class D
Certificateholders' Interest will each include
the right to receive (but only to the extent
needed to make required payments under the
Pooling and Servicing Agreement) varying per-
centages of Interest Collections and Principal
Collections during each Monthly Period. Inter-
est Collections and the amount of Defaulted Re-
ceivables at all times, and Principal Collec-
tions in each Monthly Period during the Revolv-
ing Period, will be allocated on each business
day to the Class A Certificateholders' Inter-
est, the Class B Certificateholders' Interest,
the Class C Certificateholders' Interest, and
the Class D Certificateholders' Interest based
on the Class A Floating Allocation Percentage,
the Class B Floating Allocation Percentage, the
Class C Floating Allocation Percentage, and the
Class D Floating Allocation Percentage, respec-
tively. During the Revolving Period for each
Series, all Principal Collections that would
otherwise be allocated to the
Certificateholders will be allocated on each
business day and paid to the Transferor (except
for Shared Principal Collections used to make
payments to other Series). During the Amortiza-
tion Period, until the Class B Principal Pay-
ment Commencement Date, Principal Collections
will generally be allocated on each business
day to the Class A Certificateholders' Interest
based on the ABC Fixed/Floating Allocation Per-
centage. On and after the Class B Principal
Payment Commencement Date, Principal Collec-
tions will generally be allocated on each busi-
ness day to the Class B Certificateholders' In-
terest based on the ABC Fixed/Floating Alloca-
tion Percentage. On and after the Class C Prin-
cipal Payment Commencement Date, all Principal
Collections will generally be allocated on each
business day to the
8
<PAGE>
Class C Certificateholders' Interest based on
the ABC Fixed/ Floating Allocation Percentage.
See "Description of the Offered Certificates--
Allocation Percentages."
Exchanges.................... The Pooling and Servicing Agreement provides
that the Trustee will issue two types of cer-
tificates: (i) investor certificates in one or
more Series each of which may have multiple
classes of certificates of which one or more
such classes may be transferable, and (ii) the
Exchangeable Transferor Certificate. The Ex-
changeable Transferor Certificate will evidence
the Transferor Interest, will be held by the
Transferor, and will be transferable only as
provided in the Pooling and Servicing Agree-
ment, including through the issuance of a Sup-
plemental Certificate. See "Description of the
Offered Certificates--Exchanges." The Pooling
and Servicing Agreement also provides that,
pursuant to any one or more Supplements, the
Transferor may tender the Exchangeable Trans-
feror Certificate or, if provided in the rele-
vant Supplement, certificates comprising any
Series and the Exchangeable Transferor Certifi-
cate, to the Trustee in exchange for certifi-
cates composing one or more new Series and a
reissued Exchangeable Transferor Certificate.
However, at all times, the interest in the
Principal Receivables in the Trust and amounts
on deposit in the Excess Funding Account repre-
sented by the Transferor Interest must equal or
exceed the Minimum Transferor Interest. Under
the Pooling and Servicing Agreement, the Trans-
feror may define, with respect to any Series,
the Principal Terms of the Series. See "De-
scription of the Offered Certificates--Ex-
changes." The Transferor may offer any Series
for sale in transactions either registered un-
der the Securities Act or exempt from registra-
tion thereunder, directly or through one or
more underwriters or placement agents, in
fixed-price offerings or in negotiated transac-
tions or otherwise. The Transferor currently
intends to offer, from time to time, additional
Series issued by the Trust.
Under the Pooling and Servicing Agreement, an
Exchange of the Exchangeable Transferor Certif-
icate for certificates comprising one or more
Series and a reissued Exchangeable Transferor
Certificate may occur only upon delivery to the
Trustee of the following: (i) a Supplement
specifying the Principal Terms of each Series
to be issued in connection therewith, (ii) an
opinion of counsel to the effect that the cer-
tificates of such Series will be characterized
as indebtedness or as a partnership interest
for federal income tax purposes under existing
law, and that the issuance of such Series will
not have a material adverse effect on the fed-
eral income tax characterization of any out-
standing Series or result in the Trust being
subject to tax at the entity level, (iii) if
required by such Supplement, the form of En-
hancement and an appropriate Enhancement agree-
ment with respect thereto, (iv) written confir-
mation from the Rating Agency that the Exchange
will not result in the Rating
9
<PAGE>
Agency reducing or withdrawing its original
rating on any then outstanding Series rated by
it, (v) an officer's certificate of the Trans-
feror stating that, after giving effect to such
Exchanges the Transferor Interest would be at
least equal to the Minimum Transferor Interest,
and (vi) the existing Exchangeable Transferor
Certificate and, if applicable, the existing
certificates representing the Series to be ex-
changed. See "Description of the Offered Cer-
tificates--Exchanges."
Interest..................... Each Class A Certificate represents the right to
receive interest at the rate of % per annum
above LIBOR (calculated as described under "De-
scription of the Offered Certificates--Interest
Payments") determined on for the
period from through ,
and at a rate equal to % per annum above LI-
BOR determined on the related LIBOR Determina-
tion Date for the period from
through and with respect to each
Interest Accrual Period thereafter, but in no
event in excess of % per annum (such rate,
as in effect from time to time, the "Class A
Certificate Rate"). Each Class B Certificate
represents the right to receive interest at the
rate of % per annum above LIBOR determined
on for the period from
through , and at a
rate equal to % per annum above LIBOR deter-
mined on the related LIBOR Determination Date
for the period from through
and with respect to each Interest
Accrual Period thereafter, but in no event in
excess of % per annum (such rate, as in ef-
fect from time to time, the "Class B Certifi-
cate Rate" and together with the Class A Cer-
tificate Rate sometimes referred to as a "Cer-
tificate Rate" and collectively as the "Certif-
icate Rates"). Interest on the Certificates
will accrue from the Closing Date and will be
distributed on , and on the 20th
day of each month thereafter, or if such day is
not a business day, on the next succeeding
business day (each, a "Distribution Date"), in
an amount equal to (i) with respect to the
Class A Certificates, the product of (a) the
actual number of days in the related Interest
Accrual Period divided by 360, (b) the Class A
Certificate Rate and (c) the outstanding prin-
cipal balance of the Class A Certificates as of
the preceding Record Date (or in the case of
the first Distribution Date, the initial Class
A Invested Amount) and (ii) with respect to the
Class B Certificates, the product of (a) the
actual number of days in the related Interest
Accrual Period divided by 360, (b) the Class B
Certificate Rate and (c) the outstanding prin-
cipal balance of the Class B Certificates as of
the preceding Record Date (or in the case of
the first Distribution Date, the initial Class
B Invested Amount). The Interest Accrual Period
for a Distribution Date is the period from and
including the preceding Distribution Date to
but excluding such Distribution Date.
10
<PAGE>
Interest payments on the Class A Certificates on
each Distribution Date will be funded from the
Interest Collections collected during the pre-
ceding Monthly Period (or, with respect to the
first Distribution Date, such collections from
and including the Closing Date to and including
plus the amount of the initial de-
posit to the Interest Funding Account to be
made on the Closing Date), and from certain
other funds allocated as set forth in the Pool-
ing and Servicing Agreement to the respective
classes of the respective Series of Certifi-
cates, deposited on each business day during
such Monthly Period in the Interest Funding Ac-
count. See "Description of the Offered Certifi-
cates--Interest Payments" and "--Application of
Collections; Payment of Fees, Interest and
Other Items."
Subject to the prior payment of interest on the
Class A Certificates, interest payments on the
Class B Certificates on each Distribution Date
will be funded from the Interest Collections
collected during the preceding Monthly Period
(or, with respect to the first Distribution
Date, such collections from and including the
Closing Date to and including , 1995
plus the amount of the initial deposit to the
Interest Funding Account to be made on the
Closing Date), and from certain other funds al-
located as set forth in the Pooling and Servic-
ing Agreement to the respective classes of the
respective Series of Certificates, deposited on
each business day during such Monthly Period in
the Interest Funding Account. See "Description
of the Offered Certificates--Interest Payments"
and "--Application of Collections; Payment of
Fees, Interest and Other Items."
Revolving Period............ During the Revolving Period, Principal Collec-
tions otherwise allocable to the
Certificateholders (other than any Shared Prin-
cipal Collections paid to the holders of cer-
tificates of other Series and any Reallocated
Principal Collections) will, subject to certain
limitations, be paid from the Trust to the
holder of the Exchangeable Transferor Certifi-
cate. See "Description of the Offered Certifi-
cates--Pay Out Events" for a discussion of the
events which might lead to the termination of
the Revolving Period for the Certificates prior
to the end of the Monthly Period.
Principal Payment;
Controlled Amortization....
Unless a Pay Out Event shall have occurred, with
respect to the Certificates, during the period
commencing with the Monthly Period
and ending with the Monthly Period,
on each business day during such period, an
amount equal to the lesser of (i) Principal
Collections allocable to the Class A
Certificateholders' Interest plus Shared Prin-
cipal Collections, if any, from other Series
allocable to the Class A Certificates, plus
certain other amounts comprising Class A Prin-
cipal, and (ii) the amount, if any, by which
(x) the Class
11
<PAGE>
A Controlled Amortization Amount for such
Monthly Period plus any Class A Deficit Con-
trolled Amortization Amount arising from prior
Monthly Periods exceeds (y) the amount in the
Principal Account for the account of the Class
A Certificateholders, will be deposited in the
Principal Account. On any business day when the
amount on deposit in the Principal Account
equals or exceeds the Class A Controlled Dis-
tribution Amount for the related Distribution
Date, the balance of all such funds remaining
on deposit in the Collection Account will be
treated as Shared Principal Collections and may
be used to make payments on other Series or
classes of such Series that may be accumulating
principal or amortizing. The funds on deposit
in the Principal Account will be available to
be paid to the Class A Certificateholders on
the Distribution Date and on each
Distribution Date thereafter until the Class A
Invested Amount is paid in full. If the funds
available for distribution to the Class A
Certificateholders on (the "Class A
Expected Final Payment Date") are insufficient
to pay the Class A Invested Amount in full, all
such funds will be distributed to the Class A
Certificateholders at such time. Thereafter,
until the Class A Invested Amount has been paid
in full or the Termination Date has occurred
principal and interest payments will be made to
Class A Certificateholders monthly on each Dis-
tribution Date. No payment of principal to the
Class B Certificateholders will be made until
the Class A Invested Amount has been paid in
full. See "Description of the Offered Certifi-
cates--Principal Payments."
On and after the Class B Principal Payment Com-
mencement Date, on each business day thereaf-
ter, an amount equal to the lesser of (i) Prin-
cipal Collections allocable to the Class B
Certificateholders' Interest plus Shared Prin-
cipal Collections, if any, from other Series
allocable to the Class B Certificates, plus
certain other amounts comprising Class B Prin-
cipal, and (ii) the amount, if any, by which
(x) the Class B Controlled Amortization Amount
for such Monthly Period plus any Class B Defi-
cit Controlled Amortization Amount arising from
prior Monthly Periods exceeds (y) the amount in
the Principal Account for the account of the
Class B Certificateholders, will be deposited
in the Principal Account. On any business day
when the amount on deposit in the Principal Ac-
count equals or exceeds the Class B Controlled
Distribution Amount plus any Deficit for the
related Distribution Date, the balance of all
such funds remaining on deposit in the Collec-
tion Account will be treated as Shared Princi-
pal Collections and may be used to make pay-
ments on other Series or classes of such Series
which may be accumulating principal or amortiz-
ing. The funds on deposit in the Principal Ac-
count will be available to be paid to the Class
B Certificateholders on the Class B
12
<PAGE>
Principal Payment Commencement Date and on each
Distribution Date thereafter until the Class B
Invested Amount is paid in full. If the funds
available for distribution to the Class B
Certificateholders on (the "Class
B Expected Final Payment Date") are insuffi-
cient to pay the Class B Invested Amount in
full, all such funds will be distributed to the
Class B Certificateholders at such time on a
pro rata basis. Thereafter, until the Class B
Invested Amount has been paid in full or the
Termination Date has occurred principal and in-
terest payments will be made to Class B
Certificateholders monthly on each Distribution
Date. No payment of principal to the Class C
Certificateholders will be made until the Class
B Invested Amount has been paid in full. See
"Description of the Offered Certificates--Prin-
cipal Payments."
Other Series offered by the Trust may or may not
have amortization periods like the Amortization
Periods for the Certificates, and such periods
may have different lengths and begin on differ-
ent dates than the Amortization Period de-
scribed herein. Thus, certain Series may be in
their revolving periods while others are in
their amortization periods. In addition, other
Series may allocate Principal Receivables based
upon different investor percentages. See "De-
scription of the Offered Certificates--Ex-
changes" for a discussion of the potential
terms of other Series.
Early Amortization Period.... During the Early Amortization Period, Principal
Collections allocable to the respective
Certificateholders' Interest (other than an in-
terest represented by any class of investor
certificates which is retained by the Trans-
feror (a "Transferor Retained Class")) and cer-
tain other amounts (including Shared Principal
Collections from any other Series and funds on
deposit in the Excess Funding Account) will no
longer be reinvested in the Trust or otherwise
used to maintain the Certificateholders' Inter-
est of such Series, but instead will be dis-
tributed as principal payments monthly on each
Distribution Date beginning with the first Dis-
tribution Date following the Monthly Period in
which a Pay Out Event occurs or is deemed to
have occurred to the Class A Certificateholders
in respect of the Class A Invested Amount and,
following the payment in full of the Class A
Invested Amount, to the Class B
Certificateholders in respect of the Class B
Invested Amount and, following the payment in
full of the Class B Invested Amount, to the
Class C Certificateholders in respect of the
Class C Invested Amount and, following the pay-
ment in full of the Class C Invested Amount, to
the Class D Certificateholders until the Class
D Invested Amount is paid in full. See "De-
scription of the Offered Certificates--Pay Out
Events."
Shared Principal To the extent that Principal Collections and
Collections................. other amounts that are allocated to the
Certificateholders' Interest of any class of
any series (other than any Transferor Retained
Class) are not
13
<PAGE>
needed to make payments to the
Certificateholders of such class or required to
be deposited in the Principal Account, they may
be applied to cover principal payments due to
or for the benefit of certificateholders of an-
other Series. Any such reallocation will not
result in a reduction in the Certificate-
holders' Interest of the Series to which such
Principal Collections were initially allocated.
In addition, Principal Collections and certain
other amounts otherwise allocable to other Se-
ries, to the extent such collections are not
needed to make payments to the
certificateholders of such other Series, may be
applied to cover principal payments due to or
for the benefit of the holders of the Certifi-
cates. See "Description of the Offered Certifi-
cates--Application of Collections."
Excess Funding Account....... At any time during which no Series is in an am-
ortization period (including any early amorti-
zation period), or the principal account for a
Series in amortization is fully funded for the
applicable Monthly Period, and the Transferor
Interest is less than the Minimum Transferor
Interest, funds (to the extent available there-
for as described herein) otherwise payable to
the Transferor will be deposited in the Excess
Funding Account on each business day until the
Transferor Interest is equal to the Minimum
Transferor Interest. Funds on deposit in the
Excess Funding Account will be withdrawn and
paid to the Transferor to the extent that on
any day the Transferor Interest exceeds the
Minimum Transferor Interest.
Any funds on deposit in the Excess Funding Ac-
count at the beginning of the Amortization Pe-
riod will be deposited in the Principal Account
as part of Class A Principal, Class B Princi-
pal, or Class C Principal, as applicable, for
any Distribution Date. In addition, no funds
allocated to investor certificates will be de-
posited in the Excess Funding Account during
any amortization period or early amortization
period for any Series until the Principal Ac-
count for such Series for such Distribution
Date has been fully funded or the investor cer-
tificates of such Series have been paid in
full. See "Description of the Offered Certifi-
cates--Excess Funding Account."
Distribution of Available
Series Interest Collections
Allocable to
Certificateholders..........
Available Series Interest Collections will be
applied on each business day in a Monthly Pe-
riod in the following order of priority: (i) an
amount equal to the amount of Class A Monthly
Interest and any overdue Class A Monthly Inter-
est not previously deposited in the Interest
Funding Account for such Monthly Period and in-
terest on any overdue interest amounts will be
deposited in the Interest Funding Account; (ii)
an amount equal to the amount of Class B
Monthly Interest and any overdue Class B
Monthly Interest not previously deposited in
the Interest Funding Account for such Monthly
Period and interest on any overdue interest
amounts will be deposited
14
<PAGE>
in the Interest Funding Account; (iii) an
amount equal to the amount of Class C Monthly
Interest and any overdue Class C Monthly Inter-
est not previously deposited in the Interest
Funding Account for such Monthly Period and in-
terest on any overdue interest amounts will be
deposited in the Interest Funding Account; (iv)
if the Company or an affiliate of the Company
is not the Servicer, an amount equal to the
Monthly Servicing Fee plus any Monthly Servic-
ing Fee that was due but not paid on any prior
business day will be paid to the Servicer; (v)
an amount equal to the ABC Investor Default
Amount on such business day and, to the extent
not previously paid, the ABC Investor Default
Amount for each prior business day in such
Monthly Period will be (a) during the Revolving
Period, treated as Shared Principal Collec-
tions, (b) during the Amortization Period, on
or prior to the Class B Principal Payment Com-
mencement Date, paid to Class A
Certificateholders up to the Class A Invested
Amount, (c) during the Amortization Period, on
and after the Class B Principal Payment Com-
mencement Date, paid to the Class B
Certificateholders up to the Class B Invested
Amount or (d) during the Amortization Period,
on and after the Class C Principal Payment Com-
mencement Date, paid to the Class C
Certificateholders up to the Class C Invested
Amount; (vi) an amount equal to the Class D In-
vestor Default Amount on such business day and,
to the extent not previously paid, the Class D
Investor Default Amount for each prior business
day in such Monthly Period will be (a) during
the Revolving Period and the Amortization Pe-
riod prior to the payment in full of the Class
C Invested Amount, paid to the Transferor in
order to maintain the Class D Invested Amount,
(b) during the Amortization Period following
the payment in full of the Class C Invested
Amount, paid to Class D Certificateholders up
to the Class D Invested Amount; (vii) an amount
equal to unreimbursed Class A Investor Charge-
Offs on such business day will be (a) during
the Revolving Period, treated as Shared Princi-
pal Collections, or (b) during the Amortization
Period, on or prior to the Class B Principal
Payment Commencement Date, paid to Class A
Certificateholders up to the Class A Invested
Amount; (viii) an amount equal to the accrued
and unpaid interest on the outstanding aggre-
gate principal amount of the Class B Certifi-
cates not previously paid to the Class B
Certificateholders for such Monthly Period will
be deposited in the Interest Funding Account;
(ix) an amount equal to the accrued and unpaid
interest on the outstanding aggregate principal
amount of the Class C Certificates not previ-
ously deposited in the Interest Funding Account
for such Monthly Period will be deposited in
the Interest Funding Account; (x) an amount
equal to unreimbursed Class B Investor Charge-
Offs on such business day will be (a) during
the Revolving Period, treated as Shared Princi-
pal Collections, (b) during the Amor-
15
<PAGE>
tization Period, on or prior to the Class B
Principal Payment Commencement Date, paid to
Class A Certificateholders up to the Class A
Invested Amount, or (c) during the Amortization
Period, on and after the Class B Principal Pay-
ment Commencement Date, paid to Class B
Certificateholders up to the Class B Invested
Amount; (xi) an amount equal to unreimbursed
Class C Investor Charge-Offs on such business
day will be (a) during the Revolving Period,
treated as Shared Principal Collections, (b)
during the Amortization Period, on or prior to
the Class B Principal Payment Commencement
Date, paid to Class A Certificateholders up to
the Class A Invested Amount, (c) during the Am-
ortization Period, on and after the Class B
Principal Payment Commencement Date, paid to
Class B Certificateholders up to the Class B
Invested Amount or (d) during the Amortization
Period, on and after the Class C Principal Pay-
ment Commencement Date, paid to the Class C
Certificateholders up to the Class C Invested
Amount; (xii) an amount equal to unreimbursed
Class D Investor Charge-Offs on such business
day will be (a) during the Revolving Period and
during the Amortization Period prior to the
payment in full of the Class C Invested Amount,
paid to the Transferor in order to maintain the
Class D Invested Amount and (b) during the Am-
ortization Period following the payment in full
of the Class C Invested Amount, paid to the
Class D Certificateholders; (xiii) if the Com-
pany or an affiliate of the Company is the
Servicer, an amount equal to the Monthly Ser-
vicing Fee plus any Monthly Servicing Fee that
was due but not paid on any prior business day
will be paid to the Servicer; and (xiv) the re-
mainder will be treated as Excess Interest Col-
lections. See "Description of the Offered Cer-
tificates--Application of Collections."
Coverage of Certain Interest
Shortfalls from Transferor
Interest Collections........
To the extent that any amounts are on deposit in
the Excess Funding Account on any business day,
the Servicer will determine the amount (the
"Negative Carry Amount"), if any, equal to the
excess of (x) the product of (a) the Base Rate
and (b) the product of (i) the sum of the
amounts on deposit in the Excess Funding Ac-
count and (ii) the number of days elapsed since
the previous business day divided by the actual
number of days in such year over (y) the aggre-
gate amount of all earnings since the previous
business day available from the Cash Equiva-
lents in which funds on deposit in the Excess
Funding Account are invested. The Servicer will
apply an amount equal to the lesser of (i) the
Series Allocation Percentage of the Interest
Collections allocable to the Exchangeable
Transferor Certificate ("Transferor Interest
Collections") on such business day and (ii) the
Negative Carry Amount for such business day in
the manner specified for application of Avail-
able Series Interest Collections.
16
<PAGE>
Sharing of Excess Interest Interest Collections on any business day in ex-
Collections................. cess of the amounts necessary to make required
payments on such business day will be applied
to cover any shortfalls with respect to amounts
payable from Interest Collections allocable to
any other Series then outstanding, pro rata
based upon the amount of the shortfall, if any,
with respect to such other Series. Any Excess
Interest Collections remaining after covering
shortfalls with respect to all outstanding Se-
ries will be paid to the Transferor.
Investor Default Amount;
Investor Charge-Offs........
A portion of all Defaulted Receivables (the "In-
vestor Default Amount") will be allocated to
the Certificateholders in an amount equal to
the product of the Floating Allocation Percent-
age applicable during the related Monthly Pe-
riod and the principal amount of Defaulted Re-
ceivables for such Monthly Period. If on any
Determination Date the aggregate Investor De-
fault Amount for the preceding Monthly Period
exceeded the aggregate amount of Available Se-
ries Interest Collections applied to the pay-
ment thereof as described in clauses (v) and
(vi) of "Distribution of Available Series In-
terest Collections Allocable to
Certificateholders," and the amount of (x)
Transferor Interest Collections and (y) Excess
Interest Collections, in each case to the ex-
tent applied to the payment thereof as de-
scribed in "Coverage of Certain Interest
Shortfalls from Transferor Interest Collec-
tions," and "Sharing of Excess Interest Collec-
tions," respectively, and any Reallocated Prin-
cipal Collections applied with respect thereto,
then a portion of the Class D Invested Amount
equal to such insufficiency (but not in excess
of the remaining aggregate Investor Default
Amount for such Monthly Period) will be reduced
in an amount equal to the Investor Default
Amount to avoid a charge-off with respect to
the Class A Certificates, the Class B Certifi-
cates or the Class C Certificates.
The Class D Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class D Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for such purpose as described in
clause (xiii) of "Distribution of Available Se-
ries Interest Collections Allocable to Certifi-
cateholders." If the Class D Invested Amount is
reduced to zero, a portion of the Class C In-
vested Amount equal to the amount by which such
insufficiency would have caused the Class D In-
vested Amount to be reduced below zero (but not
in excess of the remaining aggregate Investor
Default Amount for such Monthly Period) will be
deducted from the Class C Invested Amount and
allocated to the Class C Investor Charge-Off to
avoid a charge-off with respect to the Class A
Certificates or the Class B Certificates. If
and for so long as the Class D Invested Amount
is reduced to zero, the Class C
17
<PAGE>
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class C Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class C Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (xii) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." If the Class C Invested
Amount is reduced to zero, a portion of the
Class B Invested Amount equal to the amount by
which such insufficiency would have caused the
Class C Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class B In-
vested Amount, and allocated to the Class B In-
vestor Charge-Offs to avoid a charge-off with
respect to the Class A Certificates. If and for
so long as the Class C Invested Amount is re-
duced to zero, the Class B Certificateholders
will bear directly the credit and other risks
associated with their undivided interest in the
Trust.
The Class B Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class B Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (xi) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." If the Class B Invested
Amount is reduced to zero, a portion of the
Class A Invested Amount equal to the amount by
which such insufficiency would have caused the
Class B Invested Amount to be reduced below
zero (but not in excess of the remaining aggre-
gate Investor Default Amount for such Monthly
Period) will be deducted from the Class A In-
vested Amount and allocated to the Class A In-
vestor Charge-Offs. If and for so long as the
Class B Invested Amount and the Class C In-
vested Amount are reduced to zero, the Class A
Certificateholders will bear directly the
credit and other risks associated with their
undivided interest in the Trust.
The Class A Invested Amount will thereafter be
increased (but not in excess of the unpaid
principal balance of the Class A Certificates)
on any business day by the amount of Available
Series Interest Collections allocated and
available for that purpose as described in
clause (viii) of "Distribution of Available Se-
ries Interest Collections Allocable to
Certificateholders." See "Description of the
Offered Certificates--Investor Charge-Offs."
Subordination of the Class B
Certificates, the Class C
Certificates and the Class
D Certificates..............
The Class B Certificates will be subordinated to
fund payments of principal and interest on the
Class A Certificates. The Class C Certificates
will be subordinated to fund payments of prin-
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<PAGE>
cipal and interest on the Class A Certificates
and the Class B Certificates. The Class D Cer-
tificates will be subordinated to fund payments
of principal and interest on the Class A Cer-
tificates, the Class B Certificates and the
Class C Certificates. See "Description of the
Offered Certificates--Subordination of the
Class B Certificates," "--Reallocation of Cash
Flows" and "--Reallocated Principal Collec-
tions" herein. The Class B Invested Amount, the
Class C Invested Amount, and the Class D In-
vested Amount will be subordinated as described
herein to the extent necessary to fund certain
payments with respect to each Class of Certifi-
cates with an earlier alphabetical designation
as described herein. If on any business day
there is a positive Class A Required Amount,
Class B Required Amount or Class C Required
Amount, certain Principal Collections for such
business day will be used to fund first the
Class A Required Amount, second the Class B Re-
quired Amount and third the Class C Required
Amount as more fully described herein in "De-
scription of the Offered Certificates--Reallo-
cated Principal Collections." To the extent the
Class B Invested Amount, the Class C Invested
Amount or the Class D Invested Amount is re-
duced, the percentage of Interest Collections
allocated to the Class B Certificateholders,
the Class C Certificateholders, or the Class D
Certificateholders, as applicable, in subse-
quent Monthly Periods will be reduced. More-
over, to the extent the amount of such reduc-
tion in the Class B Invested Amount, the Class
C Invested Amount, or the Class D Invested
Amount is not reimbursed, the amount of princi-
pal distributable to the Class B
Certificateholders, the Class C
Certificateholders, or the Class D
Certificateholders, as applicable, from the
Collection Account will be reduced. Principal
payments with respect to the Class B Certifi-
cates will not be made until the final payment
of the Class A Invested Amount has been made to
the Class A Certificateholders. Principal pay-
ments with respect to the Class C Certificates
will not be made until the final payment of the
Class A Invested Amount has been made to the
Class A Certificateholders and the final pay-
ment of the Class B Invested Amount has been
made to the Class B Certificateholders. Princi-
pal payments with respect to the Class D Cer-
tificates will not be made until the final pay-
ment of the Class A Invested Amount has been
made to the Class A Certificateholders, the fi-
nal payment of the Class B Invested Amount has
been made to the Class B Certificateholder and
the final payment of the Class C Invested
Amount has been made to the Class C Certifi-
cateholders. See "Description of the Offered
Certificates--Subordination of the Class B Cer-
tificates," "--Reallocation of Cash Flows" and
"--Reallocated Principal Collections."
Optional Repurchase.......... The Invested Amount of the Class A Certificates,
the Class B Certificates and the Class C Cer-
tificates will be subject to optional repur-
chase by the Transferor on any Distribution
Date
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<PAGE>
after the Invested Amount of the Class A Cer-
tificates, the Class B Certificates and the
Class C Certificates is reduced to an amount
less than or equal to 10% of the initial In-
vested Amount of the Class A Certificates, the
Class B Certificates and the Class C Certifi-
cates, respectively, if certain conditions set
forth in the Pooling and Servicing Agreement
are met. The repurchase price will be equal to
the Invested Amount plus accrued and unpaid in-
terest on the Class A Certificates, the Class B
Certificates and the Class C Certificates
through the day preceding the Distribution Date
on which the repurchase occurs. See "Descrip-
tion of the Offered Certificates--Final Payment
of Principal; Termination."
Tax Status................... In the opinion of counsel to the Company and
Transferor, the Class A Certificates and the
Class B Certificates will be characterized as
debt for federal income tax purposes under ex-
isting law. Under the Pooling and Servicing
Agreement, the Transferor, the Servicer, the
Class A Certificateholders and the Class B
Certificateholders will agree to treat the
Class A Certificates and the Class B Certifi-
cates as debt for federal, state, and other tax
purposes. See "Certain Federal Income Tax Con-
sequences" for additional information concern-
ing the application of federal income tax laws.
ERISA Considerations......... Under regulations issued by the U.S. Department
of Labor, the Trust's assets would not be
deemed "plan assets" of an employee benefit
plan holding an interest in the Certificates if
certain conditions are met, including that in-
terests in each Class of the Certificates be
held by at least 100 persons independent of the
Transferor and each other upon completion of
the public offering being made hereby. The Un-
derwriters expect, although no assurance can be
given, that the Class A Certificates will be
held by at least 100 such persons, and the
Transferor anticipates that the other condi-
tions of the "publicly offered security" excep-
tion contained in the regulations will be met
with respect to the Class A Certificates. No
monitoring or other measures will be taken to
ensure that any such conditions will be met
with respect to the Class A Certificates. The
Underwriter of the Class B Certificates expects
that the Class B Certificates will not be held
by at least 100 persons. Consequently, the pub-
licly offered security exception contained in
the regulations will not be met with respect to
the Class B Certificates. If the Trust's assets
were deemed to be "plan assets" of such a plan,
there is uncertainty as to whether existing ex-
emptions from the "prohibited transaction"
rules of the Employee Retirement Income Secu-
rity Act of 1974, as amended ("ERISA"), and the
Internal Revenue Code of 1986, as amended (the
"Code") would apply to all transactions involv-
ing the Trust's assets. Accordingly, employee
benefit plans contemplating purchasing the Of-
fered Certificates should consult their counsel
before making a purchase. See "Employee Benefit
Plan Considerations."
20
<PAGE>
Offered Certificate Ratings.. It is a condition to the issuance of the Class A
Certificates that they be rated " " or
its equivalent by at least one nationally rec-
ognized rating agency (the rating agency or
agencies selected by the Transferor to rate any
Series, is hereafter referred to as the "Rating
Agency."
It is a condition to the issuance of the Class B
Certificates that they be rated at least
" " or its equivalent by the Rating
Agency.
A rating is not a recommendation to buy, sell or
hold securities and may be subject to revision
or withdrawal at any time by the assigning Rat-
ing Agency. Each rating should be evaluated in-
dependently of any other rating. See "Risk Fac-
tors--Certificate Rating."
Listing...................... Application will be made to list the Offered
Certificates on the Luxembourg Stock Exchange.
21
<PAGE>
RISK FACTORS
Prospective investors in the Offered Certificates should consider, among
other things, the following factors in connection with the purchase of the
Offered Certificates:
LIMITED EXPERIENCE
The Company began originating and servicing revolving credit arrangements for
manufactured housing dealers in February 1994, and thus has limited
underwriting and servicing experience, and very limited delinquency, default
and loss experience, with respect to such accounts. The Company's substantial
experience in underwriting and servicing retail manufactured housing sales
contracts is not necessarily indicative of the results that will be experienced
on Accounts and the Receivables generated in Accounts.
ADDITION OF TRUST ASSETS
The Transferor expects, and in some cases will be obligated, to designate
Additional Accounts, the Receivables in which will be conveyed to the Trust.
Such Additional Accounts may include accounts with dealers approved under
criteria different from those which were applied to the dealers on the Accounts
designated on the Cut-off Date or to the dealers on previously designated
Additional Accounts, because such accounts were originated at a different date.
Consequently, there can be no assurance that Additional Accounts designated in
the future will be of the same credit quality as previously designated
Accounts. The designation of Additional Accounts will be subject to the
satisfaction of certain conditions described herein under "Description of the
Certificates--Addition of Accounts."
CERTAIN LEGAL ASPECTS
The Company will warrant to the Transferor in the Purchase Agreement relating
to any Series that the sale of the related Receivables by it to the Transferor
is a valid sale of such Receivables to the Transferor. The Company will take
all actions that are required under Minnesota law to perfect the Transferor's
ownership interest in such Receivables. See "Certain Legal Aspects of the
Receivables--Transfer of Receivables." Notwithstanding the foregoing, if the
Company were to become a debtor in a bankruptcy case and a creditor or trustee-
in-bankruptcy of the Company, or the Company itself as debtor-in-possession,
were to take the position that any sale of Receivables to the Transferor should
be recharacterized as a pledge of such Receivables to secure a borrowing of the
Company, then delays in payments to the Transferor (and therefore to the Trust
and the Certificateholders) of collections of Receivables could occur or
(should the court rule that such transfers were borrowings rather than sales)
reductions in the amount of such payments could result. If a transfer of
Receivables to the Transferor were recharacterized as a pledge, a tax or
government lien on the property of the Company arising before any Receivables
come into existence may have priority over the Transferor's (and therefore the
Trust's) interest in such Receivables. See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to Bankruptcy." If the transfer of
Receivables to the Transferor were respected as a sale, the Receivables would
not be part of the Company's bankruptcy estate and would not be available to
the Company's creditors.
In addition, if the Company were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of the Company, or the Company itself as
debtor-in-possession, were to request a bankruptcy court to order that the
Transferor be substantively consolidated with the Company, delays in and
reductions in the amount of distributions on the Certificates could occur.
Although the Pooling and Servicing Agreement provides that the Transferor
will transfer all of its right, title, and interest in and to the Receivables
to the Trust, a court could treat such transactions as an assignment of
collateral as security for the benefit of holders of certificates issued by the
Trust. It is possible that the risk of such treatment may be increased by the
retention by the Transferor of the Exchangeable Transferor Certificate and the
Class D Certificates. The Transferor represents and warrants in the Pooling and
Servicing
22
<PAGE>
Agreement that the transfer of the Receivables to the Trust is either a valid
transfer and assignment of the Receivables to the Trust or the grant to the
Trust of a security interest in the Receivables. The Transferor has taken and
will take certain actions required to perfect the Trust's interest in the
Receivables and warrants that if the transfer to the Trust is deemed to be a
grant to the Trust of a security interest in the Receivables, the Trustee will
have a first priority perfected security interest therein, subject only to
Permitted Liens. If the transfer of the Receivables to the Trust is deemed to
create a security interest therein under the UCC, a tax or government lien on
property of the Transferor arising before Receivables come into existence may
have priority over the Trust's interest in such Receivables. In the event of
the insolvency of the Transferor, certain administrative expenses may also have
priority over the Trust's interest in such Receivables. See "Certain Legal
Aspects of the Receivables--Transfer of Receivables."
In a recent decision, Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th
Cir. 1993), cert. denied, 114 S. Ct. 554 (1993) the United States Court of
Appeals for the 10th Circuit suggested that even where a transfer of accounts
from a seller to a buyer constitutes a "true sale," the accounts would
nevertheless constitute property of the seller's estate in a bankruptcy of the
seller. If the Company or the Transferor were to become subject to a bankruptcy
proceeding and a court were to follow the Octagon court's reasoning,
Certificateholders might experience delays in payment or possibly losses in
their investment in the Certificates. Counsel to the Transferor has advised the
Transferor that the facts of the Octagon case are distinguishable from those in
the sale transactions between the Company and the Transferor and the Transferor
and the Trust and the reasoning of the Octagon case appears to be inconsistent
with established precedent and the Uniform Commercial Code. See "Certain Legal
Aspects of the Receivables--Certain Matters Relating to Bankruptcy."
To the extent that the Transferor is deemed to have granted a security
interest in the Receivables to the Trust and that security interest was validly
perfected before any insolvency of the Transferor and was not granted or taken
in contemplation of insolvency or with the intent to hinder, delay, or defraud
the Transferor or its creditors, that security interest should not be subject
to avoidance in the event of insolvency or receivership of the Transferor, and
payments to the Trust with respect to the Receivables should not be subject to
recovery by a bankruptcy trustee or receiver of the Transferor. If, however,
such a bankruptcy trustee or receiver were to assert a contrary position,
delays in payments on the Offered Certificates and possible reductions in the
amount of those payments could occur. If a bankruptcy trustee or receiver were
appointed for the Servicer, and no Servicer Default other than such bankruptcy
or receivership or insolvency of the Servicer exists, the bankruptcy trustee or
receiver may have the power to prevent either the Trustee or the majority of
the Certificateholders from effecting a transfer of servicing to a successor
Servicer. If a bankruptcy trustee or receiver were appointed for the
Transferor, causing a Pay Out Event with respect to all Series then
outstanding, new Principal Receivables would not be transferred to the Trust
pursuant to the Pooling and Servicing Agreement and the Trustee would sell the
portion of the Receivables allocable in accordance with the Pooling and
Servicing Agreement to each Series (unless holders of more than 50% of the
principal amount of each class of each Series, excluding any class or portion
thereof held by the Transferor, and the holders of any Supplemental
Certificates or any other interest in the Exchangeable Transferor Certificates
other than the Transferor instruct otherwise), thereby causing early
termination of the Trust and a loss to the Certificateholders if the net
proceeds allocable to the Certificateholders from such sale, if any, were
insufficient to pay the Certificateholders in full. The net proceeds of any
such sale of the portion of the Receivables allocated in accordance with the
Pooling and Servicing Agreement to each Series will first be used to pay
amounts due to the Class A Certificateholders, will thereafter be used to pay
amounts due to the Class B Certificateholders, will thereafter be used to pay
amounts due to the Class C Certificateholders, and will thereafter be used to
pay amounts due to the Class D Certificateholders. If the only Pay Out Event to
occur is either the insolvency of the Transferor or the appointment of a
bankruptcy trustee or receiver for the Transferor, the bankruptcy trustee or
receiver may have the power to continue to require the Transferor to transfer
new Receivables to the Trust and to prevent the early sale, liquidation, or
disposition of the Receivables and the commencement of the Early Amortization
Period. In addition, a bankruptcy trustee or receiver for the Transferor may
have the power to cause early payment of the Certificates. See "Certain Legal
Aspects of the Receivables--Certain Matters Relating to Bankruptcy."
23
<PAGE>
Moreover, if an insolvency event were to occur with respect to the Company,
any Delayed Funding Receivables that had not yet been funded may not become
funded and may be executory contracts subject to disaffirmance by the Company's
trustee-in-bankruptcy, in which case the related dealers would no longer be
obligated to pay such Delayed Funding Receivables, even though the Trust has
already paid for them. In addition, if the Company were to cease acting as
Servicer, delays in processing payments on the Receivables and information in
respect thereof could occur and result in delays in payments to the
Certificateholders.
BASIS RISK
The Receivables will bear interest at a variable rate above a designated
index rate, as described in "Green Tree Financial Corporation--Payment Terms."
The Offered Certificates bear interest at a floating rate based on LIBOR. If
there is a decline in such prime rate, the amount of Interest Collections on
such Accounts may be reduced, whereas the amounts payable as Monthly Interest
on such Series of Certificates and other amounts required to be funded out of
Interest Collections with respect to such Series may not be similarly reduced.
SOCIAL, ECONOMIC AND OTHER FACTORS
Payment of the Receivables will be largely dependent upon the retail sale of
the related manufactured homes. The level of retail sales of manufactured homes
may change as a result of a variety of social and economic factors, including
national and regional unemployment levels, prices of site-built housing,
interest rates and consumer perceptions of economic conditions generally. The
Company has no basis to predict whether or to what extent economic or social
factors will affect the level of manufactured housing sales.
LIMITED LIQUIDITY
There can be no assurance that a secondary market will develop for the
Offered Certificates, or, if it does develop, that it will provide the holders
of any of the Offered Certificates with liquidity of investment or that if such
a secondary market develops that it will continue to exist for the term of the
Offered Certificates.
NON-RECOURSE TO TRANSFEROR, THE COMPANY OR AFFILIATES THEREOF
No Certificateholder will have recourse for payment of its Certificates to
any assets of any of the Transferor (other than the Exchangeable Transferor
Certificate and any Transferor Retained Class, to the extent described herein),
the Company, or any affiliates thereof. Consequently, Certificateholders must
rely solely upon payments on the Receivables for the payment of principal of
and interest on the Certificates. Furthermore, under the Pooling and Servicing
Agreement, the Certificateholders have an interest in the Receivables and
Collections only to the extent of the Certificateholders' Interest and, to the
limited extent described herein, the Transferor Interest. Should the Offered
Certificates not be paid in full on a timely basis, Certificateholders may not
look to any assets of any of the Transferor (other than the Exchangeable
Transferor Certificate to the extent described herein), the Company or any
affiliates thereof to satisfy their claims.
PAYMENTS AND MATURITY
The Receivables may be paid at any time and there is no assurance that there
will be additional Receivables created or that any particular pattern of
repayments will occur. A significant decline in the amount of Receivables
generated could result in the occurrence of a Pay Out Event and the
commencement of the Early Amortization Period if, as a result, the Transferor
Interest were reduced below the Minimum Transferor Interest or amounts in the
Excess Funding Account result in significant Negative Carry Amounts. See
"Maturity Considerations" and "Description of the Offered Certificates--Pay Out
Events" for a discussion of other Pay Out Events. If a Pay Out Event occurs,
the Early Amortization Period will commence and the average life and maturity
of the Offered Certificates may be significantly reduced. There can be no
24
<PAGE>
assurance in that event that the holders of the Offered Certificates would be
able to reinvest any accelerated distributions on account of such Offered
Certificates in other suitable investments having a comparable yield.
EFFECT OF SUBORDINATION OF CLASS B CERTIFICATES; PRINCIPAL PAYMENTS
The Class B Certificates will be subordinated in right of payment of
principal to the Class A Certificates. Payments of principal in respect of the
Class B Certificates will not commence until after the final principal payment
with respect to the Class A Certificates has been made and the Class A Invested
Amount has been paid in full. Moreover, the Class B Invested Amount is subject
to reduction on any Determination Date if collections of Principal Receivables
allocable to the Class B Certificates are reallocated to cover the Class A
Required Amount or if the aggregate Investor Default Amount, if any, for each
business day in the preceding Monthly Period exceeds the aggregate Available
Series Interest Collections applied to the payment thereof and is not funded
from Excess Interest Collections, Transferor Interest Collections, Class C
Reallocated Principal Collections or Class D Reallocated Principal Collections
and is not assessed against the Class C Invested Amount or the Class D Invested
Amount. If the Class B Invested Amount suffers such a reduction, Interest
Collections allocable to the Class B Certificateholders' Interest in future
Monthly Periods will be reduced. Moreover, to the extent the amount of such
reduction in the Class B Invested Amount is not reimbursed, the amount of
principal distributable to the Class B Certificateholders will be reduced. See
"Description of the Offered Certificates--Allocation Percentages," "--
Reallocated Principal Collections," "--Investor Charge-Offs" and "--
Subordination of the Class B Certificates."
NEGATIVE CARRY
Any amounts deposited in the Excess Funding Account subsequent to the Closing
Date may result in a reduction of Portfolio Yield to the extent that the Cash
Equivalents in which such amounts are invested earn a rate which is less than
that generated by the Receivables and resulting from the Discount Factor (if
any).
DEPENDENCE ON THE COMPANY
The Trust is completely dependent upon the Company for the generation of
Receivables. The Company competes with various other financing sources who are
in the business of providing wholesale floorplan financing arrangements to
dealers. If, for any reason, the Company were unable to, or ceased to, generate
new receivables, a Pay Out Event would occur.
ABILITY OF SERVICER TO CHANGE PAYMENT TERMS
The Servicer will have the right, on behalf of the Transferor, to change
payment terms and various other terms with respect to the Receivables, subject
to the following sentence. In servicing the Receivables, the Servicer may
change the terms of the Receivables or its policies and procedures with respect
to the servicing thereof if such change would not, in the reasonable belief of
the Servicer, cause a Pay Out Event to occur and (i) if the Servicer owns a
comparable segment of receivables, such change is made applicable to such
comparable segment of receivables that have characteristics the same as, or
substantially similar to, the Receivables that are subject to such change and
(ii) if the Servicer does not own a comparable segment of receivables, it will
not make any such change with the intent to materially benefit the Servicer
over the Certificateholders, except as otherwise restricted by the terms of the
Contracts. There can be no assurance that changes in applicable law, changes in
the marketplace or prudent business practice might not result in a
determination by the Servicer to take actions which would change the payment or
other Receivable terms. Except as specified above, there are no restrictions in
the Pooling and Servicing Agreement on the ability of the Servicer to change
the terms of the Receivables. While the Servicer has no current intention of
taking actions which would change the payment or other terms of the Receivables
other than in accordance with its customary and usual procedures, there can be
no assurances that changes in the marketplace or prudent business practice
might not result in a determination to do so.
25
<PAGE>
The Servicer will have the right to generate new Receivables with payment
terms which are generally longer than the current payment terms on the
Receivables. Such a lengthening of the payment period could result in a
reduction of the monthly payment rate and consequently a reduction in the
Portfolio Yield (if a Discount Factor is in use) unless such Discount Factor is
increased accordingly, with respect thereto for any Monthly Period.
CONTROL
Subject to certain exceptions, the investor certificateholders of each Series
may take certain actions, or direct certain actions to be taken, under the
Pooling and Servicing Agreement or the related Supplement. In determining
whether the required percentage of Certificateholders have given their approval
or consent, except as otherwise specified, the Class A Certificateholders, the
Class B Certificateholders and the Class C Certificateholders will be treated
as a single Series. Accordingly, the Class A Certificateholders will have the
power to determine whether any such action is taken without regard to the
position or interests of the Class B Certificateholders or the Class C
Certificateholders relating to such action. Neither the Class B
Certificateholders nor the Class C Certificateholders will have similar power.
However, under certain circumstances the consent or approval of a specified
percentage of the aggregate invested amount of all Series outstanding or of the
invested amount of each class of each Series may be required to direct certain
actions, including requiring the appointment of a successor Servicer following
a Servicer Default, amending the Pooling and Servicing Agreement in certain
circumstances, directing the Servicer not to sell the Receivables upon the
occurrence of an Insolvency Event and directing a repurchase of all outstanding
Series upon the breach of certain representations and warranties by the
Transferor.
MASTER TRUST CONSIDERATIONS
In addition to the Certificates, the Trust, as a master trust, is expected to
issue additional Series from time to time. While the Principal Terms of any
Series will be specified in a Supplement, the provision of a Supplement and,
therefore, the terms of any additional Series, will not be subject to the prior
review or consent of holders of the certificates of any previously issued
Series. Such Principal Terms may include methods for determining applicable
investor percentages and allotting collections, provisions creating security or
Enhancements, different classes of certificates (including subordinated classes
of certificates), provisions subordinating such Series to another Series (if
the Supplement relating to such Series so permits) or another Series to such
Series (if the Supplement for such other Series so permits), and any other
amendment or supplement to the Pooling and Servicing Agreement which is made
applicable only to such Series. See "Description of the Offered Certificates--
Exchanges." In addition, the provisions of any Supplement may give the holders
of the certificates issued pursuant thereto consent, approval, or other rights
that could result in such holders having the power to cause the Transferor, the
Servicer, or the Trustee to take or refrain from taking certain actions,
including, without limitation, actions with respect to the exercise of certain
rights and remedies under the Pooling and Servicing Agreement, without regard
to the position or interest of the certificateholders of any other Series.
Similar rights may also be given to the provider of any Enhancement for any
Series. It is a condition precedent to issuance of any additional Series that
each Rating Agency that has rated any outstanding Series deliver written
confirmation to the Trustee that the Exchange will not result in such Rating
Agency reducing or withdrawing its rating on any outstanding Series. There can
be no assurance, however, that the Principal Terms of any other Series,
including any Series issued from time to time hereafter, might not have an
adverse impact on the timing and amount of payments received by a
Certificateholder or the value of Certificates even if there is no change in
the rating of any outstanding Series. See "Description of the Offered
Certificates--Exchanges."
CERTIFICATE RATING
It is a condition to issuance of the Class A Certificates that they have an
initial rating of " " or its equivalent by at least one nationally
recognized rating agency. It is a condition to issuance of the Class
26
<PAGE>
B Certificates that they be rated " " or its equivalent by at least
one nationally recognized rating agency. However, any such rating will not
address the likelihood that the principal of, or interest on, the Class A
Certificates will be paid by the Class A Expected Final Payment Date or that
the principal of, or interest on, the Class B Certificates will be paid by the
Class B Expected Final Payment Date. It is a condition to issuance of the Class
C Certificates that they be rated " " or its equivalent by at least
one nationally recognized rating agency. The Class D Certificates initially
will not be rated. The ratings will be based primarily on the value of the
Receivables, the funds on deposit in the Excess Funding Account, if any (and
the manner in which such funds are invested). The ratings are not a
recommendation to purchase, hold, or sell the Class A Certificates, the Class B
Certificates or the Class C Certificates, inasmuch as such ratings do not
comment as to the market price or suitability for a particular investor. There
can be no assurance that the ratings will remain in effect for any given period
of time or that either rating will not be lowered or withdrawn by any Rating
Agency if in its judgment circumstances so warrant.
The Transferor will request a rating of the Offered Certificates by at least
one nationally recognized rating agency. There can be no assurance as to
whether any rating agency not requested to rate the Offered Certificates will
nonetheless issue a rating with respect to any Class of the Offered
Certificates, and, if so, what such rating would be. A rating assigned to any
Class of the Offered Certificates by a rating agency that has not been
requested by the Transferor to do so may be lower than the ratings assigned by
the Rating Agencies pursuant to the Transferor's request.
THE TRUST
The Trust will be formed, in accordance with the laws of the State of
Delaware, pursuant to the Pooling and Servicing Agreement. The Trust will be
formed for the transactions described herein and similar transactions, as
contemplated by the Pooling and Servicing Agreement, and prior to formation
will have no assets or obligations. The Trust will not engage in any business
activity, other than as described herein, but rather will only acquire and hold
the Receivables (and related assets), issue (or cause to be issued) the
Certificates, the Exchangeable Transferor Certificate, and certificates
representing additional Series and engage in related activities (including,
with respect to any Series, entering into any Enhancement and Enhancement
agreement relating thereto) and make payments thereon. As a consequence, the
Trust is not expected to have any need for additional capital resources.
THE TRANSFEROR
Green Tree Floorplan Funding Corp., a wholly owned subsidiary of the Company,
was incorporated in Delaware in September 1995. The Transferor was organized
for the limited purposes of purchasing receivables from the Company and
transferring such receivables to third parties, and any activities incidental
to and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Transferor are located at 500 Landmark
Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639 (telephone (612)
293-3400).
The Transferor has taken, and will take in connection with the creation of
each Series of Certificates, steps intended to ensure that the voluntary or
involuntary application for relief by the Company under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in consolidation of the assets and liabilities of the Transferor with
those of the Company. These steps include the creation of the Transferor as a
separate, limited-purpose subsidiary pursuant to a certificate of incorporation
containing certain limitations (including restrictions on the nature of the
Transferor's business and a restriction on the Transferor's ability to commence
a voluntary case or proceeding under any Insolvency Law without the unanimous
affirmative vote of all of its directors). The Transferor's Certificate of
Incorporation includes a provision that requires the Transferor to have two
directors who qualify under the Certificate of Incorporation as "Independent
Directors." No assurance can be given, however, that such a consolidation will
not occur. See "Special Considerations--Certain Legal Aspects."
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<PAGE>
GREEN TREE FINANCIAL CORPORATION'S COMMERCIAL FINANCE DIVISION
The Company is a Delaware corporation that, as of June 30, 1995, had
stockholders' equity of approximately $844,992,000. Through its various
divisions, the Company purchases, pools, sells and services retail conditional
sales contracts for manufactured housing and retail installment sales contracts
for home improvements, a variety of consumer products and equipment finance,
and provides credit to manufactured housing dealers for purposes of purchasing
manufactured home inventory from manufacturers. The Company conducts its
business throughout the United States through 49 manufactured housing offices,
80 home improvement locations and 3 regional wholesale lending centers, as well
as centralized operations in St. Paul, Minnesota and Rapid City, South Dakota.
Its principal executive offices are located at 1100 Landmark Towers, 345 St.
Peter Street, St. Paul, Minnesota 55102-1639 (telephone (612) 293-3400). The
Company's Annual Report on Form 10-K for the year ended December 31, 1994, most
recent Proxy Statement, and, when available, subsequent quarterly or annual
reports are available from the Company upon written request. The Certificates
do not represent an interest in or obligation of the Company, the Transferor or
any of their affiliates, and no Certificateholder will have recourse for
payment of its Certificates to any assets of any of the Company, the Transferor
(other than the Exchangeable Transferor Certificate and any Transferor Retained
Class, to the extent described herein) or any of their affiliates.
COMMERCIAL FINANCE DIVISION--GENERAL
The Receivables arise under Accounts that have been selected from extensions
of credit made by the Company to manufactured housing dealers located
throughout the United States to enable such dealers to purchase manufactured
homes from the manufacturers. The Receivables will be secured by the
manufactured homes and may also be secured by certain other inventory and/or
personal guaranties.
The Company extends credit to dealers under two programs. Under the "Presold"
program, the Company will finance the purchase by the dealer from the
manufacturer of a manufactured home that a retail customer has ordered through
the dealer, provided that the Company has approved an application for credit by
that customer. In addition, for some but not all dealers participating in the
Presold program, the Company will finance the purchase of certain manufactured
homes that the dealer has ordered from the manufacturer without a corresponding
purchase order from a retail customer (the "Stock" program).
CREDIT UNDERWRITING PROCESS
As part of its business of financing the retail purchase of manufactured
homes, the Company's regional service center personnel contact dealers located
in their region and explain the Company's available retail customer financing
plans, terms, prevailing rates and credit and financing policies. If the dealer
wishes to use the Company's available retail customer financing, the dealer
must make an application for dealer approval. Upon satisfactory results of the
Company's investigation of the dealer's creditworthiness and general business
reputation, the Company and the dealer execute a dealer agreement regarding
retail customer financing.
Substantially all dealers with whom the Company has executed a retail
financing agreement are eligible to apply for wholesale financing from the
Company's Commercial Finance Division ("CFD"). Upon application, CFD personnel
perform a review of the dealer including, but not limited to, a review of the
dealer's credit history, financial statements and performance trends, years in
business and general business reputation, experience of management, historical
relationship with the Company (including portfolio quality), personal credit
history and the financial status of the manufacturer of the homes sold by the
dealer. In addition, CFD personnel generally require reference letters from (or
verbal communication with) several of the dealer's current creditors. Using its
proprietary "Dealer Risk Rating System," an initial rating is assigned to the
applicant.
Based upon these investigations, CFD may either turn down the application,
approve the dealer solely for financing under its Presold program, in which
case no credit limit is established, or approve the dealer for
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<PAGE>
its Stock and Presold programs and establish a credit limit. Upon approval of
the application and agreement as to terms, the Company and the dealer execute a
financing and security agreement governing all extensions of credit made by the
Company to the dealer. In most cases, CFD also requires the individual
stockholders/proprietors to execute personal guaranties of the dealer's
obligations. Under the Presold program no credit limit is established as, in
order for any financing to occur, the Company must first pre-approve the retail
customer for financing of the unit. The Company does, however, monitor the
outstandings of each dealer under this program and may reject applications for
credit thereunder if the receivables of such dealer aged 60 days or more
(representing manufactured homes which the retail customers ultimately fail to
purchase) exceed a certain percentage of the total commitments and outstanding
receivables of such dealer.
Credit limits under CFD's Stock program are determined based on a variety of
factors including the dealer's historical and projected sales volume, financial
status of the manufacturers, the dealer's risk rating, and many others. Credit
limits must be approved by the appropriate level of management within CFD, with
higher levels of authorization required as the size of the credit line
increases.
CREATION OF RECEIVABLES
Under the Company's Stock program, advances for the purchase of inventory are
most often initiated by the dealer placing an order with the manufacturer. Upon
informing the manufacturer that Green Tree will be the financing source, the
manufacturer will contact CFD for an approval number. Upon such request, CFD
will first determine whether (a) the manufacturer is in compliance with its
Manufacturer Floorplan Agreement, (b) the dealer is in compliance with its
program with CFD, and (c) such purchase order is within the dealer's credit
limit. If each of these conditions is satisfied, CFD issues a commitment number
to the manufacturer, who then ships the inventory and submits the invoice
directly to CFD. Proceeds of the loan by CFD to the dealer are then paid
directly to the manufacturer in satisfaction of the invoice, generally on the
day after receipt of the invoice.
Under the Presold program, the process of creating the receivable is similar
to that of the Stock program, except that the Company must first have approved
the financing of the sale by the dealer to the retail customer, and, in the
case of a dealer approved solely for Presold financing, CFD must determine,
prior to commitment, that the dealer's account is in good standing.
The Company and the manufacturer may also agree that CFD may discount the
invoice price of the inventory ordered by the dealer. Under this arrangement,
the manufacturer will deem itself paid in full upon receipt of such discounted
amount. Typically, in exchange for the payment delay and/or the discount, CFD
will agree to provide the manufacturer's dealers with reduced interest, or
perhaps no interest, for some specified period of time. Thus, the dealer's
financing program may provide for so-called "interest free" or "free flooring"
periods during which no interest or finance charges will accrue.
PAYMENT TERMS
Upon the sale or other disposition by the dealer of the financed manufactured
home, CFD requires immediate repayment in full of the amount advanced (less any
partial repayments of principal already made, described below) and all accrued
but unpaid interest. If the Company is financing the retail customer's purchase
of the manufactured home (which was the case with respect to approximately %
of the manufactured homes financed for dealers by the Company from inception to
the Cut-off Date), the Company will pay off the floorplan receivable by
offsetting the amount owed by the dealer under the floorplan receivable from
the amount owed by the Company to the dealer for the Company' purchase of the
retail financing contract.
Under either program, the dealer is obligated to pay interest to the Company
on the amount of credit extended, at rates that increase with the number of
days elapsed from the date on which the receivable begins to accrue interest.
Under the Presold program, no interest accrues during the first 15 days
following the
29
<PAGE>
original invoice shipment date. Thereafter, interest accrues at rates based on
the Prime Rate or such other index (described below) or another index rate,
with an increasing spread over the Prime Rate or such other index as the
receivable ages. Under the Stock program, interest begins accruing on the date
of receipt by the Company of the manufacturer's invoice, at a rate based on the
Prime Rate with an increasing spread as the receivable ages. The "Prime Rate"
for purposes of calculating the interest accrued on a receivable in any month
is the prevailing domestic prime rate published in The Wall Street Journal for
the last business day of the prior calendar month. The Company also charges the
dealer a documentation, handling and inspection ("DHI") fee of $10 per month
for each manufactured home financed, increasing to $20 per month after a
certain specified period of time has elapsed since the creation of the
receivable. These fees will be included in the Finance Charge Collections owned
by the Trust. Interest and DHI fees are due and payable on a monthly basis.
In addition, principal repayments may become due in installments if the unit
has not been sold within a specified period of time. These payments are
referred to as "Curtailments." Even if a unit is subject to payment of
Curtailments, the outstanding principal balance with respect to such unit will
remain fully payable upon sale.
FLOORPLAN AGREEMENTS WITH MANUFACTURERS
Manufacturers, as with dealers, must meet certain underwriting guidelines in
order to qualify as an approved manufacturer for financing with the Company.
This includes a review and analysis of the manufacturer's financial condition,
Dun & Bradstreet reports and product information, and often times the support
of personal guaranties and/or letters of credit.
The Company will provide financing to a dealer for a manufactured home only
if the Company has previously entered into a floorplan financing agreement with
the manufacturer of that manufactured home (a "Manufacturer Agreement").
Pursuant to the Manufacturer Agreement, the manufacturer agrees, subject to
certain conditions, to purchase from the Company any manufactured home sold by
that manufacturer to a dealer and financed by the Company, if the Company
acquires possession of that manufactured home pursuant to repossession,
voluntary surrender, or other circumstances following default by the dealer.
The repurchase price will be the lesser of (a) the unpaid principal balance
owed to the Company by the dealer in respect of that manufactured home, or (b)
the amount paid by the Company to the manufacturer on behalf of the dealer,
less Curtailments billed to the dealer in respect of such manufactured home in
accordance with the applicable Curtailment schedule agreed to with that
manufacturer (whether or not paid by the dealer). Based on the results of the
Company's review of the manufacturer, "contingent liability caps" are
established whereby total outstandings with respect to each manufacturer are
limited to a preset dollar amount. This cap overrides any particular dealer's
credit limit as it relates to units manufactured by a particular manufacturer.
Though manufacturers differ with respect to the terms of their repurchase
obligations, such obligation with respect to any particular manufactured home
generally expires or begins to decline 6 to 18 months after delivery of the
manufactured home to the dealer.
DEALER MONITORING
Inventory inspections are performed to verify the existence of the
manufactured home securing a dealer's loan, to check the condition of such
inventory, account for any missing inventory and collect any funds due. This
inventory inspection is one of the key tools utilized to monitor inventory
financed and is performed on at least a monthly basis with respect to each
dealer account (and each lot within a dealer account to the extent that a
dealer conducts its business in more than one location). If an inspection
reveals that the dealer has sold a manufactured home without immediate
repayment to the Company, the unit is considered "sold and unpaid" ("SAU") and
the Company demands immediate repayment from the dealer or initiates other
appropriate steps to resolve the SAU. Inspection dates within each month must
vary, and unscheduled inspections are performed whenever CFD deems it
appropriate. CFD also requires regular rotation of the individuals conducting a
dealer's inspections.
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<PAGE>
In addition, Region Managers, within their respective portfolio of dealers,
monitor each dealer as to their specific performance and adherence to the
Company's requirements. This includes a regular review of annual and interim
financial statements for trends, payments for sold units between inspections,
monitoring of the Company's on-going perfected security interests in the
inventory, existence of proper insurance coverage with respect to such
inventory at all times, timely payment of interest, DHI fees and Curtailments,
proper recording of invoices, the maintenance of the Manufacturer Statements of
Origin ("MSO's") which are on file with respect to each manufactured home
financed, and the requirement that all inventory stays within the repurchase
period in effect with respect to each manufacturer.
REALIZATION UPON RECEIVABLES
Upon any default by a dealer on its obligations to the Company under the
related financing agreement and the expiration of all applicable notice and
cure periods, the Company may declare such dealer's obligations immediately due
and payable and may enforce all of its legal rights and remedies, including
commencement of proceedings to realize upon all collateral (including the
dealer's inventory of manufactured homes), subject to prevailing standards of
commercial reasonableness and good faith. The Company will seek to resell any
repossessed manufactured homes to the manufacturer, as described above, or to
otherwise realize upon such collateral, and will seek to enforce any guaranties
of the dealer's obligations.
THE RECEIVABLES
The Receivables conveyed to the Trust arise in Accounts selected from the
Company's portfolio of accounts on the basis of criteria set forth in the
Pooling and Servicing Agreement and the Series 1995-1 Series Supplement as
applied on the Cut-Off Date and, with respect to Additional Accounts, as of the
related date of their designation (the "Trust Portfolio"). The Transferor will
have the right (subject to certain limitations and conditions set forth
therein), and in some circumstances will be obligated, to designate from time
to time Additional Accounts and to transfer to the Trust all Receivables of
such Additional Accounts, whether such Receivables are then existing or
thereafter created. Any Additional Accounts must be Eligible Accounts as of the
date the Transferor designates such accounts as Additional Accounts.
Furthermore, pursuant to the Pooling and Servicing Agreement, the Transferor
has the right (subject to certain limitations and conditions) to designate
certain Accounts as Removed Accounts and to require the Trustee to reconvey all
Receivables in such Removed Accounts to the Transferor, whether such
Receivables are then existing or thereafter created. Throughout the term of the
Series, the Accounts from which the Receivables arise will be the Accounts
designated by the Transferor on the Cut-Off Date plus any Additional Accounts
minus any Removed Accounts. Pursuant to the Agreement and the Series 1995-1
Series Supplement, the Transferor will represent and warrant to the Trust that,
as of the Closing Date and the date Receivables are conveyed to the Trust, such
Receivables meet certain eligibility requirements. See "Description of the
Certificates-- Representations and Warranties."
ELIGIBLE RECEIVABLES
The Receivables must arise under an Eligible Account. An "Eligible Account"
is defined to mean, as of the Cut-Off Date (or, with respect to Additional
Accounts, as of their date of designation for inclusion in the Trust), an
Account owned by the Transferor (a) which is in existence and maintained with
the Company, (b) which is payable in United States dollars, (c) the dealer on
which has provided, as its most recent billing address, an address located in
the United States or its territories or possessions, (d) which has been
originated by the Company in the ordinary course of its business, (e) as to
which no amounts have been charged off by the Company as uncollectible in its
customary and usual manner for charging off such Account as of the Cut-Off Date
(or, with respect to Additional Accounts, as of their date of designation for
inclusion in the
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Trust, and (f) the applicable dealer is not involved in insolvency
proceedings). The definition of Eligible Account may be changed by amendment to
the Pooling and Servicing Agreement without the consent of the
Certificateholders if (i) the Transferor delivers to the Trustee a certificate
of an authorized officer to the effect that, in the reasonable belief of the
Transferor, such amendment will not as of the date of such amendment adversely
affect in any material respect the interest of the Certificateholders, and (ii)
such amendment will not result in a withdrawal or reduction of the rating of
any outstanding Series under the Trust.
An "Eligible Receivable" is defined as a Receivable (a) that was originated
by the Company in the ordinary course of business, (b) that has arisen under an
Eligible Account, (c) that was created in compliance with all requirements of
law applicable thereto, and pursuant to a dealer finance agreement that
complies with all requirements of law applicable thereto, (d) with respect to
which all consents, licenses or authorizations of, or registrations with, any
governmental authority required to be obtained or given by the Company or the
Transferor in connection with the creation of such Receivable or the transfer
thereof to the Trust or the execution, delivery, creation and performance by
the Company of the related dealer finance agreement have been duly obtained or
given and are in full force and effect as of the date of the creation of such
Receivable, (e) as to which, at the time of its creation, the Transferor had
and the Trust will have good and marketable title free and clear of all liens
and security interests (other than certain tax liens for taxes not then due or
which the Transferor is contesting), (f) that is the legal, valid, binding and
assignable payment obligation of the related dealer, legally enforceable
against such dealer in accordance with its terms (with certain bankruptcy
related exceptions), (g) that constitutes "chattel paper" or a "general
intangible" under Article 9 of the Uniform Commercial Code as then in effect in
the State of Minnesota, (h) which has the benefit of a Manufacturer Agreement,
(i) as to which at all times following the transfer of such Receivable to the
Trust, the Trust will have good and marketable title thereto free and clear of
all liens arising prior to the transfer or arising at any time, other than
liens permitted pursuant to the Pooling and Servicing Agreement, (j) which has
been the subject of a valid transfer and assignment from the Transferor to the
Trust of all the Transferor's interest therein (including any proceeds
thereof), (k) which will at all times be the legal and assignable payment
obligation of the dealer relating thereto, enforceable against such dealer in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy or other similar laws, (l) which at the time of transfer
to the Trust is not subject to any right of rescission, setoff, or any other
defense (including defenses arising out of violations of usury laws) of the
dealer, (m) as to which, at the time of transfer of such Receivable to the
Trust, the Company and the Transferor have satisfied all their respective
obligations with respect to such Receivable required to be satisfied at such
time, (n) as to which, at the time of transfer of such Receivable to the Trust,
neither the Company nor the Transferor has taken or failed to take any action
which would impair the rights of the Trust or the certificateholders therein,
and (o) which was transferred to the Trust with all applicable governmental
authorization.
LOSS AND DELINQUENCY HISTORY
[Delinquency History to be provided]
The following table sets forth the historical net charge-offs for dealer
receivables originated by the Company for the given periods. There can be no
assurance, however, that the loss experience for the Receivables in the future
will be similar to the historical experience set forth below. The historical
experience set forth below includes the effect of the financial obligations of
manufacturers in respect of repossessed products as described above under
"Green Tree Financial Corporation--Agreements with Manufacturers." If
manufacturers are not able to perform such obligations in the future, the loss
experience in respect of the
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Trust Portfolio and the Receivables may be adversely affected. Because the
Company only began originating dealer receivables in 1994, its portfolio of
dealer receivables may not yet have exhibited the loss experience that will be
experienced over a longer period of time.
LOSS EXPERIENCE FOR MANUFACTURED HOUSING FLOORPLAN RECEIVABLES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT AND FOR THE THREE MONTHS ENDED
-------------------------------------------
JUNE
JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, 30,
1994 1994 1994 1995 1995
-------- ------------- ------------ --------- ------
<S> <C> <C> <C> <C> <C>
Average Receivables out-
standing (1)............. $ $ $ $ $
Net charge-offs (2)....... $ $ $ $ $
Net charge-offs as a
percentage of Average
Receivables outstanding..
</TABLE>
--------
(1) Average Receivables outstanding is the arithmetic average of Receivables
outstanding at the beginning of each fiscal month during the period shown.
(2) Net charge-offs reflect charge-offs [of principal advanced] less
recoveries.
(3) Annualized percentage.
[POOL STATISTICS]
[To be added]
MATURITY CONSIDERATIONS
The Class A Invested Amount is payable to the Class A Certificateholders, to
the extent funds are available therefor in the Principal Account, on each
Distribution Date beginning with the Distribution Date, or earlier
in the event of a Pay Out Event that results in the commencement of the Early
Amortization Period. The Class A Certificateholders will receive payments of
principal on each Distribution Date during the Controlled Amortization Period
until the Class A Invested Amount has been paid in full or the Termination Date
has occurred. It is anticipated that the final payment of principal with
respect to the Class A Certificates will be made on the
Distribution Date (the "Class A Expected Final Payment Date"). The Pooling and
Servicing Agreement provides that the Class B Certificateholders will not begin
to receive payments of principal until the Class A Invested Amount has been
paid in full. The Class B Certificateholders will receive payments of principal
on the Class B Principal Payment Commencement Date and each Distribution Date
thereafter until the Class B Invested Amount is paid in full or the Termination
Date has occurred. It is anticipated that the final payment of principal with
respect to the Class B Certificates will be made on the
Distribution Date (the "Class B Expected Final Payment Date"). The Pooling and
Servicing Agreement provides that the Class C Certificateholders will not begin
to receive payments of principal until the Class A Invested Amount and the
Class B Invested Amount have been paid in full. The Class C Certificateholders
will receive payments of principal on the Class C Principal Payment
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<PAGE>
Commencement Date and each Distribution Date thereafter until the Class C
Invested Amount is paid in full or the Termination Date has occurred. It is
anticipated that the final payment of principal with respect to the Class C
Certificates will be made on the Distribution Date (the "Class C
Expected Final Payment Date").
On each Business Day during the Controlled Amortization Period, the Class A
Certificateholders will have deposited in the Principal Account an amount equal
to the lesser of
(i) the sum of (a) any amount on deposit in the Excess Funding Account
allocated to the Offered Certificates on such day, (b) any amounts in
respect of ABC Investor Default Amounts or Class A Investor Charge-Offs,
Class B Investor Charge-Offs, Class C Investor Charge-Offs or Class D
Investor Charge-Offs paid on such day, (c) Shared Principal Collections
allocable to the Class A Certificates, if any, and (d) the product of the
ABC Fixed/Floating Allocation Percentage and the aggregate amount of
Principal Collections collected during the preceding Monthly Period, and
(ii) the amount, if any, by which (x) the "Class A Controlled
Distribution Amount," which is equal to the sum of the Class A Controlled
Amortization Amount and any existing Class A Deficit Controlled
Amortization Amount exceeds (y) the amount on deposit in the Principal
Account for the account of the Class A Certificateholders. The term "Class
A Deficit Controlled Amortization Amount" means zero on the initial
Distribution Date and, on any subsequent Distribution Date, the excess, if
any, of the amount determined on the preceding Distribution Date under
clause (ii) above over the amount determined under clause (x) above with
respect to the related Monthly Period.
On each Business Day during the Controlled Amortization Period, if an amount
sufficient to pay the Class A Invested Amount in full has been deposited in the
Principal Account, the Class B Certificateholders will have deposited in the
Principal Account an amount equal to the lesser of
(i) (a) any remaining amount on deposit in the Excess Funding Account
allocated to the Offered Certificates on such day, (b) any amounts in
respect of ABC Investor Default Amounts or Class B Charge-Offs, Class C
Charge-Offs or Class D Charge-Offs paid on such day, (c) Shared Principal
Collections allocable to the Class B Certificates, if any, and (d) the
product of the ABC Fixed/Floating Allocation Percentage and the aggregate
amount of Principal Collections collected during the preceding Monthly
Period, and
(ii) the amount, if any, by which (x) the "Class B Controlled
Distribution Amount" which is equal to the sum of the Class B Controlled
Amortization Amount and any existing Class B Deficit Controlled
Amortization Amount exceeds (y) the amount on deposit in the Principal
Account for the account of the Class B Certificateholders. The term "Class
B Deficit Controlled Amortization Amount" means zero on the initial
Distribution Date and, on any subsequent Distribution Date, the excess, if
any, of the amount determined under clause (ii) above over the amount
determined under clause (x) above with respect to the related Monthly
Period.
Although it is anticipated that principal payments will be made to Class A
Certificateholders in an amount equal to the Class A Controlled Amortization
Amount on each Distribution Date beginning on the Distribution
Date and ending on the Distribution Date and to the Class B
Certificateholders in an amount equal to the Class B Controlled Amortization
Amount beginning on the Distribution Date and ending on the
Distribution Date, no assurance can be given that collections on
the Receivables will be sufficient to pay the full amount of the applicable
Controlled Amortization Amount on each such Distribution Date.
Should a Pay Out Event occur and the Early Amortization Period commence, the
Class A Certificateholders will be entitled to receive monthly payments of
principal as described above, until the Class A Invested Amount is paid in full
or until the Termination Date. Thereafter, on and after the Class B
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<PAGE>
Principal Payment Commencement Date, the Class B Certificateholders will be
entitled to receive monthly payments of principal as described above, until the
Class B Invested Amount is paid in full or until the Termination Date.
Thereafter, on and after the Class C Principal Payment Commencement Date, the
Class C Certificateholders will be entitled to receive monthly payments of
principal, until the Class C Invested Amount is paid in full or until the
Termination Date. A "Pay Out Event" occurs, either automatically or after
specified notice, upon (a) the failure of the Transferor to make certain
payments or transfers of funds for the benefit of the Certificateholders or to
observe or perform in any material respect certain other covenants within the
time periods stated in the Pooling and Servicing Agreement, (b) material
breaches of certain representations, warranties, or covenants of the Transferor
which remain uncured after grace periods specified in the Pooling and Servicing
Agreement, (c) certain bankruptcy or insolvency events relating to the
Transferor or the Company, (d) the occurrence of a Servicer Default that would
have a material adverse effect on the Certificateholders, (e)[ (x) the
Transferor Interest being less than the Minimum Transferor Interest,] (y) (i)
the Series Allocation Percentage of the sum of the total amount of Principal
Receivables plus amounts on deposit in the Excess Funding Account being less
than (ii) the sum of the aggregate outstanding principal amounts of the Class A
Certificates, the Class B Certificates, the Class C Certificates and the Class
D Certificates or (z) the total amount of Principal Receivables and the amount
on deposit in the Excess Funding Account being less than the Minimum Aggregate
Principal Receivables, in each case as of any Determination Date, (f) the Trust
becoming subject to regulation as an "investment company" within the meaning of
the Investment Company Act, (g) a reduction in the average of the Portfolio
Yields for any three consecutive Monthly Periods to a rate which is less than
the weighted average of the Base Rates for such three consecutive Monthly
Periods or (h) the amount on deposit in the Excess Funding Account as a
percentage of the sum of the aggregate amount of Principal Receivables plus the
amount on deposit in the Excess Funding Account being equal to or greater than
% on the last day of three consecutive Monthly Periods. See "Description of
the Offered Certificates--Pay Out Events."
The following table sets forth the highest and lowest monthly payment rates
("MPR") for the receivables originated by the Company from dealers during any
month in the period shown and the average monthly payment rates for such
receivables for all months during the periods shown, in each case calculated by
dividing the total collections during a given month by total opening monthly
balances of such receivables during the periods shown and expressing such
amounts as a percentage. Payment rates shown in the table are based on amounts
which would be deemed payments of Principal Receivables with respect to such
receivables.
[Table to be provided]
The amount of collections of Receivables may vary from month to month due to
seasonal fluctuations in sales of manufactured homes and other factors. There
can be no assurance that Principal Collections with respect to the Trust, and
thus the rate at which the Certificateholders could expect to receive payments
of principal on their Certificates during the Amortization Period, will be
similar to the historical experience set forth above. If a Pay Out Event
occurs, the average life and maturity of the Offered Certificates could be
significantly reduced.
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<PAGE>
POOL FACTOR AND RELATED INFORMATION
The "Class A Pool Factor" and the "Class B Pool Factor" are each a seven-
digit decimal, which the Servicer will compute monthly, expressing as of each
Record Date the Class A Invested Amount as a proportion of the Class A Invested
Amount as of the date of initial issuance of the Offered Certificates (the
"Closing Date") or the Class B Invested Amount as a proportion of the Class B
Invested Amount as of the Closing Date. On the Closing Date, the Class A Pool
Factor and the Class B Pool Factor will each be 1.0000000 and will remain
unchanged during the Revolving Period, except in certain limited circumstances.
Thereafter, on and after the beginning of the Amortization Period, the Class A
Pool Factor will decline to reflect reductions in the Class A Invested Amount
and on and after the Class B Principal Payment Commencement Date, the Class B
Pool Factor will decline to reflect reductions in the Class B Invested Amount.
A Certificateholder's pro rata interest in the Principal Receivables in the
Trust for a given month can be determined by multiplying the denomination of
the holder's Certificate by the applicable Pool Factor for that month.
Pursuant to the Pooling and Servicing Agreement, monthly reports concerning
the Class A Invested Amount, the Class A Pool Factor, the Class B Invested
Amount and the Class B Pool Factor and various other items of information will
be made available to the Class A Certificateholders and the Class B
Certificateholders, respectively. See "Description of the Offered
Certificates--Reports to Certificateholders."
USE OF PROCEEDS
The Trustee, on behalf of the Trust, will receive the Receivables from the
Transferor and, in exchange therefor, will issue the Exchangeable Transferor
Certificate, the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates to or upon the order of the
Transferor. The Transferor will apply the entire net proceeds received from the
sale of the Offered Certificates, which is expected to be approximately
$ , to pay the purchase price of the Receivables.
DESCRIPTION OF THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and Servicing
Agreement and the Series 1995-1 Supplement. Pursuant to the Pooling and
Servicing Agreement, the Transferor and the Trustee may execute additional
Supplements in order to issue additional Series.
GENERAL
The Offered Certificates will represent undivided interests in certain assets
of the Trust, including the right to the investor allocation percentage of all
Obligor payments on the Receivables in the Trust. Each Class A Certificate and
Class B Certificate represents the right to receive payments of interest at the
Class A Certificate Rate or the Class B Certificate Rate, as the case may be,
funded from Available Series Interest Collections and the right to receive
payments of principal after the beginning of the Amortization Period, with
respect to the Class A Certificates, and on and after the Class B Principal
Payment Commencement Date, with respect to the Class B Certificates, in each
case funded from Principal Collections allocated to the Class A
Certificateholders' Interest or the Class B Certificateholders' Interest, as
the case may be.
The Transferor will own the Exchangeable Transferor Certificate and the Class
D Certificates. The Exchangeable Transferor Certificate will represent an
undivided interest in the Trust, including the right to a percentage (the
"Transferor Percentage") of all Obligor payments on the Receivables in the
Trust equal to 100% minus the sum of the applicable investor allocation
percentages (which shall not exceed 100%) for all Series of certificates then
outstanding. See "--Certain Matters Regarding the Transferor and the Servicer."
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During the Revolving Period, the amount of the Invested Amount in the Trust
will remain constant except under certain limited circumstances. See "--
Defaulted Receivables." The amount of Principal Receivables in the Trust,
however, will vary each day as new Receivables arise in the Accounts and other
Receivables are paid. The amount of the Transferor Interest (or the amount in
the Excess Funding Account) will fluctuate each day, therefore, to reflect the
changes in the amount of the Principal Receivables in the Trust. During the
Amortization Period, the Invested Amount will decline as dealer payments of
Principal Receivables are collected and held for distribution or distributed to
the Certificateholders. As a result, the Transferor Interest will generally
increase each month during the Amortization Period to reflect the reductions in
the Invested Amount of such Series and will also change to reflect the
variations in the amount of the Principal Receivables in the Trust. The
Transferor Interest may be reduced as the result of an Exchange. See "--
Exchanges."
Each Class of Offered Certificates initially will be represented by
certificates registered in the name of the nominee of DTC (together with any
successor depository selected by the Transferor, the "Depository," except as
set forth below. Beneficial interests in each Class of Offered Certificates
will be available for purchase in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof in book-entry form only. The Transferor
has been informed by DTC that DTC's nominee will be Cede & Co. Accordingly,
Cede & Co. is expected to be the holder of record of the Offered Certificates.
Unless and until Definitive Certificates are issued under the limited
circumstances described herein, no Certificate Owner acquiring an interest in
any Class of Offered Certificates will be entitled to receive a certificate
representing such Certificate Owner's interest in such Certificates. Until such
time, all references herein to actions by Certificateholders of any Class of
Offered Certificates will refer to actions taken by the Depository upon
instructions from its participating organizations ("Participants") and all
references herein to distributions, notices, reports, and statements to
Certificateholders of any Class of Offered Certificates will refer to
distributions, notices, reports, and statements to the Depository or its
nominee, as the registered holder of the Offered Certificates of such Class,
for distribution to Certificate Owners of such Class in accordance with the
Depository's procedures. See "--Book-Entry Registration" and "--Definitive
Certificates."
BOOK-ENTRY REGISTRATION
With respect to each Class of Offered Certificates in book-entry form,
Certificateholders may hold their Certificates through DTC (in the United
States) or CEDEL or Euroclear (in Europe), which in turn hold through DTC, if
they are participants of such systems, or indirectly through organizations that
are participants in such systems.
Cede, as nominee for DTC, will hold the global certificates. CEDEL and
Euroclear will hold omnibus positions on behalf of the CEDEL Participants and
the Euroclear Participants, respectively, through customers' securities
accounts in CEDEL's and Euroclear's names on the books of their respective
depositaries (collectively, the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the Depositaries' names on the
books of DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities for its Participants ("DTC Participants") and facilitates the
clearance and settlement among Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Participants include securities brokers
and dealers, banks, trust companies, clearing corporations, and certain other
organizations. Indirect access to the DTC system is also available to others
such as securities brokers and dealers, banks, and trust companies that dear
through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
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Transfers between DTC Participant will occur in accordance with DTC rules.
Transfers between CEDEL Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly through
DTC in the United States, on the one hand, and directly or indirectly through
CEDEL Participants or Euroclear Participants on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits or securities in CEDEL or Euroclear
as a result of a transaction with a DTC Participant will be made during the
subsequent securities settlement processing, dated the business day following
the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant
CEDEL Participant or Euroclear Participant on such business day. Cash received
in CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following
settlement in DTC.
Purchases of Certificates under the DTC system must be made by or through
Participants, which will receive a credit for the Certificates on DTC's
records. The ownership interest of each actual Certificate Owner is in turn to
be recorded on the Participants' and Indirect Participants' records.
Certificate Owners will not receive written confirmation from DTC of their
purchase, but Certificate Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Participant or Indirect Participant through which the
Certificate Owner entered into the transaction. Transfers of ownership
interests in the Certificates are to be accomplished by entries made on the
books of Participants acting on behalf of Certificate Owners. Certificate
Owners will not receive certificates representing their ownership interest in
Certificates, except in the event that use of the book-entry system for the
Certificates is discontinued.
To facilitate subsequent transfers, all Certificates deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Certificates with DTC and their registration in the
name of Cede & Co. effects no change in beneficial ownership. DTC has no
knowledge of the actual Certificate Owners of the Certificates; DTC's records
reflect only the identity of the Participants to whose accounts such
Certificates are credited, which may or may not be the Certificate Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Certificate Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to Certificates.
Under its usual procedures, DTC mails an omnibus proxy to the issuer as soon as
possible after the record date, which assigns Cede & Co.'s consenting or voting
rights to those Participants to whose accounts the Certificates are credited on
the record date (identified in a listing attached thereto).
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Principal and interest payments on the Certificates will be made to DTC.
DTC's practice is to credit Participants' accounts on the Distribution Date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the Distribution Date.
Payments by Participants to Certificate Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee or
the Transferor, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Trustee, disbursement of such payments to Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Certificate Owners shall be the responsibility of Participants and Indirect
Participants.
DTC may discontinue providing its services as securities depository with
respect to the Certificates at any time by giving reasonable notice to the
Transferor or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, Definitive Certificates are
required to be printed and delivered. The Transferor may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depository). In that event, Definitive Certificates will be printed
and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Transferor believes to be reliable, but
the Transferor takes no responsibility for the accuracy thereof.
CEDEL S.A. ("CEDEL") is incorporated under the laws of Luxembourg as a
professional depository. CEDEL holds securities for its participating
organizations ("CEDEL Participants") and facilitates the clearance and
settlement of securities transactions between CEDEL Participants through
electronic book-entry changes in accounts of CEDEL Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled by CEDEL in any of 28 currencies, including United States dollars.
CEDEL provides to its CEDEL Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. CEDEL interfaces with domestic
markets in several countries. As a professional depository, CEDEL is subject to
regulations by the Luxembourg Monetary Institute. CEDEL Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include the underwriters of any Series
of Certificates. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that dear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Transactions may now be
settled in any of 32 currencies, including United States dollars. The Euroclear
System includes various other services, including securities lending and
borrowing and interfaces with domestic markets in several countries generally
similar to the arrangements for cross-market transfers with DTC described
above. The Euroclear System is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office (the "Euroclear Operator" or "Euroclear"), under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear system on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the underwriters of any Series of Certificates. Indirect access
to the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear Participant, either directly
or indirectly.
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The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian
Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants
and has no record of or relationship with persons holding through Euroclear
Participants.
Distributions with respect to Certificates held through CEDEL or Euroclear
will be credited to the cash accounts of CEDEL Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. CEDEL or the Euroclear Operator, as the case may be, will take any
other action permitted to be taken by a Certificateholder under the related
Pooling and Servicing Agreement on behalf of a CEDEL Participant or a Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect such actions on its behalf
through DTC.
Although DTC, CEDEL and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Certificates among participants of DTC, CEDEL
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
DEFINITIVE CERTIFICATES
The Offered Certificates of each Class will be issued in such registered,
certificated form to the Certificate Owners of such Class or their nominees
("Definitive Certificates"), rather than to the Depository or its nominee, only
if (i) the Transferor advises the Trustee in writing that the Depository is no
longer willing or able to discharge properly its responsibilities as Depository
with respect to the Certificates of such Class, and the Trustee or the
Transferor is unable to locate a qualified successor, (ii) the Transferor, at
its option, advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository, or (iii) after the occurrence of a
Servicer Default, Certificate Owners representing not less than 50% of the
Invested Amount of such Class advise the Trustee and the Depository through
Participants in writing that the continuation of a book-entry system through
the Depository is no longer in the best interest of the Certificate Owners of
such Class.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Depository is required to notify all Participants of
the availability through the Depository of Definitive Certificates. Upon
surrender by the Depository of the definitive certificate representing the
Certificates of the affected Class and instructions for registration, the
Trustee will issue the Certificates of such Class as Definitive Certificates,
and thereafter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Pooling and Servicing Agreement.
Distribution of principal and interest on the Offered Certificates will be
made by the Trustee directly to Certificateholders in accordance with the
procedures set forth herein and in the Pooling and Servicing Agreement.
Interest payments and any principal payments on each Distribution Date will be
made to Certificateholders in whose names the Definitive Certificates were
registered at the dose of business on the related Record Date. Distributions
will be made by check mailed to the address of such Certificateholder as
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it appears on the register maintained by the Trustee. The final payment on any
Offered Certificate, however, will be made only upon presentation and surrender
of such Certificate at the office or agency specified in the notice of final
distribution to Certificateholders. The Trustee will provide such notice to
registered Certificateholders mailed not later than the fifth day of the month
of such final distributions.
Definitive Certificates will be transferable and exchangeable at the offices
of the transfer agent and registrar, which initially will be the Trustee (in
such capacity, the "Transfer Agent and Registrar"). No service charge will be
imposed for any registration of transfer or exchange, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith. The Transfer Agent and
Registrar will not be required to register the transfer or exchange of
Definitive Certificates for the period from the Record Date preceding the due
date for any payment to the Distribution Date with respect to such Definitive
Certificates.
INTEREST PAYMENTS
Interest will accrue on the outstanding principal balance of each Class of
the Certificates at the applicable Certificate Rate from the Closing Date.
Interest will be distributed on , 1995, and on each Distribution
Date thereafter to Certificateholders, to the extent of Available Series
Interest Collections. Interest payments on the Class A Certificates and the
Class B Certificates on any Distribution Date will be calculated on the
outstanding principal balance of the Class A Certificates or the outstanding
principal balance of the Class B Certificates, as applicable, as of the
preceding Record Date, except that interest for the first Distribution Date
will accrue at the applicable Certificate Rate on the initial principal balance
of the Class A Certificates or the initial principal balance of the Class B
Certificates from the Closing Date.
The Class A Certificates will bear interest at the rate of % per annum
above LIBOR determined as set forth below for the period from
through , and at a rate equal to % per annum above LIBOR
determined as set forth below for the period from through
and with respect to each Interest Accrual Period thereafter,
provided, however, that the rate at which interest will accrue on the Class A
Certificates will in no event exceed % per annum. The Class B Certificates
will bear interest at the rate of % per annum above LIBOR determined as set
forth below for the period from through , and at a
rate equal to % per annum above LIBOR determined as set forth below for the
period from through and with respect to each Interest
Accrual Period thereafter, provided, however, that the rate at which interest
will accrue on the Class B Certificates will in no event exceed % per annum.
The Class C Certificates will bear interest at a rate equal to a specified
margin in excess of LIBOR determined as set forth below; provided, however,
that the rate at which interest will accrue on the Class C Certificates will in
no event exceed % per annum.
The Trustee will determine LIBOR on for the period from
through and will determine LIBOR for each Interest
Accrual Period following the initial Interest Accrual Period on the second
business day prior to the Distribution Date on which such Interest Accrual
Period commences (each, a "LIBOR Determination Date"). For purposes of
calculating LIBOR, a business day is any day on which banks in London and New
York are open for the transaction of international business. The Trustee will
determine LIBOR in accordance with the following provisions:
(i) On each LIBOR Determination Date, the Trustee will determine LIBOR on
the basis of quotations of the offered rates for one-month United States
dollar deposits following the LIBOR Determination Date provided by four
major banks in the London interbank market selected by the Servicer (the
"Reference Banks") as of 11:00 a.m. (London time) as such quotations appear
on the Telerate Page 3875 of the Dow Jones Telerate Service (or such other
page as may replace Telerate Page 3875 on that service for the purpose of
displaying London interbank offered rates of major banks). LIBOR as
determined by the Trustee is the arithmetic mean of such quotations
(rounded, if necessary, to the nearest multiple of 0.0625% per annum).
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(ii) If, on any LIBOR Determination Date, at least two but fewer than all
of the Reference Banks provide quotations, LIBOR will be determined in
accordance with clause (i) above on the basis of the offered quotations of
those Reference Banks providing such quotations.
(iii) If, on the LIBOR Determination Date, only one or none of the
Reference Banks provides such offered quotations, LIBOR will be:
(a) the rate per annum (rounded as aforesaid) that the Trustee
determines to be either (x) the arithmetic mean of the offered
quotations that leading banks in The City of New York selected by the
Servicer are quoting on the relevant LIBOR Determination Date for one-
month United States dollar deposits to the principal London office of
each of the Reference Banks or those of them (being at least two in
number) to which such offered quotations are, in the opinion of the
Servicer, being so made or (y) in the event the Trustee can determine
no such arithmetic mean, the arithmetic mean of the offered quotations
that leading banks in The City of New York selected by the Servicer are
quoting on such LIBOR Determination Date to leading European banks for
one-month United States dollar deposits; or
(b) if the banks selected as aforesaid by the Servicer are not
quoting as described in clause (a) above, LIBOR for such Interest
Accrual Period will be LIBOR as determined on the previous LIBOR
Determination Date.
The Class A Certificate Rate and the Class B Certificate Rate applicable to
the then current and immediately preceding Interest Accrual Period may be
obtained by telephoning the Trustee at its Corporate Trust Office at .
Following the listing of the Offered Certificates on the Luxembourg Stock
Exchange, the Trustee will cause the Class A Certificate Rate and the Class B
Certificate Rate applicable to an Interest Accrual Period to be provided to the
Luxembourg Stock Exchange as soon as possible after its determination but in no
event later than the first day of such Interest Accrual Period.
Interest on the Class A Certificates and the Class B Certificates will be
calculated on the basis of the actual number of days in the Interest Accrual
Period and a 360 day year.
PRINCIPAL PAYMENTS
During the Revolving Period (which begins on the Closing Date and ends on the
day before the Amortization Period begins), no principal payments will be made
to the Certificateholders. During the Amortization Period, principal will be
paid to the Principal Account on each business day and such amounts will be
distributed, first to the Class A Certificateholders until the Class A Invested
Amount is paid in full, then to the Class B Certificateholders until the Class
B Invested Amount is paid in full, then to the Class C Certificateholders until
the Class C Invested Amount is paid in full, and finally to the Class D
Certificateholders until the Class D Invested Amount is paid in full. The
amount of principal distributed with respect to the Class A Certificates on
each Distribution Date during the Controlled Amortization Period shall not
exceed the Class A Controlled Distribution Amount. The amount of principal
distributed with respect to the Class B Certificates during the Controlled
Amortization Period shall not exceed the Class B Controlled Distribution
Amount. See "--Pay Out Events" for a discussion of events which might lead to
the commencement of the Amortization Period prior to the first day of the
Monthly Period. See""--Application of Collections" for a
discussion of the method by which Principal Collections are allocated during
the Amortization Period.
Principal Collections for any Monthly Period allocated to the Class A
Invested Amount, the Class B Invested Amount and the Class C Invested Amount
will first be used to cover, with respect to any Monthly Period during the
Amortization Period, required deposits into the Principal Account for the
benefit of the Class A Certificateholders. On and after the Class B Principal
Payment Commencement Date, Principal Collections for any Monthly Period
allocated to the Class B Invested Amount and the Class C Invested Amount will
first be used to cover required deposits into the Principal Account for the
benefit of the Class B Certificateholders. On and after the Class C Principal
Payment Commencement Date, Principal Collections
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for any Monthly Period allocated to the Class C Invested Amount will first be
used to cover required deposits into the Principal Account for the benefit of
the Class C Certificateholders. The Servicer will determine the amount of
Principal Collections for any business day allocated to the Offered
Certificates and remaining after covering required deposits or payments of
principal to the Certificateholders and any similar amount remaining with
respect to certificates of any other Series (other than amounts allocated to
Transferor Retained Classes) (collectively, "Shared Principal Collections").
The Servicer will allocate the Shared Principal Collections to cover any
scheduled or permitted principal distributions to certificateholders and
deposits to principal funding accounts, if any, for any Series that have not
been covered out of the Principal Collections allocable to such Series and
certain other amounts ("Principal Shortfalls"). Shared Principal Collections
will not be used to cover investor charge-offs for any Series. If Principal
Shortfalls exceed Shared Principal Collections on any business day, Shared
Principal Collections will be allocated pro rata among the applicable Series
based on the relative amounts of Principal Shortfalls. To the extent that
Shared Principal Collections exceed Principal Shortfalls, the balance will,
subject to certain limitations, be paid to the holder of the Exchangeable
Transferor Certificate.
INTEREST COLLECTIONS; PRINCIPAL COLLECTIONS
The Servicer will allocate the aggregate amount of Collections available in
the Collection Account (or shall instruct the Trustee to so allocate from
amounts on deposit in the Collection Account if all Collections are being
deposited therein as described below under "--Application of Collections;
Allocations") on each business day to Interest Collections and Principal
Collections. "Interest Collections" are calculated as the sum of (A) all
collections of interest and other fees on the Receivables, (B) all Imputed
Yield Collections (if a Discount Rate is then in effect), (C) investment
earnings on amounts on deposit in the Excess Funding Account on such business
day and (D) Recoveries on such business day. "Principal Collections" are such
Collections other than Interest Collections.
SUBORDINATION OF THE CLASS B CERTIFICATES
The Class B Certificates will be subordinated to the extent necessary to fund
certain payments with respect to the Class A Certificates. To the extent the
Class B Invested Amount is reduced, the percentage of Interest Collections
allocated to the Class B Certificateholders in subsequent Monthly Periods will
be reduced. Moreover, to the extent the amount of such reduction in the Class B
Invested Amount is not reimbursed, the amount of principal distributable to the
Class B Certificateholders will be reduced.
The Class C Certificates will be subordinated to the extent necessary to fund
certain payments with respect to the Class A Certificates and the Class B
Certificates. To the extent the Class C Invested Amount is reduced, the
percentage of Interest Collections allocated to the Class C Certificateholders
in subsequent Monthly Periods will be reduced. Moreover, to the extent the
amount of such reduction in the Class C Invested Amount is not reimbursed, the
amount of principal distributable to the Class C Certificateholders will be
reduced.
If, on any Determination Date, the aggregate Investor Default Amount, if any,
for each business day in the preceding Monthly Period exceeds (a) the aggregate
amount of Available Series Interest Collections applied to the payment thereof
as described in clauses (v) and (vi) of "--Application of Collections--Payment
of Fees, Interest, and Other Items," (b) the amount of Transferor Interest
Collections and Excess Interest Collections allocated thereto as described in
"--Reallocation of Cash Flows," and (c) the amount of Reallocated Principal
Collections allocated with respect thereto as described in "--Reallocated
Principal Collections," the Class D Invested Amount will be reduced by the
amount by which such aggregate Investor Default Amount exceeds the amount
applied with respect thereto during the preceding Monthly Period. Such
reductions of the Class D Invested Amount will thereafter be reimbursed and the
Class D Invested Amount increased on each business day by the amount, if any,
of Available Series Interest Collections and Excess Interest Collections
allocated and available for that purpose.
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In the event that any such reduction of the Class D Invested Amount would
cause the Class D Invested Amount to be a negative number, the Class D Invested
Amount will be reduced to zero and the Class C Invested Amount will be reduced
by the amount by which the Class D Invested Amount would have been reduced
below zero, but not more than the remaining aggregate Investor Default Amount
for such Monthly Period. Such reductions of the Class C Invested Amount will
thereafter be reimbursed and the Class C Invested Amount increased on each
business day by the amount, if any, of Available Interest Collections and
Excess Interest Collections for such business day allocated and available for
that purpose.
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C Invested
Amount will be reduced to zero and the Class B Invested Amount will be reduced
by the amount by which the Class C Invested Amount would have been reduced
below zero, but not more than the remaining aggregate Investor Default Amount
for such Monthly Period. Such reductions of the Class B Invested Amount will
thereafter be reimbursed and the Class B Invested Amount increased on each
business day by the amount, if any, of Available Series Interest Collections
and Excess Interest Collections for such business day allocated and available
for that purpose. If the Class B Invested Amount is reduced to zero, the Class
A Invested Amount will be reduced by the amount by which the Class B Invested
Amount would have been reduced below zero, but not more than the remaining
aggregate Investor Default Amount for such Monthly Period. Such reductions of
the Class A Invested Amount will thereafter be reimbursed and the Class A
Invested Amount increased on each business day by the amount, if any, of
Available Series Interest Collections and Excess Interest Collections allocated
and available for that purpose. See "--Reallocation of Cash Flows," "--
Reallocated Principal Collections" and "--Investor Charge-Offs."
TRANSFER AND ASSIGNMENT OF RECEIVABLES
On the Closing Date, the Transferor will transfer and assign to the Trust all
of its right, title, and interest in and to the Receivables outstanding as of
the Closing Date, all of the Receivables thereafter arising in the Accounts and
the proceeds of all of the foregoing. Prior to such transfer and assignment and
pursuant to the Purchase Agreement, the Company will contribute and sell to the
Transferor all its right, title and interest in and to the Receivables existing
as of the Cut-Off Date and all the Receivables arising in the Accounts from
time to time thereafter. On the Closing Date, and concurrently with the
transfer and assignment of the Receivables to the Trust, the Trustee will
authenticate the Certificates and deliver the Certificates to the Transferor
which will in turn deliver the Offered Certificates to the Underwriters against
payment of the net proceeds of the sale of the Offered Certificates. The
Trustee will also authenticate and deliver the Exchangeable Transferor
Certificate to the Transferor.
The Company, for itself and as Servicer, will identify in its computer files
that the Receivables have been assigned to the Trust. The Company, as Servicer,
will retain and will not deliver to the Trustee any other records or agreements
relating to the Receivables. The records and agreements relating to the
Receivables will not be segregated from those relating to other accounts and
receivables of the Company and the physical documentation relating to
Receivables will not be stamped or marked to reflect the transfer of
Receivables to the Trust. The Trustee will have reasonable access to such
records and agreements as required by applicable law or to enforce the rights
of the Certificateholders. The Company will file one or more UCC-1 financing
statements in accordance with the UCC to perfect the Transferor's interest in
the Receivables, as applicable. The Transferor, in turn, will file one or more
UCC-1 financing statements in accordance with applicable state law to perfect
the Trust's interest in the Receivables. See "Certain Legal Aspects of the
Receivables."
EXCHANGES
The Pooling and Servicing Agreement provides for the Trustee to issue two
types of certificates: (i) one or more Series of certificates, each of which
may have one or more classes, and (ii) the Exchangeable Transferor Certificate.
The Exchangeable Transferor Certificate will evidence the Transferor Interest,
will initially be held by the Transferor, and will be transferable only as
provided in the Pooling and Servicing
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Agreement. The Pooling and Servicing Agreement also provides that, pursuant to
any one or more Supplements, the holder of the Exchangeable Transferor
Certificate may tender the Exchangeable Transferor Certificate and the
certificates evidencing any Series of certificates, to the Trustee in exchange
for one or more new Series and a reissued Exchangeable Transferor Certificate.
Under the Pooling and Servicing Agreement, the holder of the Exchangeable
Transferor Certificate may define, with respect to any newly issued Series,
certain terms including: (i) its name or designation; (ii) its initial invested
amount (or method for calculating such amount); (iii) its certificate rate (or
the method of allocating interest payments or other cash flows to such Series);
(iv) the closing date; (v) the rating agency or agencies, if any, rating the
Series; (vi) the interest payment date or dates and the date or dates from
which interest shall accrue; (vii) the name of the clearing agency, if any;
(viii) the method for allocating collections to certificateholders of such
Series with respect to Principal Collections, Interest Collections, and
Defaulted Receivables and the method by which the principal amount of such
Series will amortize or accrue; (ix) the names of any accounts to be used by
such Series and the terms governing the operation of any such accounts; (x) the
percentage used to calculate monthly servicing fees; (xi) the Minimum
Transferor Interest; (xii) the Enhancement provider, if applicable, and the
terms of any Enhancement with respect to such Series; (xiii) the base rate
applicable to such Series; (xiv) the terms on which the certificates of such
Series may be repurchased or remarketed to other investors; (xv) the
termination date of such Series; (xvi) any deposit into any account provided
for such Series; (xvii) the number of classes of such Series and, if more than
one class, the rights and priorities of each such class; (xviii) the fees, if
any, to be included in funds available to certificateholders in such Series;
(xix) the subordination, if any, of such new Series with respect to any other
Series; (xx) the rights, if any, of the holder of the Exchangeable Transferor
Certificate that have been transferred to the holders of such Series; (xxi) the
pool factor (consisting of a seven-digit decimal expressing the ratio of the
invested amount to the initial invested amount); (xxii) the Minimum Aggregate
Principal Receivables; (xxiii) whether such Series will be part of a group or
subject to being paired with any other prefunded Series; (xxiv) whether such
Series will be prefunded; and (xxv) any other relevant terms, including whether
or not such Series will be pledged as collateral for an issuance of any other
securities, including commercial paper (all such terms, the "Principal Terms"
of such Series). None of the Transferor, the Servicer, the Trustee, or the
Trust is required or intends to obtain the consent of any Certificateholder to
issue any additional Series or in connection with the determination of the
Principal Terms thereof. However, as a condition of an Exchange, the holder of
the Exchangeable Transferor Certificate will deliver to the Trustee written
confirmation that the Exchange will not result in any Rating Agency reducing or
withdrawing its rating of any outstanding Series, including the Offered
Certificates. The Transferor may offer any Series to the public or other
investors in transactions either registered under the Securities Act or exempt
from registration thereunder, directly, through one or more underwriters or
placement agents, in fixed-price offerings, in negotiated transactions, or
otherwise. Any such Series may be issued in fully registered or book-entry form
in minimum denominations determined by the Transferor. The Certificates
represent the Series initially issued by the Trust. The Transferor presently
intends to offer, from time to time, additional Series.
The Pooling and Servicing Agreement provides that the holder of the
Exchangeable Transferor Certificate may perform Exchanges and define the
Principal Terms of each Series, including the period during which amortization
of the principal amount thereof is intended to occur, which period may have a
different length and begin on a different date than such period for any other
Series. Accordingly, one or more Series may be in their amortization periods
while other Series are not. Moreover, any Series may have the benefit of an
Enhancement that is available only to such Series. Under the Pooling and
Servicing Agreement, the Trustee will hold any such form of Enhancement only on
behalf of the Series with respect to which it relates. Likewise, with respect
to each such form of Enhancement, the holder of the Exchangeable Transferor
Certificate may deliver a different form of Enhancement agreement. The Pooling
and Servicing Agreement also provides that the holder of the Exchangeable
Transferor Certificate may specify different coupon rates and monthly servicing
fees with respect to each Series (or a particular class within such Series).
Collections allocated to Interest Receivables not used to pay interest on the
certificates, the monthly servicing fee, the investor default amount, or
investor charge-offs with respect to any Series will be allocated as provided
in such Enhancement agreement, if applicable. The holder of the Exchangeable
Transferor Certificate also has
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the option under the Pooling and Servicing Agreement to vary between Series the
terms upon which a Series (or a particular class within such Series) may be
repurchased by the Transferor or remarketed to other investors. Additionally,
certain Series may be subordinated to other Series, and classes within a Series
may have different priorities. The Series 1995-1 Supplement does not permit the
subordination of the Certificates to any other Series that may be issued by the
Trust (except to the limited extent described herein with respect to Shared
Principal Collections and Excess Interest Collections). There is no limit to
the number of Exchanges that may be performed under the Pooling and Servicing
Agreement. The Trust will terminate only as provided in the Pooling and
Servicing Agreement.
Under the Pooling and Servicing Agreement and pursuant to a Supplement, an
Exchange may occur only upon the satisfaction of certain conditions provided in
the Pooling and Servicing Agreement. Under the Pooling and Servicing Agreement,
the holder of the Exchangeable Transferor Certificate may perform an Exchange
by notifying the Trustee at least five business days in advance of the date
upon which the Exchange is to occur. Under the Pooling and Servicing Agreement,
the notice will state the designation of any Series to be issued on the date of
the Exchange and, with respect to each such Series: (i) its initial principal
amount (or method for calculating such amount), (ii) its certificate rate (or
the method of allocating interest payments or other cash flows to such Series),
and (iii) the provider of the Enhancement, if any, which is expected to provide
credit support with respect to it. The Pooling and Servicing Agreement provides
that on the date of the Exchange the Trustee will authenticate any such Series
only upon delivery to the Trustee of the following: (i) a Supplement specifying
the Principal Terms of such Series, (ii) an opinion of counsel to the effect
that the certificates of such Series will be characterized as indebtedness or
as partnership interests under existing law for federal and applicable state
income tax purposes and that the issuance of such Series will not materially
adversely affect the federal income tax characterization of any outstanding
Series or result in the trust being subject to tax at the entity level for
federal or applicable state tax purposes, (iii) if required by such Supplement,
the form of Enhancement and an appropriate Enhancement agreement with respect
thereto executed by the Transferor and the issuer of the Enhancement, (iv)
written confirmation from each Rating Agency that the Exchange will not result
in such Rating Agency's reducing or withdrawing its rating on any then-
outstanding Series rated by it, (v) the existing Exchangeable Transferor
Certificate and, if applicable, the certificates representing the Series to be
exchanged, and (vi) an officer's certificate of the Transferor stating that,
after giving effect to such Exchange, (a) the Transferor Interest would be at
least equal to the Minimum Transferor Interest, and (b) taking into account the
certificates of the newly issued Series, more than 20% (by Invested Amount and
by value) of the outstanding certificates issued by the Trust with respect to
which no opinion of counsel was issued that the applicable class would be
treated as debt for federal income tax purposes (including the Exchangeable
Transferor Certificate and each Transferor Retained Class) shall, by their
terms, be prohibited from being transferred.
Under the Pooling and Servicing Agreement, the Transferor may also exchange
the Exchangeable Transferor Certificate for a newly issued Exchangeable
Transferor Certificate and a second certificate (a "Supplemental Certificate")
the terms of which will be defined in a supplement upon the satisfaction of
certain conditions provided in the Pooling and Servicing Agreement.
REPRESENTATIONS AND WARRANTIES
The Transferor will make representations and warranties to the Trust relating
to the Accounts, and the Receivables to the effect, among other things, that
(a) as of the Cut-off Date, the Closing Date and the date of issuance of any
other Series (a "Series Issuance Date") (or, in the case of an Additional
Account, as of the Additional [Cut-off Date] and the date the related
Receivables are transferred to the Trust (an "Addition Date")), each Account or
Additional Account was or is an Eligible Account or, if it was or is an
Ineligible Account on such date, such Account is being removed from the Trust
in accordance with the requirements of the Pooling and Servicing Agreement, (b)
as of the Cut-off Date (or as of the Additional Cut-off Date, in the case of
any Additional Accounts) or as of the date any future Receivable is generated
(a "Transfer Date"), each Receivable is an Eligible Receivable or, if such
Receivable is not an Eligible Receivable, such Receivable
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is conveyed to the Trust as described below under "Eligible Accounts and
Eligible Receivables," (c) each Receivable and all Collateral Security conveyed
to the Trust on the Series 1995-1 Closing Date and on each Transfer Date or, in
the case of Additional Accounts, on the Addition Date, and all of the
Transferor's right, title and interest in the Receivables Agreement, have been
conveyed to the Trust free and clear of any liens, and (d) all appropriate
consents and governmental authorizations required to be obtained by the
Transferor in connection with the conveyance of each such Receivable have been
duly obtained. If the Transferor breaches any representation and warranty
described in this paragraph and such breach remains uncured for 30 days or such
longer period as may be agreed to by the Trustee, after the earlier to occur of
the discovery of such breach by the Transferor or the Servicer or receipt of
written notice of such breach by the Seller or the Servicer, and such breach
has a materially adverse effect on the Certificateholders' Interest or the
interests of the holders of other outstanding Series in any Receivable or
Account, the Certificateholders' Interest and such other certificateholders'
interests in such Receivable or, in the case of a breach relating to an
Account, all Receivables in the related Account ("Ineligible Receivables") will
be reassigned to the Transferor on the terms and conditions set forth below and
such Account shall no longer be included as an Account.
Each such Receivable shall be reassigned to the Transferor on or before the
end of the Collection Period in which such reassignment obligation arises by
the Transferor directing the Servicer to deduct the balance of such Receivable
[(discounted by the Discount Factor for the Collection Period preceding such
Determination Date)] from the Pool Balance. In the event that such deduction
would cause the Transferor's Participation Amount to be less than the Trust
Available Subordinated Amount on the preceding Determination Date (after giving
effect to the allocations, distributions, withdrawals and deposits to be made
on such Distribution Date), on the date on which such reassignment is to occur
the Transferor will be obligated to make a deposit into the Collection Account
in immediately available funds in an amount equal to the amount by which the
Transferor's Participation Amount would be less than the Trust Available
Subordinated Amount (the amount of any such deposit being referred to herein as
a "Transfer Deposit Amount"), provided that if the Transfer Deposit Amount is
not so deposited, the principal balance of the related Receivables will be
deducted from the Pool Balance only to the extent the Transferor's
Participation Amount is not reduced below the Trust Available Subordinated
Amount and any principal balance not so deducted will not be reassigned and
will remain part of the Trust. The reassignment of any such Receivable to the
Transferor and the payment of any related Transfer Deposit Amount will be the
sole remedy respecting any breach of the representations and warranties
described in the preceding paragraph with respect to such Receivable available
to Certificateholders or the Trustee on behalf of Certificateholders.
The Transferor will make in the Pooling and Servicing Agreement and related
Series Supplement representations and warranties to the Trust to the effect,
among other things, that as of the Closing Date of such Series (a) the
Transferor is duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has the corporate power and authority to
execute, deliver and perform its obligations under the Pooling and Servicing
Agreement, the Series 1995-1 Supplement, and the Purchase Agreement, (b) the
Transferor is duly qualified to do business and in good standing (or is exempt
from such requirement) in any state required in order to conduct its business
and has obtained all necessary licenses and approvals required under federal
and Delaware law, (c) the execution and delivery of the Pooling and Servicing
Agreement, the Series 1995-1 Supplement, and the Purchase Agreement, and the
consummation of the transactions provided for therein, have been duly
authorized by the Transferor by all necessary corporate action on its part, (d)
the Pooling and Servicing Agreement will constitute a legal, valid and binding
obligation of the Transferor and (e) the transfer of Receivables by it to the
Trust under the Pooling and Servicing Agreement will constitute either a valid
transfer and assignment to the Trust of all right, title and interest of the
Transferor in and to the Receivables (other than Receivables in Additional
Accounts), whether then existing or thereafter created and the proceeds thereof
(including amounts in any of the accounts established for the benefit of
Certificateholders) or the grant of a first priority perfected security
interest in such Receivables (except for certain tax liens) and the proceeds
thereof (including amounts in any of the accounts established for the benefit
of Certificateholders), which is effective as to each such Receivable upon the
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creation thereof. In the event of a breach of any of the representations and
warranties described in this paragraph, either the Trustee or the Holders of
Certificates evidencing undivided interests in the Trust aggregating more than
50% of the aggregate Investor Interest of all Series outstanding may direct the
Transferor to accept reassignment of an amount of Principal Receivables equal
to the invested amount to be reassigned (as described below) within 60 days of
such notice, or within such longer period specified in such notice. The
Transferor will thereupon be obligated to accept reassignment of such
Receivables on a Distribution Date occurring within such applicable period.
Such reassignment will not be required to be made, however, if at any time
during such applicable period, or such longer period, the representations and
warranties shall then be true and correct in all material respects. The amount
to be deposited by the Transferor for distribution to certificateholders in
connection with such reassignment will be equal to the invested amount for all
Series of certificates required to be reassigned on the last day of the Monthly
Period preceding the Distribution Date on which the reassignment is scheduled
to be made, less the amount, if any, previously allocated for payment of
principal to such certificateholders on such Distribution Date, plus an amount
equal to all interest accrued but unpaid on such certificates at the applicable
certificate rate through the last day of the related Interest Accrual Period,
less the amount transferred to the Distribution Account from the Interest
Funding Account in respect of interest on such certificates for the month
ending on such last day of the Monthly Period. The payment of the reassignment
deposit amount and the transfer of all other amounts deposited for the
preceding month in the Distribution Account will be considered a payment in
full of the investor interest for all Series of certificates required to be
repurchased and will be distributed upon presentation and surrender of the
certificates for each such Series. If the Trustee or certificateholders give a
notice as provided above, the obligation of the Transferor to make any such
deposit will constitute the sole remedy available to the Trustee and the
certificateholders with respect to any breach of the Transferor's
representations and warranties.
An "Eligible Account" will be defined to mean, as of the relevant Cut-Off
Date (or, with respect to Additional Accounts, as of their date of designation
for inclusion in the related Trust), each Account owned by the Transferor (a)
which is in existence and maintained with the Company, (b) which is payable in
United States dollars, (c) the dealer on which has provided, as its most recent
billing address, an address located in the United States or its territories or
possessions, (d) which has been originated by the Company in the ordinary
course of business, (e) as to which no amounts have been charged off by the
Company as uncollectible in its customary and usual manner for charging off
such Account as of the Cut-Off Date and, with respect to Additional Accounts,
as of their date of designation for inclusion in the Trust, and (f) the
applicable dealer is not involved in insolvency proceedings. The definition of
Eligible Account may be changed by amendment to the Pooling and Servicing
Agreement without the consent of the Certificateholders if (i) the Transferor
delivers to the Trustee a certificate of an authorized officer to the effect
that, in the reasonable belief of the Transferor, such amendment will not as of
the date of such amendment adversely affect in any material respect the
interest of the Certificateholders, and (ii) such amendment will not result in
a withdrawal or reduction of the rating of any outstanding Series under the
Trust.
An "Eligible Receivable" will be defined to mean each Receivable (a) that was
originated by the Company in the ordinary course of business, (b) that has
arisen under an Eligible Account, (c) that was created in compliance with all
requirements of law applicable thereto, and pursuant to a dealer finance
agreement that complies with all requirements of law applicable thereto, (d)
with respect to which all consents, licenses or authorizations of, or
registrations with, any governmental authority required to be obtained or given
by the Company or the Transferor in connection with the creation of such
Receivable or the transfer thereof to the Trust or the execution, delivery,
creation and performance by the Company of the related dealer finance agreement
have been duly obtained or given and are in full force and effect as of the
date of the creation of such Receivable, (e) as to which, at the time of its
creation, the Transferor had and the Trust will have good and marketable title
free and clear of all liens and security interests (other than certain tax
liens for taxes not then due or which the Transferor is contesting), (f) that
is the legal, valid, binding and assignable payment obligation of the related
dealer, legally enforceable against such dealer in accordance with its terms
(with certain bankruptcy related exceptions), (g) that constitutes "chattel
paper" or a "general
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intangible" under Article 9 of the Uniform Commercial Code as then in effect in
the State of Minnesota, (h) which has the benefit of a Manufacturer Agreement,
(i) as to which at all times following the transfer of such Receivable to the
Trust, the Trust will have good and marketable title thereto free and clear of
all liens arising prior to the transfer or arising at any time, other than
liens permitted pursuant to the Pooling and Servicing Agreement, (j) which has
been the subject of a valid transfer and assignment from the Transferor to the
Trust of all the Transferor's interest therein (including any proceeds
thereof), (k) which will at all times be the legal and assignable payment
obligation of the dealer relating thereto, enforceable against such dealer in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy or other similar laws, (l) which at the time of transfer
to the Trust is not subject to any right of rescission, setoff, or any other
defense (including defenses arising out of violations of usury laws) of the
dealer, (m) as to which, at the time of transfer of such Receivable to the
Trust, the Company and the Transferor have satisfied all their respective
obligations with respect to such Receivable required to be satisfied at such
time, (n) as to which, at the time of transfer of such Receivable to the Trust,
neither the Company nor the Transferor has taken or failed to take any action
which would impair the rights of the Trust or the certificateholders therein,
and (o) which was transferred to the Trust with all applicable governmental
authorization.
It will not be required or anticipated that the Trustee will make any initial
or periodic general examination of the Receivables or any records relating to
the Receivables for the purpose of establishing the presence or absence of
defects, compliance with the Transferor's representations and warranties or for
any other purpose. The Servicer, however, will deliver to the Trustee on or
before March 31 of each year an opinion of counsel with respect to the validity
of the security interest of the Trust in and to the Receivables and certain
other components of the Trust Portfolio.
ADDITION OF ACCOUNTS
As described above under "The Receivables," the Transferor will have the
right to designate, from time to time, Additional Accounts to be included as
Accounts with respect to the Trust. In addition, the Transferor will be
required to designate Additional Accounts if the Pool Balance on the last day
of any Collection Period is less than the Minimum Transferor Interest. The
Transferor will convey to the Trust its interest in all Receivables in such
Additional Accounts, whether such Receivables are then existing or thereafter
created.
Each Additional Account must be an Eligible Account at the time of its
designation. However, Additional Accounts may not be of the same credit quality
as the initial Accounts, and may have been originated by the Company using
credit criteria different from those which were applied by the Company to the
initial Accounts.
A conveyance by the Transferor to the Trust of Receivables in Additional
Accounts is subject to the following conditions, among others: (i) the
Transferor must give the Trustee, each Rating Agency and the Servicer written
notice that such Additional Accounts will be included, which notice must
specify the approximate aggregate amount of the Receivables to be transferred;
(ii) the Transferor must have delivered to the Trustee a written assignment
(including an acceptance by the Trustee on behalf of the Trust for the benefit
of the Certificateholders) as provided in the Agreement relating to such
Additional Accounts (the "Assignment"), and the Transferor must have delivered
to the Trustee a computer file or microfiche list, dated the date of such
Assignment, containing a true and complete list of such Additional Accounts;
(iii) the Transferor must represent and warrant that (x) each Additional
Account is, as of the Addition Date, an Eligible Account, and each Receivable
in such Additional Account is, as of the Addition Date, an Eligible Receivable,
(y) no selection procedures believed by the Transferor to be materially adverse
to the interests of the Certificateholders were utilized in selecting the
Additional Accounts from the available Eligible Accounts, and (z) as of the
Addition Date, the Transferor is not insolvent; (iv) the Transferor must
deliver certain opinions of counsel with respect to the transfer of the
Receivables in the Additional Accounts to the Trust and (v) if the Automatic
Addition Condition is not satisfied, each Rating Agency then rating any Series
of
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Certificates outstanding under the Trust shall have provided written
confirmation that such addition will not result in a reduction or withdrawal of
the rating of the Certificates or any other rated outstanding Series or class
of certificates.
"Automatic Addition Condition" shall mean, with respect to the addition of
Accounts that (i) during the calendar quarter in which such addition occurs,
the number of new Accounts for Dealers that are financing products of the type
already being financed by the Company does not exceed 5% of the number of all
Accounts at the end of the preceding calendar quarter, (ii) during the twelve
months ending at the beginning of such calendar quarter, the number of such new
Accounts does not exceed 20% of the number of all Accounts at the beginning of
such twelve month period, (iii) the average for the three months preceding the
month of such addition of the aggregate balance of Receivables that have been
delinquent for more than 30 days does not exceed 1.25% of the Pool Balance at
the end of the month preceding the month of such addition, and (iv) the
annualized average for such three month period of the net losses incurred in
respect of the Receivables does not exceed 1.75% of the Pool Balance at the end
of the month preceding the month of such addition.
In addition to the periodic reports otherwise required to be filed by the
Servicer with the Commission pursuant to the Exchange Act, the Servicer intends
to file, on behalf of the Trust, a Report on Form 8-K with respect to any
addition to the Trust of Receivables in Additional Accounts that would have a
material effect on the composition of the assets of the Trust.
REMOVAL OF ACCOUNTS
Subject to the conditions set forth in the next succeeding sentence, the
Transferor may, but will not be obligated to, designate from time to time
certain Accounts to be Removed Accounts, all Receivables in which shall be
subject to deletion and removal from the Trust; provided, however, that the
Transferor may not make more than one such designation in any Monthly Period.
The Transferor will be permitted to designate and require reassignment to it of
the Receivables from Removed Accounts only upon satisfaction of the following
conditions: (i) the removal of any Receivables of any Removed Accounts will
not, in the reasonable belief of the Transferor, cause a Pay Out Event to
occur; (ii) the Transferor must have delivered to the Trustee for execution a
written assignment and a computer file or microfiche list containing a true and
complete list of all Removed Accounts identified by account number and the
aggregate amount of the Receivables in such Removed Accounts; (iii) either (a)
the Trust Portfolio is not more than % delinquent and the weighted average
delinquency rate of such Trust Portfolio does not exceed 60 days, or (b) the
Trust Portfolio is not more than % delinquent and the weighted average
delinquency rate of such Trust Portfolio does not exceed 90 days, or (c) the
Trust Portfolio is not more than the specified percentage delinquent and the
weighted average delinquency rate of such Trust Portfolio does not exceed the
number of days specified in the related Prospectus Supplement; (iv) the
Transferor must represent and warrant that no selection procedures believed by
the Transferor to be materially adverse to the interests of the holders of the
Certificates were utilized in selecting the Removed Accounts to be removed from
the Trust; (v) each Rating Agency must have received notice of such proposed
removal of Accounts and the Transferor must have received notice from each
Rating Agency that such proposed removal will not result in a downgrade of its
then current rating for the Certificates; (vi) the aggregate principal amount
of Receivables of the Accounts then existing less the aggregate principal
amount of Receivables of the Removed Accounts must not be less than [the
Minimum Aggregate Principal Receivables]; (vii) the Receivables of the Removed
Accounts must not equal or exceed % of the aggregate principal amount of the
Receivables in the Trust at such time; provided, that if any Series has been
paid in full, the Receivables in such Removed Accounts may equal or
approximately equal the initial Investor Interest or Full Investor Interest, as
applicable, of such Series; and (viii) the Transferor must have delivered to
the Trustee an officer's certificate confirming the items set forth in clauses
(i) through (vii) above. Notwithstanding the above, the Transferor will be
permitted to designate as a Removed Account without the consent of the related
Trustee, Certificateholders or Rating Agencies any Account that has a zero
balance and which the Transferor will remove from its computer file.
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CERTAIN COVENANTS
Pursuant to the Pooling and Servicing Agreement, the Transferor covenants
that, among other things, subject to specified exceptions and limitations, (i)
it will take no action to cause any Receivable to be evidenced by any
instruments or to be anything other than an account, general intangible, or
chattel paper, except in connection with the enforcement or collection of a
Receivable, (ii) except for the conveyances under the Pooling and Servicing
Agreement, it will not sell any Receivable or grant a lien (other than a
Permitted Lien) on any Receivable, (iii) it will comply with the Credit and
Collection Policy and it will not change the terms of such policy or the
Contracts if any such change would, in either case, materially impair the
collectibility of any Receivable, (iv) in the event it receives a collection on
any Receivables, it will pay such collection to the Servicer as soon as
practicable, (v) it will not convey or transfer any Receivable except as
otherwise provided in the Pooling and Servicing Agreement, (vi) it will notify
the Trust promptly after becoming aware of any lien on any Receivable other
than Permitted Liens, (vii) it will take all actions necessary to enforce its
rights and claims under the Purchase Agreement and (viii) except as permitted
by the Pooling and Servicing Agreement, it will not commingle its assets with
those of the Company or any affiliate of the Company.
TRUST ACCOUNTS
The Trustee will establish and maintain with a Qualified Institution in the
name of the Trust, for the benefit of the Certificateholders, two separate
accounts, each in a segregated trust account (which need not be a deposit
account), consisting of an "Interest Funding Account" and a "Principal
Account." The Trustee will also establish a "Distribution Account" for the
benefit of the certificateholders of each Series which will be a non-interest
bearing segregated demand deposit account established with a Qualified
Institution. The Servicer will establish and maintain, in the name of the
Trust, for the benefit of certificateholders of all Series, a "Collection
Account," which is a segregated account established by and maintained by the
Servicer with a Qualified Institution. A "Qualified Institution" is a
depository institution or trust company, which may include the Trustee,
organized under the laws of the United States or any one of the states thereof,
which at all times has a certificate of deposit rating of P-1 by Moody's and of
A-1+ by Standard & Poor's or long-term unsecured debt obligation (other than
such obligation the rating of which is based on collateral or on the credit of
a person other than such institution or trust company) rating of by Moody's
and of by Standard & Poor's and deposit insurance provided by the FDIC, or
a depository institution, which may include the Trustee, which is acceptable to
the Rating Agencies; [provided, however, that no such rating shall be required
of an institution which shall have corporate trust powers and which maintains
the Collection Account, any principal account, any interest funding account or
any other account maintained for the benefit of Certificateholders as a fully
segregated trust account with the trust department of such institution which is
rated at least Baa3 by Moody's.] Funds in the Principal Account and the
Interest Funding Account will be invested, at the direction of the Transferor,
in (i) obligations fully guaranteed by the United States of America, (ii) time
deposits, promissory notes, or certificates of deposit of depository
institutions or trust companies, the certificates of deposit of which are rated
P-1 by Moody's and A-1+ by Standard & Poor's, (iii) commercial paper having, at
the time of the Trust' investment, a rating of P-1 by Moody's and of A-1+ by
Standard & Poor's, (iv) bankers' acceptances issued by any depository
institution or trust company described in clause (ii) above, (v) money market
funds which have the highest rating from, or have otherwise been approved in
writing by, Moody's and Standard & Poor's, (vi) certain open end diversified
investment companies, (vii) Eurodollar time deposits that have been rated P-1
by Moody's and A-1+ by Standard & Poor's, and (viii) any other investment that
each Rating Agency confirms in waiting will not adversely affect its then
current rating of any outstanding Certificates (such investments, "Cash
Equivalents"). Any earnings (net of losses and investment expenses) on funds in
the Interest Funding Account and the Principal Account will be paid to the
Transferor. The Servicer has the revocable power to withdraw funds from the
Collection Account, and to instruct the Trustee to make withdrawals and
payments from the Interest Funding Account and the Principal Account, for the
purpose of carrying out the Servicer' duties under the Pooling and Servicing
Agreement. The agent making payments to the Certificateholders (the "Paying
Agent") has the revocable power to withdraw funds from the Distribution Account
for the purpose of making distributions to Certificateholders. The Paying Agent
initially will be .
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On the Closing Date the Transferor will make an initial deposit to the
Interest Funding Account in an amount equal to the sum of the Class A Monthly
Interest, the Class B Monthly Interest and the Class C Monthly Interest for the
initial Interest Accrual Period.
EXCESS FUNDING ACCOUNT
The Trustee will establish and maintain in the name of the Trust, for the
benefit of the certificateholders of all Series, an "Excess Funding Account"
which is a segregated account established by and maintained by the Servicer
with a Qualified Institution. At any time during which no Series is in an
amortization period (including any early amortization period), or for a Series
in amortization, the principal account, if any, is fully funded for the
applicable period, and the Transferor Interest does not exceed the Minimum
Transferor Interest, funds (to the extent available therefor as described
herein) otherwise payable to the Transferor will be deposited in the Excess
Funding Account on any business day until the Transferor Interest is at least
equal to the Minimum Transferor Interest. Funds on deposit in the Excess
Funding Account will be withdrawn and paid to the Transferor to the extent that
on any day the Transferor Interest exceeds the Minimum Transferor Interest as a
result of the addition of new Receivables to the Trust. Such deposits in and
withdrawals from the Excess Funding Account may be made on a daily basis.
Any funds on deposit in the Excess Funding Account at the beginning of the
Amortization Period will be deposited in the Principal Account as part of Class
A Principal, Class B Principal, or Class C Principal, as applicable, for any
Distribution Date. In the event that more than one Series begins its
amortization period at the same time, amounts on deposit in the Excess Funding
Account will be paid out to each such Series pro rata based on the aggregate
invested amount of each such Series. In addition, no funds allocated to
investor certificates will be deposited in the Excess Funding Account during
any amortization period or early amortization period for any Series until the
Principal Account for such Series for such Distribution Date has been fully
funded or the investor certificates of such Series have been paid in full. A
Pay Out Event will occur if the amount on deposit in the Excess Funding Account
as a percentage of the sum of the aggregate amount of Principal Receivables
plus the amount on deposit in the Excess Funding Account shall equal or exceed
% on the last day of three consecutive Monthly Periods.
Funds on deposit in the Excess Funding Account will be invested by the
Trustee at the direction of the Transferor in Cash Equivalents. On each
Distribution Date, all net investment income earned on amounts in the Excess
Funding Account since the preceding Distribution Date will be withdrawn from
the Excess Funding Account and treated as Interest Collections.
ALLOCATION PERCENTAGES
Pursuant to the Pooling and Servicing Agreement, during each Monthly Period
the Servicer will allocate among the Class A Certificateholders' Interest the
Class B Certificateholders' Interest, the Class C Certificateholders' Interest,
the Class D Certificateholders' Interest, the Transferor Interest, and the
holders of the other Series issued and outstanding from time to time pursuant
to the Pooling and Servicing Agreement and applicable Supplements all Interest
Collections and all Principal Collections and the amount of all Defaulted
Receivables. Interest Collections and the amount of Defaulted Receivables will
be allocated at all times, and Principal Collections will be allocated during
the Revolving Period, to the Class A Certificateholders' Interest, the Class B
Certificateholders' Interest, the Class C Certificateholders' Interest and the
Class D Certificateholders' Interest, based on the percentage equivalent of a
fraction the numerator of which is the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount, or the Class D Invested Amount,
respectively, at the end of the preceding business day and the denominator of
which is the greater of (a) the total amount of Principal Receivables and
amounts on deposit in the Excess Funding Account as of the end of the preceding
business day and (b) with respect to Principal Collections only, the sum of the
numerator for all classes of all Series then outstanding used to calculate the
applicable allocation percentage (the "Class A Floating Allocation Percentage,"
the "Class B Floating Allocation Percentage," the "Class C Floating Allocation
Percentage," and the "Class D Floating Allocation
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Percentage," respectively; the sum of all such percentages, the "Floating
Allocation Percentage"). During the Revolving Period, all Principal Collections
allocable to the Certificates will be allocated and paid to the Transferor
(except for collections applied as Reallocated Principal Collections and Shared
Principal Collections paid to the holders of certificates of other Series, if
any, and except for funds deposited in the Excess Funding Account). On any
business day on or after the Amortization Period Commencement Date, Principal
Collections will be allocated to the Certificateholders' Interest based on the
percentage equivalent of a fraction the numerator of which is the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount or
the Class D Invested Amount, respectively, at the end of the last day of the
Revolving Period and the denominator of which is the greater of (a) the sum of
the aggregate amount of Principal Receivables and the amounts on deposit in the
Excess Funding Account at the end of the preceding business day and (b) the sum
of the numerators used to calculate the allocation percentages with respect to
Principal Collections for all Series (the "Class A Fixed/Floating Allocation
Percentage," the "Class B Fixed/Floating Allocation Percentage," the "Class C
Fixed/Floating Allocation Percentage," and the "Class D Fixed/Floating
Allocation Percentage," respectively; the sum of all such percentages the
"Fixed/Floating Allocation Percentage"). On any business day when Principal
Collections are being allocated for payment to the Class A, Class B or Class C
Certificates, Principal Collections will be allocated to the Class A, Class B
or Class C Certificateholders' Interest based on the percentage equivalent of a
fraction the numerator of which is the sum of the Class A Invested Amount, the
Class B Invested Amount and the Class C Invested Amount at the end of the last
day of the Revolving Period and the denominator of which is the greater of (a)
the sum of the aggregate amount of Principal Receivables and the amount on
deposit in the Excess Funding Account at the end of the preceding business day
and (b) the sum of the numerators used to calculate the allocation percentages
with respect to Principal Receivables for all Series (the "ABC Fixed/Floating
Allocation Percentage").
"Class A Invested Amount" means an amount equal to (a) the initial principal
balance of the Class A Certificates minus (b) the aggregate amount of principal
payments made to Class A Certificateholders prior to such date, and minus (c)
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution
Dates, equal to the amount by which the Class A Invested Amount has been
reduced to fund the Investor Default Amount on all prior Distribution Dates as
described under "--Investor Charge-Offs," and plus (d) the aggregate amount of
Available Series Interest Collections, Transferor Interest Collections, Excess
Interest Collections and Reallocated Principal Collections applied on all prior
Distribution Dates for the purpose of reimbursing amounts deducted pursuant to
the foregoing clause (c).
"Class B Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class B Certificates minus (b) the aggregate
amount of principal payments made to Class B Certificateholders prior to such
date, minus (c) the aggregate amount of Class B Investor Charge-Offs for all
prior Distribution Dates, equal to the amount by which the Class B Invested
Amount has been reduced to fund the Investor Default Amount on all prior
Distribution Dates as described under "--Investor Charge-Offs," minus (d) the
aggregate amount of Reallocated Class B Principal Collections for which neither
the Class D Invested Amount nor the Class C Invested Amount has been reduced
for all prior Distribution Dates, and plus (e) the aggregate amount of
Available Series Interest Collections, Transferor Interest Collections, Excess
Interest Collections and Reallocated Class C Principal Collections and
Reallocated Class D Principal Collections applied on all prior Distribution
Dates for the purpose of reimbursing amounts deducted pursuant to the foregoing
clauses (c) and (d).
"Class C Invested Amount" for any date means an amount equal to (a) the
initial principal balance of the Class C Certificates less the Class C
Percentage of the initial deposit to the Account minus (b) the aggregate amount
of principal payments made to Class C Certificateholders prior to such date,
minus (c) the aggregate amount of Class C Investor Charge-Offs for all prior
Distribution Dates, equal to the amount by which the Class C Invested Amount
has been reduced to fund the Investor Default Amount on all prior Distribution
Dates as described under "--Investor Charge-Offs," minus (d) the aggregate
amount of Reallocated Class C Principal Collections for which the Class D
Invested Amount has not been reduced for
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all prior Distribution Dates, and plus (e) the aggregate amount of Available
Series Interest Collections, Transferor Interest Collections, Excess Interest
Collections, Reallocated Class D Principal Collections and certain other
amounts as may be available applied on all prior Distribution Dates for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses (c)
and (d).
"Class D Invested Amount" means an amount equal to (a) the initial principal
balance of the Class D Certificates, minus (b) the aggregate amount of
principal payments made to Class D Certificateholders prior to such date, minus
(c) the aggregate amount of Class D Investor Charge-Offs for all prior
Distribution Dates, equal to the amount by which the Class D Invested Amount
has been reduced to fund the Investor Default Amount on all prior Distribution
Dates as described under "--Investor Charge-Offs," minus (d) the aggregate
amount of Reallocated Principal Collections for all prior Distribution Dates,
and plus (e) the aggregate amount of Interest Collections, Transferor Interest
Collections, and Excess Interest Collections applied on all prior Distribution
Dates for the purpose of reimbursing amounts deducted pursuant to the foregoing
clause (c).
"Invested Amount" means the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount and the Class D Invested Amount.
"Transferor's Percentage" means (a) when used with respect to Principal
Collections during the Revolving Period and Interest Collections and the amount
of Defaulted Receivables at all times, 100% minus the sum of the Floating
Allocation Percentage and the floating allocation percentages for all other
Series and (b) when used with respect to Principal Collections during the
Amortization Period, 100% minus the sum of the Fixed/Floating Allocation
Percentage and the allocation percentages used with respect to Principal
Collections for all other Series.
As a result of the Floating Allocation Percentage, Interest Collections and
the portion of Defaulted Receivables allocated to the Certificateholders will
change each business day based on the relationship of the Class A Invested
Amount, the Class B Invested Amount, the Class C Invested Amount, and Class D
Invested Amount to the total amount of Principal Receivables and amounts on
deposit in the Excess Funding Account on the preceding business day.
REALLOCATION OF CASH FLOWS
On each business day the Servicer will determine the Required Amount. To the
extent that any amounts are on deposit in the Excess Funding Account on any
business day, the Servicer will determine the Negative Carry Amount, if any.
The Servicer will apply an amount equal to the lesser of (i) the Transferor
Interest Collections on such business day and (ii) the Negative Carry Amount
for such business day in the manner specified for application of Available
Series Interest Collections.
To the extent of any remaining Required Amount, the Servicer will apply all
or a portion of the Excess Interest Collections of other Series with respect to
such business day allocable to the Series 1995-1 Certificates in an amount
equal to the remaining Required Amount. Excess Interest Collections from other
Series allocable to the Series 1995-1 Certificates for any business day will be
equal to the product of (x) Excess Interest Collections available from all
other Series for such business day and (y) a fraction, the numerator of which
is the Required Amount for such business day (as reduced by amounts applied
pursuant to the preceding paragraph) and the denominator of which is the
aggregate amount of shortfalls in required amounts or other amounts to be paid
from available Interest Collections for all Series for such business day.
REALLOCATED PRINCIPAL COLLECTIONS
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class D Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class D Floating Allocation Percentage
or (ii) during an Amortization Period, the Class D Fixed/Floating Allocation
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Percentage and (b) the amount of Principal Collections with respect to [the
related Monthly Period/such business day?] to the following amounts in the
following priority (such collections applied in accordance with clause (a)
below are called "Reallocated Class D Principal Collections"):
(a) an amount equal to the sum of (i) the Class A Required Amount with
respect to the related Monthly Period, (ii) the Class B Required Amount
with respect to the related Monthly Period and (iii) the Class C Required
Amount with respect to the related Monthly Period will be applied first to
the components of the Class A Required Amount, then to the components of
the Class B Required Amount and then to the components of the Class C
Required Amount in the same priority as such components are applied from
Available Series Interest Collections as described in "--Application of
Collections--Payment of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class D Principal Collections) (i)
on business days with respect to the Revolving Period and the Amortization
Period prior to the payment in full of the Class C Invested Amount will be
paid to the Transferor in order to maintain the Class D Invested Amount and
(ii) on business days with respect to an Amortization Period following
payment in full of the Class C Invested Amount will be included in the
funds available to make principal payments to the Class D
Certificateholders until the Class D Invested Amount is paid in full.
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class C Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class C Floating Allocation Percentage
or (ii) during an Amortization Period, the Class C Fixed/Floating Allocation
Percentage and (b) the amount of Principal Collections with respect to the
related [Monthly Period/such business day?] to the following amounts in the
following priority (such collections applied in accordance with clause (a)
below are called "Reallocated Class C Principal Collections"):
(a) an amount equal to the sum of (i) the Class A Required Amount with
respect to the related Monthly Period over the amount of Reallocated Class
D Principal Collections applied with respect thereto for the related
Monthly Period and (ii) the Class B Required Amount with respect to the
related Monthly Period over the amount of Reallocated Class D Principal
Collections applied with respect thereto for the related Monthly Period,
will be applied first to the remaining components of the Class A Required
Amount and then to the remaining components of the Class B Required Amount
in the same priority as such components are applied from Available Series
Interest Collections as described in "--Application of Collections--Payment
of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class C Principal Collections) will,
on business days with respect to the Revolving Period, be applied as Shared
Principal Collections and on business days with respect to an Amortization
Period will be included in the funds available to make principal payments
to the Class A Certificateholders until the Class A Invested Amount is paid
in full and then to the Class B Certificateholders until the Class B
Invested Amount is paid in full and then to the Class C Certificateholders
until the Class C Invested Amount is paid in full.
On each business day, the Servicer will apply or cause the Trustee to apply
an amount, not to exceed the Class B Invested Amount, equal to the product of
(a)(i) during the Revolving Period, the Class B Floating Allocation Percentage
or (ii) during an Amortization Period, the Class B Fixed/Floating Allocation
Percentage and (b) the amount of Principal Collections with respect to [the
related Monthly Period/such business day?] to the following amounts in the
following priority (such collections applied in accordance with clause (a)
below are called "Reallocated Class B Principal Collections" and the sum of
Reallocated Class D Principal Collections, Reallocated Class C Principal
Collections and Reallocated Class B Collections is called "Reallocated
Principal Collections");
(a) an amount equal to the excess, if any, of the Class A Required Amount
with respect to the related Monthly Period over the sum of the amount of
Reallocated Class D Principal Collections and Reallocated Class C Principal
Collections applied with respect thereto for the related Monthly Period
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will be applied to the remaining components of the Class A Required Amount
in the same priority as such components are applied from Available Series
Interest Collections as described in "--Application of Collections--Payment
of Fees, Interest and Other Items"; and
(b) any such collections not applied in the foregoing manner (and
therefore not constituting Reallocated Class B Principal Collections) will,
on business days with respect to the Revolving Period, be applied as Shared
Principal Collections and on business days with respect to an Amortization
Period will be included in the funds available to make principal payments
to the Class A Certificateholders until the Class A Invested Amount is paid
in full and then to the Class B Certificateholders until the Class B
Invested Amount is paid in full.
On each Distribution Date, the Class D Invested Amount will be reduced by the
amount of Reallocated Principal Collections for the related Monthly Period. In
the event that such reduction would cause the Class D Invested Amount to be a
negative number, the Class D Invested Amount will be reduced to zero and the
Class C Invested Amount will be reduced by the amount by which the Class D
Invested Amount would have been reduced below zero. In the event that the
amount of Reallocated Principal Collections for such Distribution Date would
cause the Class C Invested Amount to be a negative number, the Class C Invested
Amount will be reduced to zero and the Class B Invested Amount will be reduced
by the amount by which the Class C Invested Amount would have been reduced
below zero. In the event that the reallocation of Principal Collections would
cause the Class B Invested Amount to be a negative number on any Distribution
Date, the amount of Class B Reallocated Principal Collections on such
Distribution Date will be an amount not to exceed the amount which would cause
the Class B Invested Amount to be reduced to zero.
APPLICATION OF COLLECTIONS
Allocations. Payments on the Receivables will be made to the Servicer, who
will deposit all such payments in the Collection Account no later than the
second business day following the date of processing. On the day on which any
deposit to the Collection Account is available, the Servicer will make the
deposits and payments to the accounts and parties as indicated below; provided,
however, that for as long as the Company or any affiliate of the Company
remains the Servicer under the Pooling and Servicing Agreement, then the
Servicer may make such deposits and payments on the business day immediately
prior to the Distribution Date (the "Transfer Date") in an aggregate amount
equal to the net amount of such deposits and payments which would have been
made had the conditions of this proviso not applied if (a)(i) the Servicer
provides to the Trustee a letter of credit or other form of Enhancement rated
in the highest rating category by the Rating Agency covering the risk of
collection of the Servicer and (ii) the Transferor shall not have received a
notice from the Rating Agency that making payments monthly rather than daily
would result in the lowering of such Rating Agency's then-existing rating of
any Series of certificates then outstanding or (b) the Servicer has and
maintains a short-term credit rating of P-1 by Moody's and A-1 by Standard &
Poor's.
If clause (a) or clause (b) set forth in the proviso to the immediately
preceding paragraph is satisfied, payments on the Receivables collected by the
Servicer will not be segregated from the assets of the Servicer. Until such
payments on the Receivables collected by the Servicer are deposited into the
Collection Account, such funds may be used by the Servicer for its own benefit,
and the proceeds of any short-term investment of such funds will accrue to the
Servicer. During such times as the Servicer holds funds representing payments
on the Receivables collected by the Servicer and is permitted to use such funds
for its own benefit, the Certificateholders are subject to risk of loss,
including risk resulting from the bankruptcy or insolvency of the Servicer. The
Servicer will pay no fee to the Trust or any Certificateholder for any use by
the Servicer of funds representing collections on the Receivables.
The Servicer will withdraw the following amounts from the Collection Account
for application on each business day as indicated:
(i) an amount equal to the Transferor Percentage plus, prior to the Class
D Principal Payment Commencement Date, the Class D Floating Allocation
Percentage or the Class D Fixed/Floating
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Allocation Percentage, as applicable, of the aggregate amount of Principal
Collections (less the amount thereof which may be applied as Reallocated
Class D Principal Collections) and any amounts to be paid in respect of the
Class D Investor Default Amount will be paid to the Transferor to maintain
the Class D Invested Amount;
(ii) an amount equal to the Transferor Percentage of the aggregate amount
of Interest Collections will be paid to the holder of the Exchangeable
Transferor Certificate to the extent such funds are not allocated to any
Series as set forth in the applicable Supplement;
(iii) an amount equal to the sum of (i) the Floating Allocation
Percentage of the aggregate amount of Interest Collections, (ii) investment
earnings on amounts on deposit in the Excess Funding Account, (iii) certain
Transferor Interest Collections allocable to the Certificates and (iv)
Excess Interest Collections of other Series allocable to such Series, will
be allocated and paid as described below in""--Payment of Fees, Interest,
and Other Items;"
(iv) during the Revolving Period, an amount equal to the sum of the Class
A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage of Principal
Collections (less the amount thereof which may be applied as Reallocated
Class B Principal Collections and Reallocated Class C Principal
Collections) will be applied as Shared Principal Collections;
(v) during the Amortization Period and prior to the Class B Principal
Payment Commencement Date, an amount equal to the ABC Fixed/Floating
Allocation Percentage of Principal Collections (less the amount thereof
which may be applied as Reallocated Class B Principal Collections or
Reallocated Class C Principal Collections), any amount on deposit in the
Excess Funding Account, any amounts to be paid in respect of the ABC
Investor Default Amount, Class A Investor Charge-Offs, Class B Investor
Charge-Offs and Class C Investor Charge-Offs and any amount of Shared
Principal Collections allocated to the Certificates on such business day up
to (a) during the Controlled Amortization Period, the Class A Controlled
Distribution Amount or (b) during the Early Amortization Period, the Class
A Invested Amount, will be deposited in the Principal Account;
(vi) during the Amortization Period and on or after the Class B Principal
Payment Commencement Date, an amount equal to the ABC Fixed/Floating
Allocation Percentage of such Principal Collections (less the amount
thereof which may be applied as Reallocated Class B Principal Collections
or Reallocated Class C Principal Collections), any remaining amount on
deposit in the Excess Funding Account, any amounts to be paid in respect of
the ABC Investor Default Amount, Class B Investor Charge-Offs and Class C
Investor Charge-Offs and any amount of Shared Principal Collections
allocated to the Certificates on such business day, up to (a) during the
Controlled Amortization Period, the Class B Controlled Distribution Amount
or (b) during the Early Amortization Period, the Class B Invested Amount,
will be deposited in the Principal Account;
(vii) during the Amortization Period and on or after the Class C
Principal Payment Commencement Date, an amount equal to the ABC
Fixed/Floating Allocation Percentage of such Principal Collections (less
the amount thereof which may be applied as Reallocated Class C Principal
Collections), any remaining amount on deposit in the Excess Funding
Account, any amounts to be paid in respect of the ABC Investor Default
Amount, and Class C Investor Charge-Offs and any amount of Shared Principal
Collections allocated to the Certificates on such business day, up to the
Class C Invested Amount, will be deposited into the Principal Account;
(viii) Shared Principal Collections will be allocated to each outstanding
Series pro rata based on any Principal Shortfalls with respect to any
Series which is in its amortization period. The Servicer will pay any
remaining Shared Principal Collections on such business day to the holder
of the Exchangeable Transferor Certificate; and
(ix) Excess Interest Collections will be allocated as set forth below in
paragraph (xv) to "--Payment of Fees, Interest, and Other Items."
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Any Shared Principal Collections and other amounts described above as being
payable to the Transferor will not be paid to the Transferor if the Transferor
Interest on any date, after giving effect to the inclusion in the Trust of all
Receivables on or prior to such date and the application of all prior payments
to the Transferor, does not exceed the Minimum Transferor Interest. Any such
amounts otherwise payable to the Transferor will be deposited into and held in
the Excess Funding Account, and on the Amortization Period Commencement Date
with respect to any Series, such amounts will be deposited in the principal
account of such Series to the extent specified in the related Supplement until
the applicable principal account of such Series has been funded in full or the
holders of certificates of such Series have been paid in full. See "--Excess
Funding Account."
Payment of Fees, Interest and Other Items. On each business day during a
Monthly Period, the Servicer will determine the sum of (i) the Floating
Allocation Percentage of Interest Collections and (ii) investment earnings on
amounts on deposit in the Excess Funding Account (the "Available Series
Interest Collections") and will distribute from the Collection Account such
amount in the following priority:
(i) an amount equal to the lesser of
(A) the Available Series Interest Collections and
(B) the excess of
(a) the sum of (1) the Class A Monthly Interest, (2) the amount of
any Class A Monthly Interest previously due but not deposited in the
Interest Funding Account in prior Monthly Periods, and (3) any
additional interest (to the extent permitted by applicable law) at
the Class A Certificate Rate plus 2% per annum with respect to
interest amounts that were due but not paid in a prior Monthly
Period over
(b) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class A Certificateholders;
(ii) an amount equal to the lesser of
(A) any Available Series Interest Collections remaining and
(B) the excess of
(a) the sum of (1) the Class B Monthly Interest, (2) the amount of
any Class B. Monthly Interest previously due but not deposited in
the Interest Funding Account in prior Monthly Periods, and (3) any
additional interest (to the extent permitted by applicable law) at
the Class B Certificate Rate plus 2% per annum with respect to Class
B Monthly Interest amounts that were due but not paid in a prior
Monthly Period over
(b) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class B Certificateholders;
(iii) an amount equal to the lesser of
(A) any Available Series Interest Collections remaining and
(B) the excess of
(a) the sum of (1) the Class C Monthly Interest, (2) the amount of
any Class C Monthly Interest previously due but not deposited in the
Interest Funding Account in prior Monthly Periods, and (3) any
additional interest (to the extent permitted by applicable law) at
the Class C Certificate Rate plus 2% per annum with respect to Class
C Monthly Interest amounts that were due but not paid in a prior
Monthly Period over
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(b) the amount which has already been deposited in the Interest
Funding Account with respect thereto in the current Monthly Period,
will be deposited in the Interest Funding Account for distribution on the
next succeeding Distribution Date to the Class C Certificateholders;
(iv) if the Company or an affiliate of the Company is not the Servicer,
an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) the portion of the Monthly Servicing Fee for
the current month that has not been previously paid to the Servicer plus
any prior Monthly Servicing Fee that was due but not previously paid to the
Servicer, will be distributed to the Servicer;
(v) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) the sum of (1) the aggregate ABC Investor
Default Amount for such business day and (2) the unpaid ABC Investor
Default Amount for any prior business day during the then-current Monthly
Period, will (w) during the Revolving Period, be treated as Shared
Principal Collections, (x) during the Amortization Period on and prior to
the Class B Principal Payment Commencement Date, be deposited in the
Principal Account for payment to the Class A Certificateholders, (y) on and
after the Class B Principal Payment Commencement Date, be deposited in the
Principal Account for payment to the Class B Certificateholders and (z) on
and after the Class C Principal Payment Commencement Date, be deposited in
the Principal Account for payment to the Class C Certificateholders;
(vi) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) the sum of (1) the aggregate Class D Investor
Default Amount for such business day and (2) the unpaid Class D Investor
Default Amount for any prior business day during the then-current Monthly
Period, will (x) during the Revolving Period and the Amortization Period
prior to the payment in full of the Class C Invested Amount, be paid to the
Transferor in order to maintain the Class D Invested Amount and (y) during
the Amortization Period following the payment in full of the Class C
Invested Amount, be deposited in the Principal Account for payment to the
Class D Certificateholders;
(vii) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) unreimbursed Class A Investor Charge-Offs, if
any, will be applied to reimburse Class A Investor Charge-Offs and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Amortization Period but on and prior to the Class B
Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class A Certificateholders, (y) on and after the Class B
Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class B Certificateholders and (z) on and after the
Class C Principal Payment Commencement Date, be deposited in the Principal
Account for payment to the Class C Certificateholders;
(viii) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) the sum of (1) the amount of interest which
has accrued with respect to the outstanding aggregate principal amount of
the Class B Certificates at the Class B Certificate Rate but has not been
deposited in the Interest Funding Account will be paid to the Class B
Certificateholders either on such business day or on a prior business day,
and (2) any additional interest (to the extent permitted by applicable law)
at the Class B Certificate Rate plus 2% per annum with respect to such
interest amounts that were due but not paid to Class B Certificateholders
in any previous Monthly Period, will be deposited in the Interest Funding
Account for distribution on the next succeeding Distribution Date to the
Class B Certificateholders;
(ix) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) the sum of (1) the amount of interest which
has accrued with respect to the outstanding aggregate principal amount of
the Class C Certificates at the Class C Certificate Rate but has not been
deposited in the Interest Funding Account paid to the Class C
Certificateholders either on such business day or on a poor business day
and (2) any additional interest (to the extent permitted by applicable law)
at the Class C Certificate Rate plus 2% per annum with respect to such
interest amounts that were due but not paid to Class C Certificateholders
in any previous Monthly Period, will be deposited in the Interest Funding
Account for distribution on the next succeeding Distribution Date to the
Class C Certificateholders;
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(x) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) unreimbursed Class B Investor Charge-Offs, if
any, will be applied to reimburse Class B Investor Charge-Offs and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Amortization Period but on and prior to the Class B
Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class A Certificateholders, (y) on and after the Class B
Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class B Certificateholders and (z) on and after the
Class C Principal Payment Commencement Date, be deposited in the Principal
Account for payment to the Class C Certificateholders;
(xi) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) unreimbursed Class C Investor Charge-Offs, if
any, will be applied to reimburse Class C Investor Charge-Offs and (w)
during the Revolving Period, be treated as Shared Principal Collections,
(x) during the Amortization Period but on and prior to the Class B
Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class A Certificateholders, (y) on and after the Class B
Principal Payment Commencement Date, be deposited in the Principal Account
for payment to the Class B Certificateholders and (z) on and after the
Class C Principal Payment Commencement Date, be deposited in the Principal
Account for payment to the Class C Certificateholders;
(xii) an amount equal to the lesser of (A) any Available Series Interest
Collections remaining and (B) unreimbursed Class D Investor Charge-Offs, if
any, will (x) during the Revolving Period and during the Amortization
Period prior to the payment in full of the Class C Invested Amount, be paid
to the Transferor and (y) during the Amortization Period following payment
in full of the Class C Invested Amount, be deposited in the Principal
Account for payment to the Class D Certificateholders;
(xiii) if the Company or an affiliate of the Company is the Servicer, an
amount equal to the lesser of (A) any Available Series Interest Collections
remaining and (B) the portion of the Monthly Servicing Fee for the current
month that has not been previously paid to the Servicer plus any prior
Monthly Servicing Fee that was due but not previously paid to the Servicer
will be distributed to the Servicer; and
(xiv) any Available Series Interest Collections remaining after making
the above described distributions will be treated as Excess Interest
Collections which will be available to fund any applicable reserves with
respect to the Class C Certificates, to cover shortfalls, if any, in
amounts payable from Interest Collections to certificateholders of other
Series and then to pay any unpaid commercially reasonable costs and
expenses of a successor Servicer, if any. Excess Interest Collections which
are not so used will be paid to the Transferor.
"Class A Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class A Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the outstanding principal balance of the Class A
Certificates on the related Record Date or, with respect to the first
Distribution Date, the initial outstanding principal balance of the Class A
Certificates.
"Class B Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class B Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the Class B Invested Amount on the related Record Date
or, with respect to any Distribution Date related to the Funding Period, the
outstanding principal balance of the Class B Certificates on the related Record
Date.
"Class C Monthly Interest" with respect to any Distribution Date will equal
the product of (i) the Class C Certificate Rate for the related Interest
Accrual Period, (ii) the actual number of days in such Interest Accrual Period
divided by 360 and (iii) the Class C Invested Amount on the related Record Date
or, with respect to any Distribution Date related to the Funding Period, the
outstanding principal balance of the Class C Certificates on the related Record
Date.
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"Required Amount" means on any business day the amount, if any, by which the
full amount to be paid pursuant to clauses (i)-(xiii) above in "--Payments of
Fees, Interest, and Other Items" exceeds the portion of the Available Series
Interest Collections and Transferor Interest Collections, if any, applied to
the payment of the amounts described in such clauses.
Payment of Principal. On each business day during the Revolving Period, the
Trustee, acting in accordance with instructions from the Servicer, will treat
the amount described in clause (iv) of "--Allocations" as Shared Principal
Collections which will be applied as described in clause (viii) of "--
Allocations." On each Transfer Date during the Amortization Period, the
Trustee, acting in accordance with instructions from the Servicer, will
withdraw the amount on deposit in the Principal Account and, to the extent of
Class A Principal until the Class A Invested Amount is paid in full, deposit
such amounts in the Distribution Account for distribution to the Class A
Certificateholders on the next succeeding Distribution Date. The Class A
Certificateholders will be entitled to receive principal payments to the extent
of Class A Principal until the Class A Invested Amount is paid in full. The
Class B Certificateholders will be entitled to receive principal payments to
the extent of Class B Principal until the Class B Invested Amount is paid in
full only after the Class A Invested Amount has been paid in full. The Class C
Certificateholders will be entitled to receive principal payments to the extent
of Class C Principal until the Class C Invested Amount is paid in full only
after the Class A Invested Amount and the Class B Invested Amount have been
paid in full. The Class D Certificateholders will be entitled to receive
principal payments only after the Class A Invested Amount, the Class B Invested
Amount, and the Class C Invested Amount have been paid in full.
"Class A Principal" with respect to any Distribution Date during the
Amortization Period will equal the sum of (i) an amount equal to the ABC
Fixed/Floating Allocation Percentage of all Principal Collections (less the
amount of Reallocated Class B Principal Collections and Reallocated Class C
Principal Collections) received during the Monthly Period immediately preceding
such Distribution Date, (ii) any amount on deposit in the Excess Funding
Account or the Pre-Funding Account allocated to the Class A Certificates with
respect to the preceding Monthly Period, (iii) the aggregate ABC Investor
Default Amount paid from Available Series Interest Collections, Transferor
Interest Collections, Excess Interest Collections or Reallocated Principal
Collections with respect to the preceding Monthly Period and any reimbursements
from Available Series Interest Collections, Transferor Interest Collections,
Excess Interest Collections or Reallocated Principal Collections of
unreimbursed Class A Investor Charge-Offs, Class B Investor Charge-Offs, Class
C Investor Charge-Offs and Class D Investor Charge-Offs and (iv) Shared
Principal Collections allocated to the Class A Certificates; provided, however,
that with respect to any Distribution Date during the Controlled Amortization
Period, Class A Principal will not exceed the lesser of (i) the Class A
Controlled Distribution Amount and (ii) the Class A Invested Amount; provided,
further that with respect to the Termination Date, Class A Principal will be an
amount equal to the Class A Invested Amount.
"Class B Principal" with respect to any Distribution Date on or after the
Class B Principal Payment Commencement Date will equal the sum of (i) an amount
equal to the ABC Fixed/Floating Allocation Percentage of all Principal
Collections (less the amount of Reallocated Class B Principal Collections and
Reallocated Class C Principal Collections) received during the Monthly Period
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date following the date on which an amount equal to the Class A
Invested Amount is deposited in the Principal Account to be applied to the
payment of Class A Principal, the ABC Fixed/Floating Allocation Percentage of
Principal Collections from the date on which such deposit is made), (ii) any
amount on deposit in the Excess Funding Account allocated to the Class B
Certificates with respect to the preceding Monthly Period, and (iii) the
aggregate ABC Investor Default Amount paid from Available Series Interest
Collections, Transferor Interest Collections, Excess Interest Collections or
Reallocated Principal Collections with respect to the preceding Monthly Period
and any reimbursements from Available Series Interest Collections, Transferor
Interest Collections, Excess Interest Collections or Reallocated Principal
Collections of unreimbursed Class B Investor Charge-Offs, Class C Investor
Charge-Offs and Class D Investor Charge-Offs and (iv) Shared Principal
Collections allocated to the Class B Certificates; provided, however, that with
respect to any Distribution Date during the Controlled
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Amortization Period, Class B Principal will not exceed the lesser of (i) the
Class B Controlled Distribution Amount and (ii) the Class B Invested Amount;
provided, further, that with respect to the Termination Date, Class B Principal
will be an amount equal to the Class B Invested Amount.
"Class C Principal" with respect to any Distribution Date on or after the
Class C Principal Payment Commencement Date will equal the sum of (i) an amount
equal to the ABC Fixed/Floating Allocation Percentage of all Principal
Collections (less the amount of Reallocated Class C Principal Collections)
received during the Monthly Period immediately preceding such Distribution Date
(or, in the case of the first Distribution Date following the date on which an
amount equal to the Class B Invested Amount is deposited in the Principal
Account to be applied to the payment of Class B Principal, the ABC
Fixed/Floating Allocation Percentage of Principal Collections from the date on
which such deposit is made), (ii) any amount on deposit in the Excess Funding
Account allocated to the Class C Certificates with respect to the preceding
Monthly Period, (iii) the aggregate ABC Investor Default Amount paid from
Available Series Interest Collections, Transferor Interest Collections, Excess
Interest Collections or Reallocated Principal Collections with respect to the
preceding Monthly Period and any reimbursements from Available Series Interest
Collections, Transferor Interest Collections, Excess Interest Collections or
Reallocated Principal Collections of unreimbursed Class C Investor Charge-Offs
and Class D Investor Charge-Offs and (iv) Shared Principal Collections
allocated to the Class C Certificates; provided, that with respect to the
Termination Date, Class C Principal will be an amount equal to the Class C
Invested Amount.
On the Transfer Date preceding the Class D Principal Payment Commencement
Date, and on each Transfer Date thereafter until the Trust is terminated or
until the Class D Invested Amount is paid in full, the Trustee, acting in
accordance with instructions from the Servicer, will withdraw amounts deposited
into the Principal Account in respect of Principal Collections processed during
the related Monthly Period and, to the extent of the Class D Invested Amount,
deposit such amounts in the Distribution Account for distribution to the Class
D Certificateholders on the next succeeding Distribution Date (the "Class D
Principal"). The Class D Certificateholders will be entitled to receive
principal payments to the extent of Class D Principal until the Class D
Invested Amount is paid in full.
COVERAGE OF CERTAIN INTEREST SHORTFALLS
To the extent of any shortfall in the amount of Available Series Interest
Collections due to the accumulation of principal in the Excess Funding Account,
the Transferor Interest Collections will be made available to cover such
Negative Carry Amount.
Interest Collections allocable to any Series in excess of the amounts
necessary to make required payments with respect to such Series ("Excess
Interest Collections") will be applied to cover any shortfalls with respect to
amounts payable from Interest Collections allocable to any other Series, pro
rata based upon the amounts of the shortfalls, if any, with respect to such
other Series. Any Excess Interest Collections remaining after covering
shortfalls with respect to all outstanding Series during a Monthly Period will
be paid to the successor Servicer, if any, to cover certain costs and expenses
and then to the holder of the Exchangeable Transferor Certificate.
DEFAULTED RECEIVABLES
Receivables will be charged off as uncollectible in accordance with the
Servicer's customary and usual policies and the Credit and Collection Policy (a
"Defaulted Receivable"). See "The Receivables--Loss and Delinquency History."
On each business day, the Servicer will allocate to the Certificateholders a
portion of all Defaulted Receivables in an amount (the "Investor Default
Amount") equal to the product of (a) the Floating Allocation Percentage
applicable on such business day and (b) the aggregate principal amount of
Defaulted Receivables identified since the prior reporting date. On each
business day, the Servicer will allocate to the Class A, Class B and Class C
Certificateholders a portion of all Defaulted Receivables in an amount
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(the "ABC Investor Default Amount") equal to the product of (a) the sum of the
Class A Floating Allocation Percentage, the Class B Floating Allocation
Percentage and the Class C Floating Allocation Percentage applicable on such
business day and (b) the aggregate principal amount of Defaulted Receivables
identified since the prior reporting date. On each business day, the Servicer
will allocate to the Class D Certificateholders a portion of all Defaulted
Receivables in an amount (the "Class D Investor Default Amount") equal to the
product of (a) the Class D Floating Allocation Percentage and (b) the aggregate
principal amount of Defaulted Receivables identified since the prior reporting
date.
INVESTOR CHARGE-OFFS
If on the third business day preceding each Distribution Date (the
"Determination Date"), the aggregate Investor Default Amount and the Series
Allocation Percentage of unpaid Adjustment Payments, if any, for all business
days in the preceding Monthly Period exceeded the aggregate amount of the
Available Series Interest Collections, Transferor Interest Collections, Excess
Interest Collections and Reallocated Principal Collections allocated with
respect thereto during such Monthly Period, then the Class D Invested Amount
will be reduced by the aggregate amount of such excess, but not more than the
remaining aggregate Investor Default Amount for such Monthly Period (a "Class D
Investor Charge-Off"). The Class D Invested Amount thereafter will be increased
(but not in excess of the unpaid principal balance of the Class D Certificates)
on any business day by the amounts allocated and available for that purpose as
described under clause (xii) of "--Application of Collections--Payment of Fees,
Interest, and Other Items."
In the event that any such reduction of the Class D Invested Amount would
cause the Class D Invested Amount to be a negative number, the Class D Invested
Amount will be reduced to zero, and the Class C Invested Amount will be reduced
by the aggregate amount of such excess, but not more than the remaining
aggregate Investor Default Amount for such Monthly Period (a "Class C Investor
Charge-Off"), which will have the effect of slowing or reducing the return of
principal to the Class C Certificateholders. The Class C Invested Amount will
thereafter be increased (but not in excess of the unpaid principal balance of
the Class C Certificates) on any Monthly Period by the amounts allocated and
available for that purpose as described under clause (xi) of "--Application of
Collections--Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class C Invested Amount would
cause the Class C Invested Amount to be a negative number, the Class C Invested
Amount will be reduced to zero, and the Class B Invested Amount will be reduced
by the aggregate amount of such excess, but not more than the remaining
aggregate Investor Default Amount for such Monthly Period (a "Class B Investor
Charge-Off"), which will have the effect of slowing or reducing the return of
principal to the Class B Certificateholders. The Class B Invested Amount will
thereafter be increased (but not in excess of the unpaid principal balance of
the Class B Certificates) on any Monthly Period by the amounts allocated and
available for that purpose as described under clause (x) of "--Application of
Collections--Payment of Fees, Interest, and Other Items."
In the event that any such reduction of the Class B Invested Amount would
cause the Class B Invested Amount to be a negative number, the Class B Invested
Amount will be reduced to zero, and the Class A Invested Amount will be reduced
by the amount by which the Class B Invested Amount would have been reduced
below zero, but not more than the remaining aggregate Investor Default Amount
for such Monthly Period (a "Class A Investor Charge-Off"). The Class A Invested
Amount will thereafter be increased (but not in excess of the unpaid principal
balance of the Class A Certificates) on any Monthly Period by the amounts
allocated and available for that purpose as described under clause (vii) of "--
Application of Collections--Payment of Fees, Interest, and Other Items."
FINAL PAYMENT OF PRINCIPAL; TERMINATION
The Class A Certificates, the Class B Certificates, and the Class C
Certificates will each be subject to optional repurchase by the Transferor on
any Distribution Date after the sum of the Class A Invested Amount, the Class B
Invested Amount and the Class C Invested Amount is reduced to an amount less
than
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or equal to $ (10% of the initial outstanding principal amount of the
Class A Certificates, the Class B Certificates and the Class C Certificates),
if certain conditions set forth in the Pooling and Servicing Agreement are
satisfied. The repurchase price will be equal to (i) the unpaid Class A
Invested Amount plus accrued and unpaid interest on the Class A Certificates,
(ii) the unpaid Class B Invested Amount plus accrued and unpaid interest on the
Class B Certificates, (iii) the unpaid Class C Invested Amount plus accrued and
unpaid interest on the Class C Certificates and (iv) the unpaid Class D
Invested Amount. In each case interest will accrue through the day preceding
the Distribution Date on which the repurchase occurs.
The Certificates will be retired on the day following the Distribution Date
on which the final payment of principal is scheduled to be made to the
Certificateholders, whether as a result of optional reassignment to the
Transferor or otherwise. Subject to prior termination as provided above, the
Pooling and Servicing Agreement provides that the final distribution of
principal and interest on the Offered Certificates will be made on the
, Distribution Date (the "Termination Date"), except to the
extent provided below. In the event that the Invested Amount is greater than
zero, exclusive of any Class held by the Transferor, on the Termination Date,
the Trustee will sell or cause to be sold (and apply the proceeds first to the
Class A Certificates until paid in full, then to the Class B Certificates until
paid in full, then to the Class C Certificates until paid in full, and finally
to the Class D Certificates to the extent necessary to pay such remaining
amounts to all Certificateholders pro rata within each Class as final payment
of the Certificates) interests in the Receivables or certain Receivables, as
specified in the Pooling and Servicing Agreement and the Series 1995-1
Supplement, in an amount up to 110% of the Invested Amount at the close of
business on such date (but not more than the total amount of Receivables
allocable to the Certificates in accordance with the Pooling and Servicing
Agreement). If the sale contemplated by the preceding sentence has not occurred
by the Termination Date, the affected Certificateholders shall remain entitled
to receive proceeds of such sale when it occurs. The net proceeds of such sale
and any collections on the Receivables, up to an amount equal to the Invested
Amount plus accrued interest due on the Certificates, will be paid on the
Termination Date first to Class A Certificateholders until the Class A Invested
Amount is paid in full, then to the Class B Certificateholders until the Class
B Invested Amount is paid in full, then to the Class C Certificateholders until
the Class C Invested Amount is paid in full, and then to the Class D
Certificateholders until the Class D Invested Amount is paid in full.
Unless the Servicer and the holder of the Exchangeable Transferor Certificate
instruct the Trustee otherwise, the Trust will terminate on the earlier of (a)
the day after the Distribution Date following the date on which funds shall
have been deposited in the Distribution Account for the payment to
certificateholders outstanding sufficient to pay in full the aggregate investor
interest of all Series outstanding plus interest thereon at the applicable
certificate rates to the next Distribution Date and (b) a date which shall not
be later than , , or (c) if the Receivables are sold, disposed of
or liquidated following the occurrence of an Insolvency Event, immediately
following such sale, disposition or liquidation (such date, the "Trust
Termination Date". Upon the termination of the Trust and the surrender of the
Exchangeable Transferor Certificate, the Trustee will convey to the holder of
the Exchangeable Transferor Certificate all right, title, and interest of the
Trust in and to the Receivables and other funds of the Trust (other than funds
on deposit in the Distribution Account and other similar bank accounts of the
Trust with respect to any Series).
PAY OUT EVENTS
As described above, the Revolving Period will continue through the end of the
Monthly Period, with respect to the Certificates, unless a Pay Out
Event occurs prior to such date. A "Pay Out Event" refers to any of the
following events:
(i) failure on the part of the Transferor (a) to make any payment or
deposit on the date required under the Pooling and Servicing Agreement (or
within the applicable grace period which will not exceed five business
days); (b) to perform in all material respects the Transferor's covenant
not to sell, pledge, assign, or transfer to any person, or grant any
unpermitted lien on, any Receivable; or (c) to observe or perform in any
material respect any other covenants or agreements of the Transferor set
forth in the
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Pooling and Servicing Agreement, the Purchase Agreement or the Series 1995-
1 Supplement, which failure has a material adverse effect on the
Certificateholders and which continues unremedied for a period of 60 days
after written notice of such failure, requiring the same to be remedied,
shall have been given to the Transferor by the Trustee, or to the
Transferor and the Trustee by the Certificateholders representing more than
50% of the Invested Amount and continues to materially and adversely affect
the interests of the Certificateholders for such period;
(ii) any representation or warranty made by the Transferor in the Pooling
and Servicing Agreement proves to have been incorrect in any material
respect when made, and as a result the interests of the Certificateholders
are materially adversely affected, and such representation or warranty
continues to be incorrect for 60 days after notice to the Transferor by the
Trustee or to the Transferor and the Trustee by more than 50% of the
Invested Amount and the Certificateholders' Interest continues to be
materially adversely affected during such period; provided, however, that a
Pay Out Event pursuant to this subparagraph (ii) will not be deemed to
occur thereunder if the Transferor has accepted reassignment of the related
Receivable or all such Receivables, if applicable, during such period (or
such longer period as the Trustee may specify) in accordance with the
provisions thereof;
(iii) certain events of bankruptcy or insolvency relating to the
Transferor or the Company;
(iv) any reduction of the average of the Portfolio Yields for any three
consecutive Monthly Periods to a rate which is less than the Base Rate;
(v) the Trust shall become subject to regulation by the Commission as an
"investment company" within the meaning of the Investment Company Act;
(vi) (a) the Transferor Interest shall be less than the Minimum
Transferor Interest[?], (b) (I) the Series Allocation Percentage of the
total amount of Principal Receivables plus amounts on deposit in the Excess
Funding Account shall be less than (II) the sum of the aggregate
outstanding principal amounts of the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates or (c)
the total amount of Principal Receivables and the amount on deposit in the
Excess Funding Account shall be less than the Minimum Aggregate Principal
Receivables, in each case as of any Determination Date;
(vii) any Servicer Default (as defined below) shall occur which would
have a material adverse effect on the Certificateholders; or
(viii) the amount on deposit in the Excess Funding Account as a
percentage of the sum of the aggregate amount of Principal Receivables plus
the amount on deposit in the Excess Funding Account shall equal or exceed
% on the last day of three consecutive Monthly Periods.
In the case of any event described in clause (i), (ii), or (vii) above, a Pay
Out Event will be deemed to have occurred with respect to the Certificates only
if, after any applicable grace period, the Certificateholders evidencing
undivided interests aggregating more than 50% of the Invested Amount, by
written notice to the Transferor and the Servicer declare that a Pay Out Event
has occurred with respect to the Certificates as of the date of such notice. In
the case of any event described in clause (iii) or (v) above, a Pay Out Event
with respect to all Series then outstanding, and in the case of any event
described in clause (iv), (vi) or (viii), a Pay Out Event with respect only to
the Certificates, will be deemed to have occurred without any notice or other
action on the part of the Trustee or the Certificateholders or all
certificateholders, as appropriate, immediately upon the occurrence of such
event. On the date on which a Pay Out Event is deemed to have occurred, the
Early Amortization Period will commence. In such event, distributions of
principal to the Certificateholders will begin on the first Distribution Date
following the month in which such Pay Out Event occurred. If, because of the
occurrence of a Pay Out Event, the Early Amortization Period begins,
Certificateholders will begin receiving distributions of principal earlier than
they otherwise would have, which may shorten the average life of the
Certificates.
In addition to the consequences of a Pay Out Event discussed above, if, (i)
pursuant to certain provisions of federal law, the Transferor voluntarily
enters liquidation or a trustee in bankruptcy is appointed for the
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Transferor, or (ii) the Retained Percentage is equal to or less than 2% on the
day of such event (an "Insolvency Event") the Transferor will immediately cease
to transfer Receivables to the Trust and promptly give notice to the Trustee of
such event. Within 15 days, the Trustee will publish a notice of the
liquidation or the appointment stating that the Trustee intends to sell,
dispose of, or otherwise liquidate the Receivables in a commercially reasonable
manner. With respect to each Series outstanding at such time (or, if any such
Series has more than one class, of each class of such Series excluding any
class or portion thereof held by the Transferor), unless otherwise instructed
within a specified period by certificateholders representing undivided
interests aggregating more than 50% of the invested amount of such Series (or
class excluding any class or portion thereof held by the Transferor) and the
holders of any Supplemental Certificates or any other interest in the
Exchangeable Transferor Certificate other than the Transferor, the Trustee will
sell, dispose of, or otherwise liquidate the portion of the Receivables
allocable to the Series that did not vote to continue the Trust in accordance
with the Pooling and Servicing Agreement in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from the sale, disposition,
or liquidation of the Receivables will be treated as collections of the
Receivables allocable to such Certificateholders and will be distributed to the
applicable Certificateholders as provided above in "--Application of
Collections."
If the only Pay Out Event to occur is either the bankruptcy or insolvency of
the Transferor or the appointment of a bankruptcy trustee or receiver for the
Transferor, the bankruptcy trustee or receiver may have the power to prevent
the early sale, liquidation, or disposition of the Receivables and the
commencement of the Early Amortization Period. In addition, a bankruptcy
trustee or receiver may have the power to cause the early sale of the
Receivables and the early retirement of the Certificates.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer's compensation for its servicing activities and reimbursement
for its expenses will take the form of the payment to it of a servicing fee in
an amount for any Monthly Period equal to the sum of (i) with respect to each
Series, one-twelfth of the product of (x) the applicable servicing fee
percentage with respect to such Series and (y) the sum of the Invested Amount
of such Series on the first day of such Monthly Period and on the last day of
such Monthly Period divided by two and (u) one-twelfth of the product of the
weighted average servicing fee percentage for all Series and the average
Transferor Interest for such Monthly Period. The monthly servicing fee will be
allocated between the Transferor Interest, the Certificateholders' Interest,
and the investor interest for all other Series. The portion of the servicing
fee allocable to the Certificateholders' Interest during each Monthly Period
(the "Monthly Servicing Fee") will be equal to one-twelfth of the product of
(x) the Servicing Fee Rate per annum and (y) the Invested Amount on the
preceding Record Date or, in the case of the first Distribution Date, the
initial principal amount of the Certificates. The Monthly Servicing Fee will be
funded from Interest Collections allocated to the Certificateholders' Interest,
and will be paid each month from the amount so allocated and on deposit in the
Collection Account. See "--Application of Collections--Payment of Fees,
Interest, and Other Items" above. The remainder of the servicing fee will be
allocable to the Transferor Interest and the investor interests of other
Series. Neither the Trust nor the Certificateholders will have any obligation
to pay such portion of the servicing fee.
The Servicer will pay from its servicing compensation certain expenses
incurred in connection with servicing the Receivables, including, without
limitation, payment of the fees and disbursements of the Trustee and
independent certified public accountants and other fees which are not expressly
stated in the Pooling and Servicing Agreement to be payable by the Trust or the
Certificateholders other than federal, state, and local income and franchise
taxes, if any, of the Trust.
CERTAIN MATTERS REGARDING THE TRANSFEROR AND THE SERVICER
The Servicer may not resign from its obligations and duties under the Pooling
and Servicing Agreement, except upon determination that performance of its
duties is no longer permissible under applicable law. No such resignation will
become effective until the Trustee or a successor to the Servicer has assumed
the Servicer's responsibilities and obligations under the Pooling and Servicing
Agreement. The Servicer may
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delegate some or all of its servicing duties; provided, however, such
delegation will not relieve the Servicer of its obligation to perform such
duties in accordance with the Pooling and Servicing Agreement. In addition, any
affiliate of the Company may be substituted in all respects for the Company as
Servicer, provided that such affiliate expressly assumes the performance of
every covenant and obligation of the Servicer under the Pooling and Servicing
Agreement.
The Pooling and Servicing Agreement provides that the Servicer will indemnify
the Trust and the Trustee from and against any reasonable loss, liability,
expense, damage, or injury suffered or sustained by reason of any acts or
omissions or alleged acts or omissions of the Servicer with respect to the
activities of the Trust or the Trustee; provided, however, that the Servicer
will not indemnify (a) the Trustee for liabilities imposed by reason of fraud,
negligence, or willful misconduct by the Trustee in the performance of its
duties under the Pooling and Servicing Agreement, (b) the Trust, the
Certificateholders, or the Certificate Owners for liabilities arising from
actions taken by the Trustee at the request of Certificateholders, (c) the
Trust, the Certificateholders, or the Certificate Owners for any losses,
claims, damages, or liabilities incurred by any of them in their capacities as
investors, including without limitation, losses incurred as a result of
Defaulted Receivables, or (d) the Trust, the Certificateholders, or the
Certificate Owners for any liabilities, costs, or expenses of the Trust, the
Certificateholders, or the Certificate Owners arising under any tax law,
including without limitation, any federal, state, or local income or franchise
tax or any other tax imposed on or measured by income (or any interest or
penalties with respect thereto or arising from a failure to comply therewith)
required to be paid by the Trust, the Certificateholders, or the Certificate
Owners in connection with the Pooling and Servicing Agreement to any taxing
authority.
In addition, the Pooling and Servicing Agreement provides that, subject to
certain exceptions, the Transferor will indemnify the Trust and the Trustee
from and against any reasonable loss, liability, expense, damage, or injury
(other than to the extent that any of the foregoing relate to any tax law or
any failure to comply therewith) suffered or sustained by reason of any acts or
omissions or alleged acts or omissions arising out of or based upon the
arrangement created by the Pooling and Servicing Agreement as though the
Pooling and Servicing Agreement created a partnership under the Delaware
Uniform Partnership Law in which the Transferor is a general partner.
The Pooling and Servicing Agreement provides that, except for the foregoing
indemnities, neither the Transferor nor the Servicer nor any of their
respective directors, officers, employees, or agents will be under any
liability to the Trust, the Trustee, the Certificateholders, or any other
person for any action taken, or for refraining from taking any action pursuant
to the Pooling and Servicing Agreement. Neither the Transferor nor the Servicer
nor any of their respective directors, officers, employees, or agents will be
protected against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith, or gross negligence of the Transferor, the
Servicer, or any such person in the performance of its duties thereunder or by
reason of reckless disregard of obligations and duties thereunder. In addition,
the Pooling and Servicing Agreement provides that the Servicer is not under any
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its servicing responsibilities under the Pooling and Servicing
Agreement and which in its opinion may expose it to any expense or liability.
Under the Pooling and Servicing Agreement, the Transferor will be liable
directly to an injured party for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by a Certificateholder in the
capacity of an investor in the Certificates) arising out of or based on the
arrangement created by the Pooling and Servicing Agreement or the actions of
the Servicer taken pursuant to the Pooling and Servicing Agreement as though
the Pooling and Servicing Agreement created a partnership under the Uniform
Partnership Act in which the Transferor is a general partner. The Transferor
will also pay, indemnify and hold harmless each Certificateholder for any such
losses, claims, damages or liabilities (other than those incurred by a
Certificateholder in the capacity of an investor in the Certificates) except to
the extent that they lapse from any action by any Certificateholder. In the
event of a Service Transfer, the successor Servicer will indemnify the
Transferor for any losses, claims, damages and liabilities of the Transferor as
described in this paragraph arising from the actions or omissions of such
successor.
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SERVICER DEFAULT
In the event of any Servicer Default (as defined below), either the Trustee
or certificateholders representing undivided interests aggregating more than
50% of the aggregate investor interests for all outstanding Series, by written
notice to the Servicer (and to the Trustee if given by the certificateholders),
may terminate all of the rights and obligations of the Servicer as servicer
under the Pooling and Servicing Agreement and in and to the Receivables and the
proceeds thereof and the Trustee may appoint a new Servicer (a "Service
Transfer"). The rights and interest of the Transferor under the Pooling and
Servicing Agreement and in the Transferor Interest will not be affected by such
termination. Upon such termination, the Trustee will as promptly as possible
appoint a successor Servicer. If no such Servicer has been appointed and has
accepted such appointment by the time the Servicer ceases to act as Servicer,
all authority, power, and obligations of the Servicer under the Pooling and
Servicing Agreement will pass to and be vested in the Trustee. If the Trustee
is unable to obtain any bids from eligible servicers and the Servicer delivers
an officer's certificate to the effect that it cannot in good faith cure the
applicable Servicer Default, and if the Trustee is legally unable to act as a
successor Servicer, then the Trustee will give the Transferor the right to
accept reassignment of all of the Receivables on terms equivalent to the best
purchase offer as determined by the Trustee.
A "Servicer Default" refers to any of the following events:
(i) failure by the Servicer to make any payment, transfer, or deposit, or
to give instructions to the Trustee to make certain payments, transfers, or
deposits within 10 business days after the date the Servicer is required to
do so under the Pooling and Servicing Agreement or any Supplement;
provided, however, that any such failure caused by a nonwillful act of the
Servicer shall not constitute a Servicer Default if the Servicer promptly
remedies such failure within 10 Business Days after receiving notice of
such failure or otherwise becoming aware of such failure;
(ii) failure on the part of the Servicer duly to observe or perform in
any respect any other covenants or agreements of the Servicer which has a
material adverse effect on the certificateholders of any Series then
outstanding and which continues unremedied for a period of 60 days after
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee, or to the Servicer and the
Trustee by holders of Certificates evidencing undivided interests
aggregating not less than 50% of the Invested Amount of any Series
materially adversely affected thereby and continues to have a material
adverse effect on the certificateholders of any Series then outstanding for
such period; or the delegation by the Servicer of its duties under the
Pooling and Servicing Agreement, except as specifically permitted
thereunder;
(iii) any representation, warranty, or certification made by the Servicer
in the Pooling and Servicing Agreement, or in any certificate delivered
pursuant to the Pooling and Servicing Agreement, proves to have been
incorrect when made which has a material adverse effect on the
certificateholders of any Series then outstanding, and which continues to
be incorrect in any material respect for a period of 60 days after written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Trustee, or to the Servicer and Trustee by the
holders of Certificates evidencing undivided interests aggregating not less
than 50% of the Invested Amount of any Series materially adversely affected
thereby and continues to have a material adverse effect on such
certificateholders for such period; or
(iv) the occurrence of certain events of bankruptcy, insolvency, or
receivership of the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance referred
to in clause (i) above for a period of 10 business days, or referred to under
clause (ii) or (iii) for a period of 60 business days, will not constitute a
Servicer Default if such delay or failure could not be prevented by the
exercise of reasonable diligence by the Servicer and such delay or failure was
caused by an act of God or other similar occurrence. Upon the occurrence of any
such event, the Servicer will not be relieved from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of the
Pooling and Servicing Agreement, and
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the Servicer will provide the Trustee, any provider of Enhancement, the
Transferor, and the holders of certificates of all Series outstanding prompt
notice of such failure or delay by it, together with a description of the cause
of such failure or delay and its efforts to perform its obligations.
In the event of a Servicer Default, due to the bankruptcy of the Servicer, if
no Servicer Default other than such bankruptcy or the insolvency of the
Servicer exists, the bankruptcy trustee or the Servicer itself as debtor-in-
possession may have the power to prevent either the Trustee or the majority of
the certificateholders from effecting a Service Transfer.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Paying Agent will forward to each
Certificateholder of record a statement prepared by the Servicer setting forth,
among other things, with respect to such Series: (a) the total amount
distributed, (b) the amount of the distribution allocable to principal on the
Class A Certificates, the Class B Certificates, the Class C Certificates and
the Class D Certificates, (c) the amount of such distribution allocable to
interest on the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, (d) the amount of Principal
Collections processed during the related Monthly Period and allocated in
respect of the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class D Certificates, respectively, (e) the amount of
Interest Collections processed during the preceding Monthly Period and
allocated in respect of the Class A Certificates, the Class B Certificates, the
Class C Certificates and the Class D Certificates, respectively, (f) the
aggregate amount of Principal Receivables, the Invested Amount, the Class A
Invested Amount, the Class B Invested Amount, the Class C Invested Amount, the
Class D Invested Amount, the Pre-Funded Amount, the Floating Allocation
Percentage, and during the Amortization Period, the ABC Fixed/Floating
Allocation Percentage with respect to the Principal Receivables in the Trust as
of the close of business on the Record Date, (g) the aggregate outstanding
balance of Receivables which are current, 30-59, 60-89 and 90 or more days
delinquent as of the end of the day on the Record Date, (h) the Aggregate
Investor Default Amount for the related Monthly Period, (i) the aggregate
amount of Class A Investor Charge-Offs, Class B Investor Charge-Offs, Class C
Investor Charge-Offs and Class D Investor Charge-Offs for the preceding Monthly
Period, (j) the amount of the Monthly Servicing Fee for the preceding Monthly
Period, (k) the Class A Pool Factor and the Class B Pool Factor as of the end
of the last day of the related Monthly Period, and (l) the aggregate amount of
funds in the Excess Funding Account as of the last day of the Monthly Period
immediately preceding the Distribution Date.
The Paying Agent will furnish to each person who at any time during the
preceding calendar year was a Certificateholder of record a statement prepared
by the Servicer containing the information required to be contained in the
regular monthly report to Certificateholders, as set forth in clauses (a), (b),
and (c) above aggregated for such calendar year or the applicable portion
thereof during which such person was a Certificateholder, together with, on or
before March 31 of each year, beginning in 1996, such customary information
(consistent with the treatment of the Certificates as debt) as the Servicer or
Trustee deems necessary or desirable for tax reporting purposes.
REPORTS; NOTICES
Following the listing of the Offered Certificates on the Luxembourg Stock
Exchange, the Trustee will publish or will cause to be published following each
Distribution Date in a daily newspaper in Luxembourg (expected to be the
Luxemburger Wort) a notice to the effect that the information set forth in the
foregoing paragraph will be available for review at the main office of the
Listing Agent of the Trust in Luxembourg, Luxembourg.
Following the listing of the Offered Certificates on the Luxembourg Stock
Exchange, notices to Certificateholders will be given by publication in a daily
newspaper in Luxembourg, which is expected to be the Luxemburger Wort. In the
event that Definitive Certificates are issued, notices to Certificateholders
will also be given by mail to the addresses of such holders as they appear in
the certificate register.
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EVIDENCE AS TO COMPLIANCE
The Agreement will provide that on or before March 31 of each calendar year,
the Servicer will cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
report to the effect that such accounting firm has examined selected documents
and records relating to the servicing of the Accounts in accordance with the
Mortgage Bankers Association of America's Uniform Single Audit Program for
Mortgage Bankers, or any successor uniform program, and that, on the basis of
such examination, such firm is of the opinion that such servicing was conducted
in compliance with the Pooling and Servicing Agreement during the period
covered by such report except for such significant exceptions or errors in
records that, in the opinion of such firm, generally accepted auditing
standards requires it to report.
AMENDMENTS
The Pooling and Servicing Agreement and any Supplement may be amended by the
Transferor, the Servicer, and the Trustee, without the consent of
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Pooling and Servicing
Agreement and Supplements or of modifying in any manner the rights of such
Certificateholders; provided that (i) the Transferor delivers an opinion of
counsel acceptable to the trustee to the effect that such amendment will not
adversely affect in any material respect the interest of the
Certificateholders, and (ii) such amendment will not result in a withdrawal or
reduction of the rating of any outstanding series.
The Pooling and Servicing Agreement and the Supplement may be amended by the
Transferor, the Servicer, and the Trustee with the consent of the holders of
certificates evidencing undivided interests aggregating not less than 66 2/3%
of the investor interests of each and every Series adversely affected (and with
respect to Series 1995-1, the holders of not less than 66 2/3% of the Invested
Amount of each Class of Certificates), for the purpose of adding any provisions
to, changing in any manner or eliminating any of the provisions of the Pooling
and Servicing Agreement, or any Supplement or of modifying in any manner the
rights of certificateholders of any then outstanding Series. No such amendment,
however, may (a) reduce in any manner the amount of, or delay the timing of,
distributions required to be made on any such Series, (b) change the definition
of or the manner of calculating the interest of any certificateholder of such
Series, or (c) reduce the aforesaid percentage of investor interests the
holders of which are required to consent to any such amendment, in each case
without the consent of all certificateholders of all Series adversely affected.
Promptly following the execution of any amendment to the Pooling and Servicing
Agreement, the Trustee will furnish written notice of the substance of such
amendment to each Certificateholder. Any Supplement and any amendments
regarding the addition or removal of Receivables from the Trust will not be
considered an amendment requiring certificateholder consent under the
provisions of the Pooling and Servicing Agreement and any Supplement.
LIST OF CERTIFICATEHOLDERS
Upon written request of Certificateholders representing undivided interests
in the Trust aggregating not less than 10% of the Invested Amount, the Trustee
after having been adequately indemnified by such Certificateholders for its
costs and expenses, and having given the Servicer notice that such request has
been made, will afford such Certificateholders access during business hours to
the current list of Certificateholders of the Trust for purposes of
communicating with other Certificateholders with respect to their rights under
the Pooling and Servicing Agreement. See "--Book-Entry Registration" and "--
Definitive Certificates."
THE TRUSTEE
The Transferor, the Servicer, and their respective affiliates may from time
to time enter into normal banking, lending and trustee relationships with the
Trustee and its affiliates. The Trustee, the Transferor, the Servicer, and any
of their respective affiliates may hold Certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the Trustee will have the power to
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appoint a co-trustee or separate trustees of all or any part of the Trust. In
the event of such appointment, all rights, powers, duties, and obligations
conferred or imposed upon the Trustee by the Pooling and Servicing Agreement
will be conferred or imposed upon the Trustee and such separate trustee or co-
trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee who will exercise and perform such rights, powers,
duties, and obligations solely at the direction of the Trustee.
The Trustee may resign at any time, in which event the Transferor will be
obligated to appoint a successor Trustee. The Transferor may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Pooling and Servicing Agreement or if the Trustee becomes insolvent. In such
circumstances, the Transferor will be obligated to appoint a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee does not become effective until acceptance of the appointment by the
successor Trustee.
If the Trustee fails to perform any of its obligations under the Pooling and
Servicing Agreement, and a certificateholder delivers written notice of such
failure to the Trustee, and the Trustee shall not have corrected such failure
for 60 days thereafter, then the holders of investor certificates representing
more than 50% of the aggregate invested amount of all Series (including related
commitments) shall have the right to remove the Trustee and (with the consent
of the Transferor, which shall not be unreasonably withheld) promptly appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
DESCRIPTION OF THE PURCHASE AGREEMENT
TRANSFER OF RECEIVABLES
Pursuant to the Receivables Purchase Agreement (the "Purchase Agreement"),
the Company will sell and transfer to the Transferor all of its right, title
and interest in and to all of the Receivables as of the Cut-Off Date and all of
the Receivables thereafter created in the related Accounts. As described
herein, pursuant to the Pooling and Servicing Agreement and the related Series
Supplement, the Transferor will transfer to the Trust all of its right, title
and interest in and to the Purchase Agreement.
In connection with each such sale or transfer of Receivables to the
Transferor, the Company will indicate in its computer files that such
Receivables have been sold to the Transferor, and that such Receivables have
been transferred by the Transferor to the Trust. In addition, the Company will
provide to the Transferor a computer file or microfiche or written list
containing a true and complete list of all such Receivables, identifying the
balances of the Receivables as of the Cut-Off Date. The records and agreements
relating to such Accounts and Receivables will not be segregated by the Company
from other documents and agreements relating to other accounts and receivables
and will not be stamped or marked to reflect the sale or transfer of such
Receivables to the Transferor, but the computer records of the Company will be
marked to evidence such sale or transfer. The Company will file UCC financing
statements with respect to the Receivables meeting the requirements of
Minnesota state law. See "Risk Factors--Certain Legal Aspects" and "Certain
Legal Aspects of the Receivables--Transfer of Receivables."
REPRESENTATIONS AND WARRANTIES
Pursuant to the Purchase Agreement, the Company represents and warrants that,
among other things, (a) it has been duly incorporated and is in good standing
and that it has the authority to consummate the transactions contemplated by
the Purchase Agreement and (b) as of the Cut-Off Date (or, in the case of an
Additional Account, as of the Additional Cut-Off Date and Addition Date), each
Account or Additional Account was an Eligible Account.
Pursuant to the Purchase Agreement, the Company additionally represents and
warrants that, among other things, (a) as of the Closing Date, each of the
Accounts was an Eligible Account or, if it was or is an
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Ineligible Account on such date, such Account is being removed from the Trust
in accordance with the requirements of the Pooling and Servicing Agreement, (b)
the amount of Receivables that are reported as Ineligible Receivables
transferred to the Transferor on the Cut-Off Date or any Additional Cut-Off
Date for the purpose of facilitating the administration and reporting
obligations of the Servicer is true and correct and there are no other
Receivables that are Ineligible Receivables except as so reported and (c) as of
the date any new Receivable is created, such Receivable is an Eligible
Receivable. In the event of a breach of any representation and warranty set
forth in this paragraph which results in an Ineligible Receivable and the
requirement that the Transferor accept retransfer of such Ineligible Receivable
pursuant to the Pooling and Servicing Agreement, then the Company will be
obligated to repurchase such Ineligible Receivable from the Transferor on the
date of such retransfer. The purchase price for such Ineligible Receivable will
be the face amount thereof, of which at least the amount of any cash deposit
required to be made by the Transferor under the Pooling and Servicing Agreement
in respect of the retransfer of such Ineligible Receivable must be paid in
cash.
Pursuant to the Purchase Agreement, the Company also represents and warrants
that, among other things (a) the Purchase Agreement constitutes a legal, valid
and binding obligation of the Company and (b) the Purchase Agreement
constitutes a valid sale or transfer to the Transferor of all right, title and
interest of the Company in and to the Receivables, whether then existing or
thereafter created in the Accounts, all related security interests and other
related rights and the proceeds thereof, which is effective as to each
Receivable upon the creation thereof. If the breach of any of the
representations and warranties described in this paragraph results in the
obligation of the Transferor under the Pooling and Servicing Agreement to
accept retransfer of the Receivables, the Company will be obligated to
repurchase the Receivables retransferred to the Company for an amount of cash
equal to the amount of cash the Transferor is required to deposit under the
Pooling and Servicing Agreement in connection with such retransfer.
The Company will agree to indemnify the Transferor and to hold the Transferor
harmless from and against any and all losses, damages and expenses (including
reasonable attorneys' fees) suffered or incurred by the Transferor if the
foregoing representations and warranties are materially false.
CERTAIN COVENANTS
Pursuant to the Purchase Agreement, the Company covenants that it will
perform its obligations under the agreements relating to the Receivables and
the Accounts in conformity with its then-current policies and procedures
relating to manufactured housing floorplan receivables and accounts.
The Company further covenants that, except for the sale and conveyance under
the Purchase Agreement and the interests created under the Pooling and
Servicing Agreement and the Series Supplement, the Company will not sell,
pledge, assign or transfer any interest in the Receivables to any other person.
The Company also covenants to defend and indemnify the Transferor for any loss,
liability or expense incurred by the Transferor in connection with a breach by
the Company of any of its representations, warranties or covenants contained in
the Purchase Agreement.
The Company also agrees not to realize upon any security interest in a
manufactured home that it may have in respect of advances or loans to Dealers
other than the related Receivable until the Trust has fully realized on its
security interest in such Receivable.
In addition, the Company expressly acknowledges and consents to the
Transferor's assignment of its rights relating to the Receivables under the
Purchase Agreement to the Trustee.
TERMINATION
The Purchase Agreement will terminate immediately after the Trust terminates.
In addition, if the Company becomes party to any bankruptcy or similar
proceeding (other than as a claimant) and, if such proceeding is not voluntary
and is not dismissed within 60 days of its institution, the Company will
immediately cease to sell or transfer Receivables to the Transferor and will
promptly give notice of such event to the Transferor and to the Trustee.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES
On the Closing Date, the Company will sell and assign the Receivables to the
Transferor pursuant to the Purchase Agreement, and the Transferor will
immediately sell and assign the Receivables to the Trust pursuant to the Series
Supplement. The Transferor represents and warrants on the Closing Date that
such sale to the Trust constitutes a valid transfer and assignment to the Trust
of all right, title and interest of the Transferor in and to the Receivables,
except for the interest of any investor certificate of any Series then held by
it, or the grant to the Trust of a security interest in the Receivables. The
Transferor has also represented and warranted in the Pooling and Servicing
Agreement that, in the event the transfer of the Receivables by the Transferor
to the Trust is deemed to create a security interest under the UCC, there will
exist a valid, subsisting, and enforceable first priority perfected security
interest in such Receivables created thereafter in favor of the Trust on and
after their creation, subject to certain tax liens. For a discussion of the
Trust's rights arising from these representations and warranties not being
satisfied, see "Description of the Certificates--Representations and
Warranties."
Each of the Company and the Transferor has represented that the Receivables
are either "general intangibles" or "chattel paper" for purposes of the UCC as
in effect in Minnesota. If the Receivables are deemed to be general intangibles
and the transfer thereof by either the Company to the Transferor or by the
Transferor to the Trust is deemed to be a sale, Minnesota common law applies
and neither possession nor a financing statement is required. If the
Receivables are deemed to be general intangibles and the transfer thereof by
either the Company to the Transferor or by the Transferor to the Trust is
deemed to create a security interest, the UCC as in effect in Minnesota applies
and the transferee must file an appropriate financing statement or statements
in order to perfect its interest therein. If the Receivables are deemed to be
chattel paper and the transfer thereof by either the Company to the Transferor
or by the Transferor to the Trust is deemed either to be a sale or to create a
security interest, the UCC as in effect in Minnesota applies and the transferee
must either take possession of the chattel paper or file an appropriate
financing statement or statements in order to perfect its interest therein.
Financing statements covering the Receivables will be filed under the UCC as in
effect in Minnesota by both the Transferor and the Trust to perfect their
respective interests in the Receivables and continuation statements will be
filed as required to continue the perfection of such interests. The Receivables
will not be stamped to indicate the interest of the Transferor or the Trustee.
There are certain limited circumstances under the UCC and other applicable
law in which prior or subsequent transferees of Receivables could have an
interest in such Receivables with priority over the Trust's interest. A
purchaser of the Receivables that are chattel paper who gives new value and
takes possession of the instruments that evidence the Receivables (i.e., the
chattel paper) in the ordinary course of such purchaser's business may, under
certain circumstances, have priority over the interest of the Trust in such
Receivable. Under the Purchase Agreement, the Company warrants to the
Transferor, and under the Agreement and Series 1995-1 Supplement the Transferor
warrants to the Trust, that the Receivables have been transferred free and
clear of the lien of any third party. Each of the Company and the Transferor
will also covenant that it will not sell, pledge, assign, transfer or grant any
lien on any Receivable or, except as described under "Description of the
Certificates--Additional Series; Exchanges," the Exchangeable Transferor's
Certificate (or any interest therein) other than to the Trust. A tax or other
government lien on property of the Company or the Transferor arising prior to
the time a Receivable comes into existence may also have priority over the
interest of the Trust in such Receivable.
CERTAIN MATTERS RELATING TO BANKRUPTCY
The Company warrants to the Transferor in the Purchase Agreement that the
sale of the Receivables by it to the Transferor is a valid sale of the
Receivables to the Transferor. In addition, pursuant to the Purchase Agreement,
the Company and the Transferor will agree to treat the transactions described
herein as a sale of such Receivables to the Transferor, and the Company will
take all actions that are required under Minnesota
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law to perfect the Transferor's ownership interest in the Receivables.
Notwithstanding the foregoing, if the Company were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of the Company or the
Company itself as debtor-in-possession were to take the position that the sale
of Receivables from the Company to the Transferor should be recharacterized as
a pledge of such Receivables to secure a borrowing from the Company, then
delays in payments of collections of Receivables to the Transferor could occur
or (should the court rule in favor of any such trustee, debtor-in-possession or
creditor) reductions in the amount of such payments could result.
In addition, if the Company were to become a debtor in a bankruptcy case and
a creditor or trustee-in-bankruptcy of such debtor or the Company itself were
to request a court to order that the Company should be substantively
consolidated with the Transferor, delays in payments on the Certificates could
result. Should the bankruptcy court rule in favor of any such creditor,
trustee-in-bankruptcy or the Company, reductions in such payments could result.
The Transferor will warrant to the Trust that the transfer of the Receivables
to the Trust is a sale of the Receivables to the Trust. The Transferor is
required to take all actions that are required under Minnesota law to perfect
the Trust's ownership interest in the Receivables and the Transferor will
warrant to the Trust that the Trust will at all times have a first priority
perfected ownership interest therein and, with certain exceptions, the proceeds
thereof. Nevertheless, a tax or government lien on property of the Company or
the Transferor arising prior to the time a Receivable is conveyed to the Trust
may have priority over the interest of the Trust in such Receivable. The
Transferor's certificate of incorporation provides that, under certain
circumstances, the Transferor is required to have two independent directors (as
defined therein) in which event it shall not file a voluntary application for
relief under Title 11 of the United States Code (the "Bankruptcy Code") without
the affirmative vote of its two independent directors. Pursuant to the Pooling
and Servicing Agreement, the Trustee, all certificateholders and any Credit
Enhancement Provider with respect to any other series will covenant that they
will not at any time institute against the Transferor any bankruptcy,
reorganization or other proceedings under any federal or state bankruptcy or
similar law. In addition, certain other steps will be taken to avoid the
Transferor's becoming a debtor in a bankruptcy case. Notwithstanding such
steps, if the Transferor were to become a debtor in a bankruptcy case, and a
bankruptcy trustee for the Transferor or the Transferor as debtor in possession
or a creditor of the Transferor were to take the position that the transfer of
the Receivables from the Transferor to the Trust should be recharacterized as a
pledge of such Receivables, then delays in payments on the Certificates or
(should the court rule in favor of any such trustee, debtor in possession or
creditor) reductions in the amount of such payments could result.
The Transferor does not intend to file, and the Company will agree that it
will not cause the Transferor to file, a voluntary application for relief under
the Bankruptcy Code or any similar applicable state law with respect to the
Transferor so long as the Transferor is solvent and does not foresee becoming
insolvent.
If the Company or the Transferor were to become a debtor in a bankruptcy case
causing a Pay Out Event to occur, then, pursuant to the Purchase Agreement, new
Receivables would no longer be transferred to the Transferor and, pursuant to
the Pooling and Servicing Agreement, only collections on Receivables
theretofore sold to the Transferor and transferred to the related Trust would
be available to be applied to pay interest accruing on the Certificates and to
pay the principal amount of the Certificates. Under such circumstances, the
Servicer is obligated to allocate all Principal Collections to the oldest
principal balance first. If such allocation method were to be altered by the
bankruptcy court, the rate of payment on the Certificates might be adversely
affected. In addition, distributions of principal on each Certificate would not
be subject to the applicable Controlled Distribution Amount. If the only Pay
Out Event to occur is either the insolvency of the Transferor or the
appointment of a bankruptcy trustee or receiver for the Transferor, the
receiver or bankruptcy trustee for the Transferor may have the power to
continue to require the Transferor to transfer new Principal Receivables to the
Trust and to prevent the early sale, liquidation, or disposition of the
Receivables and the commencement of the Early Amortization Period. See
"Description of the Offered Certificates--Pay Out Events."
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The occurrence of certain events of bankruptcy, insolvency or receivership
with respect to the Servicer will result in a Servicer Default, which Servicer
Default, in turn, will result in an Early Amortization Event. If no other
Servicer Default other than the commencement of such bankruptcy or similar
event exists, a trustee-in-bankruptcy of the Servicer may have the power to
prevent either the Trustee or the Certificateholders from appointing a
successor Servicer.
Payments made in respect of repurchases of Receivables by the Company or the
Transferor pursuant to the Pooling and Servicing Agreement and the Series
Supplement may be recoverable by the Company or the Transferor, as debtor in
possession, or by a creditor or a trustee-in-bankruptcy of the Company or the
Transferor as a preferential transfer from the Company or the Transferor if
such payments are made within one year prior to the filing of a bankruptcy case
in respect of the Company.
In a recent decision, Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th
Cir. 1993), cert. denied, 114 S. Ct. 554 (1993) the United States Court of
Appeals for the 10th Circuit suggested that even where a transfer of accounts
from a seller to a buyer constitutes a "true sale," the accounts would
nevertheless constitute property of the seller's bankruptcy estate in a
bankruptcy of the seller. If the Company or the Transferor were to become
subject to a bankruptcy proceeding and a court were to follow the Octagon
court's reasoning, Certificateholders might experience delays in payment or
possibly losses in their investment in the Certificates. Counsel has advised
the seller that the facts of the Octagon case are distinguishable from those in
the sale transaction between the Company and the Transferor and the Transferor
and the Trust and that the reasoning of the Octagon case appears to be
inconsistent with established precedent and the UCC. In addition, because the
Company, the Transferor, the Trust and the transaction governed by the Pooling
and Servicing Agreement do not have any particular link to the 10th Circuit, it
is unlikely that the Company or the Transferor would be subject to a
receivership proceeding in the 10th Circuit. Accordingly, the Octagon case
should not be binding precedent on a court in a receivership proceeding.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a discussion of federal income tax consequences to Offered
Certificate Owners. This discussion is based upon present provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the regulations
promulgated thereunder, and judicial or ruling authority, all of which are
subject to change (which may be retroactive). No ruling on any of the issues
discussed below will be sought from the Internal Revenue Service (the "IRS").
This discussion does not deal with all aspects of federal income taxation that
may be relevant to Offered Certificate Owners in light of their personal
investment circumstances, nor to certain types of owners subject to special
treatment under the federal income tax laws (e.g., banks, life insurance
companies and tax-exempt organizations). Prospective investors are advised to
consult their own tax advisors with regard to the federal income tax
consequences of owning and disposing of the Certificates, as well as the tax
consequences arising under the laws of any applicable state, foreign country or
other jurisdiction.
Treatment of the Certificates as Indebtedness of the Transferor. The
Transferor and the holders of Certificates will express in the Pooling and
Servicing Agreement the intent that, for federal, state and local income and
franchise tax purposes, the Offered Certificates will be indebtedness secured
by the Receivables and any other Trust assets allocable to the Offered
Certificates. The Transferor, by entering into the Pooling and Servicing
Agreement, and each Offered Certificate Owner, by the acceptance of an interest
in an Offered Certificate, will agree to treat the Offered Certificates as
indebtedness for federal, state and local income and franchise tax purposes.
The Pooling and Servicing Agreement generally will refer to the transfer of the
related Receivables as a "sale," however, and since different criteria are used
in determining the nontax accounting treatment of the transaction, the
Transferor will treat the Pooling and Servicing Agreement, for certain
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nontax purposes, as effecting a transfer of an ownership interest in the
Receivables and not as creating a debt obligation.
A basic premise of federal income tax law is that the economic substance of a
transaction generally determines the tax consequences. The form of a
transaction, while a relevant factor, is not conclusive evidence of its
economic substance. In appropriate circumstances, the courts have allowed
taxpayers, as well as the IRS, to treat a transaction in accordance with its
economic substance, as determined under federal income tax law, even though the
participants in the transaction have characterized it differently for nontax
purposes.
The determination of whether the economic substance of a property transfer is
a sale or a loan secured by the transferred property has been made by the IRS
and the courts on the basis of numerous factors designed to determine whether
the transferor has relinquished (and the transferee has obtained) substantial
incidents of ownership in the property. Among those factors, the primary
factors examined are whether the transferee has the opportunity to gain if the
property increases in value and bears the risk of loss if the property
decreases in value. Based upon its analysis of such factors, Dorsey & Whitney
P.L.L.P., counsel to the Company and the Transferor ("Counsel"), is of the
opinion that for federal income tax purposes the Transferor will be treated as
the owner of the Receivables and any other Trust assets allocable to the
Offered Certificates, the Offered Certificates will be characterized as
indebtedness secured by the Receivables and such other assets, and the Trust
will not be characterized as an "association" taxable as a corporation or a
"publicly traded partnership" taxable as a corporation.
Interest Income to Certificate Owners. Assuming the Offered Certificates are
debt obligations for federal income tax purposes, interest on the Offered
Certificates will be taxable as ordinary interest income when received by
Certificate Owners utilizing the cash-basis method of accounting and when
accrued by Certificate Owners utilizing the accrual method of accounting. Under
the applicable regulations, the Offered Certificates would be considered issued
with original issue discount ("OID") if the "stated redemption price at
maturity" of an Offered Certificate (generally equal to its principal amount as
of the date of issuance plus all interest other than "qualified stated
interest" payable prior to or at maturity) exceeds the original issue price (in
this case, the initial offering price at which a substantial amount of the
Offered Certificates are sold to the public). Any OID would be considered de
minimis under the regulation if it does not exceed 1/4% of the stated
redemption price at maturity of an Offered Certificate multiplied by the number
of full years until its maturity date. It is anticipated that the Offered
Certificates will not be considered issued with more than de minimis OID. Under
the OID regulations, an owner of an Offered Certificate issued with a de
minimis amount of OID must include such OID in income, on a pro rata basis, as
principal payments are made on the Offered Certificate.
While it is not anticipated that the Offered Certificates will be issued with
more than de minimis OID, it is possible that they will be so issued or will be
deemed to be issued with OID. This deemed OID could arise, for example, if
interest payments on the Offered Certificates are not deemed to be "qualified
stated interest" because the Offered Certificates do not provide for default
remedies ordinarily available to holders of debt instruments or because no
penalties are imposed as a result of any failure to make interest payments on
the Offered Certificates. In either case, all or a portion of the taxable
income to be recognized with respect to the Offered Certificates would be
includible in the income of Certificate Owners as OID. Any amount treated as
OID would not, however, be includible again when the amount is actually
received. If the yield on a class of Offered Certificates were not materially
different from its coupon, this treatment would have no significant effect on
Certificate Owners using the accrual method of accounting. However, cash method
Certificate Owners may be required to report income with respect to the Offered
Certificates in advance of the receipt of cash attributable to such income.
A Certificate Owner must include OID in income as interest over the term of
the Offered Certificate under a constant yield method. In general, OID must be
included in income in advance of the receipt of cash representing that income.
Each Certificate Owner should consult its own tax advisor regarding the impact
of the OID rules if the Offered Certificates are issued with OID.
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A Certificate Owner who purchases an Offered Certificate at a discount may be
subject to the "market discount" rules of the Code. These rules provide, in
part, for the treatment of gain attributable to accrued market discount as
ordinary income upon the receipt of partial principal payments or on the sale
or other disposition of the Offered Certificate, and for the deferral of
interest deductions with respect to debt incurred to acquire or carry the
market discount Offered Certificate. A Certificate Owner who purchases an
Offered Certificate at a premium may elect to amortize and deduct this premium
over the remaining term of the Offered Certificate in accordance with rules set
forth in Section 171 of the Code.
As an alternative to the above treatments, accrual method Certificate Owners
may elect to include in gross income all interest with respect to an Offered
Certificate, including stated interest, acquisition discount, OID, de minimis
OID, market discount, de minimis market discount, and unstated interest, as
adjusted by any amortizable bond premium or acquisition premium, using the
constant yield method.
Disposition of Offered Certificates. Generally, gain or loss will be
recognized on a sale or other taxable disposition of Offered Certificates in an
amount equal to the difference between the amount realized and the seller's tax
basis in the Offered Certificates. A Certificate Owner's tax basis in an
Offered Certificate will generally equal the cost thereof increased by any OID,
market discount and gain previously included by such Certificate Owner in
income with respect to the Offered Certificate and decreased by any bond
premium previously amortized and any principal payments previously received by
such Certificate Owner with respect to the Offered Certificate. Any such gain
or loss will be capital gain or loss if the Offered Certificate was held as a
capital asset, except for gain representing accrued interest and accrued market
discount not previously included in income. Capital gain or loss will be long-
term if the Offered Certificate was held by the holder for more than one year
and otherwise will be short-term. Any capital losses realized generally may be
used by a corporate taxpayer only to offset capital gains, and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
Information Reporting and Backup Withholding. The Trustee will be required to
report annually to the IRS, and to each Offered Certificateholder of record,
the amount of interest paid on the Offered Certificates (and the amount of
interest withheld for federal income taxes, if any) for each calendar year,
except as to exempt holders (generally, holders that are corporations, tax-
exempt organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, or nonresident aliens who provide certification of their
status as nonresidents). As long as the only "Certificateholder" of record is
Cede, as nominee for DTC, Certificate Owners and the IRS will receive tax and
other information only from Participants and Indirect Participants rather than
from the Trustee. Each nonexempt Offered Certificate Owner will be required to
provide, under penalties of perjury, a certificate on IRS Form W-9 containing
the Owner's name, address, federal taxpayer identification number and a
statement that such Owner is not subject to backup withholding. Should a
nonexempt Offered Certificate Owner fail to provide the required certification,
the Trustee (or the Participants or Indirect Participants) will be required to
withhold (or cause to be withheld) 31% of the interest (and principal)
otherwise payable to the Owner, and remit the withheld amounts to the IRS as a
credit against the Owner's federal income tax liability.
Possible Classification of the Trust as a Partnership or Association. As
described above, it is the opinion of Counsel that for federal income tax
purposes the Offered Certificates will be characterized as debt and the Trust
will not be characterized as an association or publicly traded partnership
taxable as a corporation. However, this opinion is not binding on the IRS and
no assurance can be given that this characterization will be sustained.
If the IRS were to contend successfully that any class of Certificates is not
debt for federal income tax purposes, the Trust might be classified for federal
income tax purposes as a partnership, an association taxable as a corporation,
or a publicly traded partnership taxable as a corporation. In the opinion of
Counsel, if the
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IRS were to contend successfully that the Class C Certificates were not debt
for federal income tax purposes (assuming that neither the Class A or Class B
Certificates, nor certificates of any other outstanding series, were also
recharacterized) the arrangement among the Transferor and the Class C
Certificateholders would be classified as a partnership for federal income tax
purposes and would not be treated as a publicly traded partnership because of
an exception for (i) an entity whose income is interest income that is not
derived in the conduct of a financial business or (ii) partnership interests
that are privately placed. In such case, the partnership would not be subject
to federal income tax. If the Class A or Class B Certificates are treated as
equity interests in a partnership, the partnership would in all likelihood be
treated as a publicly traded partnership. A publicly traded partnership is, in
general, taxable as a corporation. If the partnership were nevertheless not
taxable as a corporation because of an exception for an entity whose income is
interest income that is not derived in the conduct of a financial business, it
would not be subject to federal income tax. Rather, each item of income, gain,
loss, deduction and credit generated through the ownership of the Receivables
by the partnership would be passed through to the partners in the partnership
(including the Certificate Owners) according to their respective interests
therein.
The income reportable by the Offered Certificate Owners as partners in such a
partnership could differ from the income reportable by them as holders of debt.
However, except as provided below, it is not expected that such differences
would be material. If the Offered Certificate Owners were treated as partners,
a cash-basis Certificate Owner might be required to report income when it
accrues to the partnership rather than when it is received by the Certificate
Owner. Moreover, if the Offered Certificates are interests in a partnership, an
individual Certificate Owner's share of expenses of the partnership would be
miscellaneous itemized deductions that might not be deductible in whole or in
part, causing the Certificate Owner to be taxable on a greater amount of income
than the stated interest on the Offered Certificates. Finally, if any class of
Certificates is treated as equity in a partnership in which other Certificates
are debt, all or part of a tax-exempt Certificate Owner's share of income from
Certificates treated as equity would be treated as unrelated debt-financed
income taxable to the Certificate Owner.
Alternatively, if the Trust were treated as either an association taxable as
a corporation or a publicly traded partnership taxable as a corporation, the
resulting entity would be subject to federal income taxes at corporate tax
rates on its taxable income generated by ownership of the Receivables.
Distributions by the entity (other than interest distributions on classes of
Certificates properly characterized as debt) would probably not be deductible
in computing the entity's taxable income. Such an entity-level tax could result
in reduced distributions to Offered Certificate Owners, and the Offered
Certificate Owners could be liable for a share of such a tax. Moreover, all or
part of the distributions on Certificates treated as equity would probably be
treated as dividend income to the recipients, although such dividends might,
under certain circumstances, be eligible for the dividends received deduction
under the Code.
Since the Transferor will treat the Offered Certificates as indebtedness for
federal income tax purposes, the Trustee (and Participants and Indirect
Participants) will not comply with the tax reporting requirements that would
apply under these alternative characterizations of the Offered Certificates.
Foreign Investors. If, in accordance with the opinion of Counsel, the Offered
Certificates are classified as debt for federal income tax purposes, the
following information describes the federal income tax treatment of investors
that are not U.S. persons (each a "Foreign Person"). The term "Foreign Person"
means any person other than (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof or (iii) an estate or
trust the income of which is includible in gross income for U.S. federal income
tax purposes, regardless of its source.
(a) Interest paid or accrued to a Foreign Person would be exempt from
U.S. withholding taxes (including backup withholding taxes); provided that
the Foreign Person complies with applicable
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identification requirements (and does not actually or constructively own
10% or more of the voting stock of the Company and is not a controlled
foreign corporation with respect to the Company). Applicable identification
requirements will be satisfied if there is delivered to a securities
clearing organization (or bank or other financial institution that holds
the Offered Certificates on behalf of the customer in the ordinary course
of its trade or business) (i) IRS Form W-8 signed under penalties of
perjury by the beneficial owner of the Offered Certificates stating that
the owner is not a U.S. person and providing the owner's name and address,
(ii) IRS Form 1001 signed by the beneficial owner of the Offered
Certificates or the owner's agent claiming exemption from withholding under
an applicable tax treaty, or (iii) IRS Form 4224 signed by the beneficial
owner of the Offered Certificates or the owner's agent claiming exemption
from withholding of tax on income connected with the conduct of a trade or
business in the United States; provided that in any such case (x) the
applicable form is delivered pursuant to applicable procedures and is
properly transmitted to the United States entity otherwise required to
withhold tax and (y) none of the entities receiving the form has actual
knowledge that the owner is a U.S. person or that any certification on the
form is false.
(b) An owner of an Offered Certificate who is a Foreign Person will not
be subject to United States federal income tax on gain realized on the
sale, exchange or redemption of the Offered Certificate, provided that (i)
the gain is not effectively connected to a trade or business carried on by
the owner in the United States, (ii) in the case of an owner who is an
individual, the owner is not present in the United States for 183 days or
more during the taxable year in which the sale, exchange or redemption
occurs, (iii) in the case of gain representing accrued interest, the
conditions described in clause (a) are satisfied, and (iv) the Offered
Certificate was held as a capital asset.
(c) If the interest, gain or income on an Offered Certificate held by a
Foreign Person is effectively connected with the conduct of a trade or
business in the United States by the Foreign Person, the holder (although
exempt from the withholding tax previously discussed if an appropriate
statement is furnished) generally will be subject to United States federal
income tax on the interest, gain or income at regular federal income tax
rates. In addition, if the Foreign Person is a foreign corporation, it may
be subject to a branch profits tax equal to 30 percent of its "effectively
connected earnings and profits" within the meaning of the Code for the
taxable year, as adjusted for certain items, unless it qualifies for a
lower rate under an applicable tax treaty.
(d) An Offered Certificate owned by an individual who at the time of
death is a nonresident alien will not be subject to United States federal
estate tax as a result of the owner's death if, immediately before his
death, (i) the decedent did not actually or constructively own 10% or more
of the voting stock of Green Tree Financial Corporation and (ii) the
ownership of the Offered Certificate was not effectively connected with the
conduct by the decedent of a trade or business in the United States.
If the IRS were to contend successfully that the Offered Certificates are
equity interests in a partnership (not taxable as a corporation), an Offered
Certificate Owner that is a Foreign Person might be required to file a U.S.
income tax return and pay tax on its share of partnership income at regular
U.S. rates, including, in the case of a corporation, the branch profits tax
(and would be subject to withholding tax on its share of partnership income).
If the Offered Certificates are recharacterized as equity interests in an
association taxable as a corporation or a publicly traded partnership taxable
as a corporation, an owner who is a Foreign Person would generally be taxed
(and be subject to withholding) on the gross amount of the distributions on the
Offered Certificates, to the extent they are treated as dividends, at the rate
of 30% (unless the rate is reduced by applicable treaty).
STATE AND LOCAL TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in Minnesota. The State of Minnesota imposes an
income tax on individuals, trusts and estates and a franchise tax measured by
net income on corporations. This discussion of Minnesota taxation is based upon
current statutory provisions and the regulations promulgated thereunder, and
applicable judicial or ruling authority,
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all of which are subject to change (which may be retroactive). No ruling on any
of the issues discussed below will be sought from the Minnesota Department of
Revenue.
If the Offered Certificates are treated as debt of the Transferor for federal
income tax purposes, in the opinion of Counsel this treatment will also apply
for Minnesota tax purposes. Pursuant to this treatment, the Trust will not be
subject to Minnesota taxation. Certificate Owners not otherwise subject to
Minnesota income or franchise taxation would not become subject to such a tax
solely because of their ownership of the Offered Certificates. Certificate
Owners already subject to income or franchise taxation in Minnesota could,
however, be required to pay such a tax on all or a portion of the income
generated from ownership of the Offered Certificates.
If the Trust is treated as a partnership (not taxable as a corporation) for
federal income tax purposes, in the opinion of Counsel the Trust would also be
treated as such a partnership for Minnesota income tax purposes. The
partnership therefore would not be subject to Minnesota taxation. Certificate
Owners that are not otherwise subject to Minnesota income or franchise taxation
would not become subject to such a tax solely because of their interests in the
constructive partnership. Certificate Owners already subject to income or
franchise taxation in Minnesota could, however, be required to pay such a tax
on all or a portion of the income from the constructive partnership.
If the Offered Certificates are treated as ownership interests in an
association or publicly traded partnership taxable as a corporation, in the
opinion of Counsel this treatment would also apply for Minnesota income and
franchise tax purposes. Pursuant to this treatment, the Trust would be subject
to the Minnesota franchise tax measured by net income (which could result in
reduced distributions to Certificate Owners). Certificate Owners that are not
otherwise subject to Minnesota income or franchise taxation would not become
subject to such a tax solely because of their interests in the constructive
corporation. Certificate Owners already subject to income or franchise taxation
in Minnesota could, however, be required to pay such a tax on all or a portion
of the income from the constructive corporation.
Because state tax laws vary, it is not possible to describe the tax
consequences to the Certificate Owners in all of the states. Certificate Owners
are therefore urged to consult their own tax advisors with respect to the state
tax treatment of the Offered Certificates and income derived therefrom.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan that is subject to such provisions from
engaging in certain transactions involving "plan assets" with persons that are
"parties in interest" under ERISA or "disqualified persons" under the Code with
respect to the plan. ERISA also imposes certain duties on persons who are
fiduciaries of plans subject to ERISA and prohibits certain transactions
between a plan and parties in interest with respect to such plans. Under ERISA,
any person who exercises any authority or control respecting the management or
disposition of the assets of a plan is considered to be a fiduciary of such
plan (subject to certain exceptions not here relevant). A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and the Code for such persons.
Plan fiduciaries must determine whether the acquisition and holding of the
Offered Certificates and the operations of the Trust would result in direct or
indirect prohibited transactions under ERISA and the Code. The operations of
the Trust could result in prohibited transactions if Benefit Plans that
purchase the Offered Certificates are deemed to own an interest in the
underlying assets of the Trust. There may also be an improper delegation of the
responsibility to manage Benefit Plan assets if Benefit Plans that purchase the
Offered Certificates are deemed to own an interest in the underlying assets of
the Trust.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor (the "DOL") concerning the definition of what constitutes
the "plan assets" of an employee benefit plan subject to Title I
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of ERISA or Section 4975 of the Code, or an individual retirement account
("IRA") (collectively referred to as "Benefit Plans"), the assets and
properties of certain entities in which a Benefit Plan makes an equity
investment could be deemed to be assets of the Benefit Plan in certain
circumstances. Accordingly, if Benefit Plans purchase Offered Certificates, the
Trust could be deemed to hold plan assets unless one of the exceptions under
the Final Regulation is applicable to the Trust.
The Final Regulation applies to the purchase by a Benefit Plan of an "equity
interest" in an entity. Assuming that interests in Offered Certificates are
equity interests, the Final Regulation contains an exception that provides that
if a Benefit Plan acquires a "publicly offered security," the issuer of the
security is not deemed to hold plan assets. A publicly offered security is a
security that is (i) freely transferable, (ii) part of a class of securities
that is owned by 100 or more investors independent of the issuer and of one
another and (iii) either is (A) part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act or (B) sold to the plan as part of
an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or
such later time as may be allowed by the Commission) after the end of the
fiscal year of the issuer during which the offering of such securities to the
public occurred. In addition, the Final Regulation provides that if at all
times less that 25% of the value of all classes of equity interests in
Certificates are held by benefit plan investors (which is defined as including
plans subject to ERISA, government plans and IRA's), the investing plan's
assets will not include any of the underlying assets of the Trust.
It is anticipated that interests in the Class A Certificates will meet the
criteria of publicly offered securities as set forth above. The Underwriters
expect, although no assurances can be given, that interests in the Class A
Certificates will be held by at least 100 independent investors at the
conclusion of the offering; there are no restrictions imposed on the transfer
of interests in the Class A Certificates; and interests in the Class A
Certificates will be sold as part of an offering pursuant to an effective
registration statement under the Securities Act and thereafter will be timely
registered under the Exchange Act.
The Underwriter of the Class B Certificates expects that the Class B
Certificates will not be held by at least 100 persons. Consequently, the
publicly offered security exception contained in the regulations will not be
met with respect to the Class B Certificates. Consequently, no transfer of a
Class B Certificate will be permitted to be made to a Benefit Plan unless such
Benefit Plan, at its expense, delivers to the Trustee and the Transferor an
opinion of counsel satisfactory to them to the effect that the purchase or
holding of a Class B Certificate by such Benefit Plan will not result in the
assets of the Trust being deemed to be "assets of the Benefit Plan" or subject
to the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee, the Transferor or the Servicer to any obligation in
addition to those undertaken in the Pooling and Servicing Agreement. Unless
such opinion is delivered, each person acquiring a Class B Certificate or the
beneficial ownership of a Class B Certificate will be deemed to represent to
the Trustee, the Transferor and the Servicer that such person is not a Benefit
Plan subject to ERISA or Section 4975 of the Code.
If interests in a Class of the Offered Certificates fail to meet the criteria
of publicly offered securities, the Trust's assets may be deemed to include
assets of Benefit Plans that are holders of the Certificates of such Class, and
transactions involving the Trust and "parties in interest" or "disqualified
persons" with respect to such Benefit Plans might be prohibited under Section
406 of ERISA and Section 4975 of the Code unless an exemption is applicable. In
addition, the Transferor or any of the Underwriters may be considered to be a
party in interest, disqualified person or fiduciary with respect to an
investing Benefit Plan. Accordingly, an investment by a Benefit Plan in Offered
Certificates may be a prohibited transaction under ERISA and the Code unless
such investment is subject to a statutory or administrative exemption. Thus,
for example, if a participant in any Benefit Plan is an Obligor, under DOL
interpretations the purchase of interests in Offered Certificates by such plan
could constitute a prohibited transaction. Three class exemptions issued by the
DOL that could apply in such event are DOL Prohibited Transaction Exemption 84-
14 (Class Exemption for Plan Asset Transactions Determined by Independent
Qualified Professional Asset Managers), 91-38 (Class Exemption for Certain
Transactions Involving Bank Collective Investment Funds) and 90-1 (Class
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Exemption for Certain Transactions Involving Insurance Company Pooled Separate
Accounts). There is no assurance that these exemptions even if all of the
conditions specified therein are satisfied, or any other exemption will apply
to all transactions involving the Trust's assets.
In light of the foregoing, fiduciaries of a Benefit Plan considering the
purchase of interests in Offered Certificates should consult their own counsel
as to whether the assets of the Trust which are represented by such interests
would be considered plan assets, and whether, under the general fiduciary
standards of investment prudence and diversification, an investment in Offered
Certificates is appropriate for the Benefit Plan taking into account the
overall investment policy of the Benefit Plan and the composition of the
Benefit Plan's investment portfolio. In addition, fiduciaries should consider
the consequences that would apply if the Trust's assets were considered plan
assets, the applicability of exemptive relief from the prohibited transaction
rules, and, whether all conditions for such exemptive relief would be
satisfied. In this regard, purchasers that are insurance companies should
consult with their counsel with respect to the recent United States Supreme
Court case interpreting the fiduciary responsibility rules of ERISA, John
Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank (decided
December 12, 1993). In John Hancock, the Supreme Court ruled that assets held
in an insurance company's general account may be deemed to be "plan assets" for
ERISA purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of the
Offered Certificates.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
dated , 1995 (the "Underwriting Agreement"), among the Transferor and the
underwriters named below (the "Underwriters"), the Transferor has agreed to
sell to each of the Underwriters, and each of the Underwriters has severally
agreed to purchase from the Transferor, the principal amount of the Offered
Certificates set forth opposite its name below.
<TABLE>
<CAPTION>
AMOUNT OF AMOUNT OF
CLASS A CLASS B
UNDERWRITER CERTIFICATES CERTIFICATES
----------- ------------ ------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................... $ $
Bear, Stearns & Co. Inc........................
---------- ----------
Total...................................... $ $
========== ==========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Offered
Certificates offered hereby if any Offered Certificates are purchased. In the
event of a default by any Underwriter, the Underwriting Agreement provides
that, in certain circumstances, the purchase commitments of the nondefaulting
Underwriter may be increased or the Underwriting Agreement may be terminated.
The Transferor has been advised by the Underwriters that the Underwriters
propose initially to offer the Class A Certificates to the public at the public
offering price set forth on the cover page of this Prospectus, and to certain
dealers at such price less a concession not in excess of % of the principal
amount of the Class A Certificates. The Underwriters may allow, and such
dealers may reallow, a discount with respect to the Class A Certificates not in
excess of % of such principal amount to certain other dealers. The Transferor
has been advised by the Underwriter of the Class B Certificates that the
Underwriter of the Class B Certificates proposes initially to offer the Class B
Certificates to the public at the public offering price set forth on the cover
page of this Prospectus, and to certain dealers at such price less a concession
not in excess of % of the principal amount of the Class B Certificates. The
Underwriter of the Class B Certificates may allow, and such dealers may
reallow, a discount with respect to the Class B Certificates not in excess of
%
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of such principal amount to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The Underwriting Agreement provides that the Transferor and the Company will
indemnify the Underwriters against certain liabilities, including liabilities
under applicable securities laws, or contribute to payments the Underwriters
may be required to make in respect thereof.
Each Underwriter has represented and agreed that (a) it has complied and will
comply with all applicable provisions of the Financial Services Act of 1986
with respect to anything done by it in relation to the Certificates in, from or
otherwise involving the United Kingdom; (b) it has only issued or passed on and
will only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Certificates to a person who is of a kind
described in Article 9(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1988 or who is a person to whom the document
may otherwise lawfully be issued or passed on; (c) if that Underwriter is an
authorized person under Chapter III of the Financial Services Act of 1986, it
has only promoted and will only promote (as that term is defined in Regulation
1.02 of the Financial Services (Promotion of Unregulated Schemes) Regulations
1991) to any person in the United Kingdom the scheme described in this
Prospectus if that person is of a kind described either in Section 76(2) of the
Financial Services Act of 1986 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulation 1991; and (d) it is a person of a
kind described in Article 9(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1988.
LISTING AND GENERAL INFORMATION
Application has been made to list the Offered Certificates on the Luxembourg
Stock Exchange. In connection with the listing application, the Certificate of
Incorporation and By-laws of the Transferor, as well as legal notice relating
to the issuance of the Certificates will be deposited prior to listing with the
Chief Registrar of the District Court of Luxembourg, where copies thereof may
be obtained upon request. Once the Certificates have been so listed, trading of
the Certificates may be effected on the Luxembourg Stock Exchange. The Class A
Certificates and the Class B Certificates have been accepted for clearance
through the facilities of DTC, CEDEL and Euroclear (ISIN number for the Class A
Certificates and for the Class B Certificates, ).
The transactions contemplated in this Prospectus were authorized by
resolutions adopted by the Transferor on , 1995.
Copies of the Pooling and Servicing Agreement, the Series 1995-1 Supplement,
the annual report of independent public accountants described in "Description
of the Certificates--Evidence as to Compliance" in the Prospectus, the
documents listed under "Available Information" and the reports to
Certificateholders referred to under "Reports to Certificateholders" and
"Description of the Certificates--Reports to Certificateholders" in the
Prospectus will be available at the office of the Listing Agent of the Trust in
Luxembourg, whose address is 80, place de la Gare 1616, Luxembourg. Financial
information regarding the Transferor is included in the consolidated financial
statements of Green Tree Financial Corporation in its Annual Report on Form 10-
K for the fiscal year ended December 31, 1994, also available at the office of
the Listing Agent in Luxembourg.
The Certificates, the Pooling and Servicing Agreement and the Series 1995-1
Supplement are governed by the laws of the State of Delaware.
LEGAL MATTERS
The legality of the Offered Certificates will be passed upon for the
Transferor and the Company by Dorsey & Whitney P.L.L.P., Minneapolis,
Minnesota. The material federal income tax consequences of the Certificates
will be passed upon for the Transferor by Dorsey & Whitney P.L.L.P. Certain
legal matters relating to the Offered Certificates will be passed upon for the
Underwriters by Brown & Wood.
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<PAGE>
GLOSSARY OF TERMS
The following terms, which are used in this Prospectus, have the meanings
indicated:
"ABC Fixed/Floating Allocation Percentage" is defined at page in
"Description of the Offered Certificates--Allocation Percentages."
"ABC Investor Default Amount" is defined at page in "Description of the
Offered Certificates--Defaulted Receivables."
"Aggregate Unpaid Balance" means at any time, the aggregate Unpaid Balances
of the Receivables.
"Amortization Period" means the period commencing on the Amortization Period
Commencement Date and continuing until the earlier of (x) the Invested Amount
of the Certificates being paid in full or (y) the Termination Date.
"Amortization Period Commencement Date" means the earlier of the first day of
the Monthly Period and the date on which a Pay Out Event occurs or
is deemed to have occurred.
"Available Series Interest Collections" is defined at page in "Description
of the Offered Certificates--Application of Collections--Payment of Fees,
Interest and Other Items."
"Base Rate" means the sum of the weighted average of the Class A Certificate
Rate, the Class B Certificate Rate and the Class C Certificate Rate plus 2% per
annum.
"Benefit Plans" is defined at page in "Employee Benefit Plan
Considerations."
"Cash Equivalents" is defined at page in "Description of the Offered
Certificates--Trust Accounts."
"Cedel" is defined at page in "Description of the Offered Certificates--
Book-Entry Registration."
"Cedel Participants" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Certificateholders" means the record holders of the Certificates.
"Certificateholders' Interest" means the interest in the assets of the Trust
allocated to the Certificateholders.
"Certificate Owners" is defined at page in "Reports to
Certificateholders."
"Certificate Rate(s)" is defined at page in "Prospectus Summary--
Interest."
"Certificates" means, collectively, the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates.
"Class" means any of the Class A Certificates, the Class B Certificates, the
Class C Certificates or the Class D Certificates.
"Class A Certificateholders" means the record holders of the Class A
Certificates.
"Class A Certificateholders' Interest" means the interest in the assets of
the Trust allocated to the Class A Certificateholders.
"Class A Certificate Rate" is defined at page in "Prospectus Summary--
Interest."
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<PAGE>
"Class A Certificates" means the Floating Rate Accounts Receivable Trust
Certificates, Series 1995-1, Class A.
"Class A Controlled Amortization Amount" means an amount equal to
$ .
"Class A Controlled Distribution Amount" is defined at page in "Maturity
Considerations."
"Class A Deficit Controlled Amortization Amount" is defined at page in
"Maturity Considerations."
"Class A Expected Final Payment Date" means the Distribution
Date.
"Class A Fixed/Floating Allocation Percentage" is defined at page in
"Description of the Offered Certificates--Allocation Percentages."
"Class A Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of the ratio that the amount of the Class A
Invested Amount as of the end of the preceding business day bears to the
greater of (a) total amount of Principal Receivables and amounts on deposit in
the Excess Funding Account as of the end of the preceding business day and (b)
with respect to Principal Collections only, the sum of the numerators with
respect to all classes of all Series then outstanding used to calculate the
applicable allocation percentage.
"Class A Invested Amount" is defined at page in "Description of the
Offered Certificates--Allocation Percentages."
"Class A Investor Charge-Off" is defined at page in "Description of the
Offered Certificates--Investor Charge-Offs."
"Class A Monthly Interest" is defined at page in "Description of the
Offered Certificates--Application of Collections--Payment of Fees, Interest and
Other Items."
"Class A Percentage" means a fraction, the numerator of which is the Class A
Invested Amount and the denominator of which is the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount.
"Class A Pool Factor" is defined at page in "Pool Factor and Related
Information."
"Class A Principal" is defined at page in "Description of the Offered
Certificates--Application of Collections--Payments of Principal."
"Class A Required Amount" means for any business day during a Monthly Period
the amount, if any, by which the sum of the Class A Monthly Interest and any
overdue Class A Monthly Interest on the related Distribution Date (and
additional interest thereon), the Class A Floating Allocation Percentage of the
Default Amount for such Monthly Period (to date) and if the Company is no
longer the Servicer, the Class A Floating Allocation Percentage of the Monthly
Servicing Fee for the related Monthly Period exceed the Available Series
Interest Collections plus any Excess Interest Collections from other Series and
any Transferor Interest Collections allocated with respect thereto.
"Class B Certificateholders" means the record holders of the Class B
Certificates.
"Class B Certificateholders' Interest" means the interest in the assets of
the Trust allocated to the Class B Certificateholders.
"Class B Certificate Rate" is defined at page in "Prospectus Summary--
Interest."
"Class B Certificates" means the Floating Rate Accounts Receivable Trust
Certificates, Series 1995-1, Class B.
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<PAGE>
"Class B Controlled Amortization Amount" means an amount equal to
$ .
"Class B Controlled Distribution Amount" is defined at page in "Maturity
Considerations."
"Class B Deficit Controlled Amortization Amount" is defined at page in
"Maturity Considerations."
"Class B Expected Final Payment Date" means the Distribution
Date.
"Class B Fixed/Floating Allocation Percentage" is defined at page in
"Description of the Offered Certificates--Allocation Percentages."
"Class B Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of the ratio that the amount of the Class B
Invested Amount as of the end of the preceding business day bears to the
greater of (a) the total amount of Principal Receivables and amounts on deposit
in the Excess Funding Account as of the end of the preceding business day and
(b) with respect to Principal Collections only, the sum of the numerators with
respect to all classes of all Series then outstanding used to calculate the
applicable allocation percentage.
"Class B Invested Amount" is defined at page in "Description of the
Offered Certificates--Allocation Percentages."
"Class B Investor Charge-Off" is defined at page in "Description of the
Offered Certificates--Investor Charge-Offs."
"Class B Monthly Interest" is defined at page in "Description of the
Offered Certificates--Application of Collections--Payment of Fees, Interest and
Other Items."
"Class B Percentage" means a fraction, the numerator of which is the Class B
Invested Amount and the denominator of which is the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount.
"Class B Pool Factor" is defined at page in "Pool Factor and Related
Information."
"Class B Principal" is defined at page in "Description of the Offered
Certificates--Application of Collections--Payments of Principal."
"Class B Principal Payment Commencement Date" means the earlier of (a) the
Distribution Date on which the Class A Invested Amount is paid in full or, if
there are no Principal Collections allocable to such Series remaining after
payments have been made to the Class A Certificates on such Distribution Date,
the next succeeding Distribution Date and (b) the Distribution Date following a
sale or repurchase of the Receivables pursuant to the Pooling and Servicing
Agreement.
"Class B Required Amount" means for any business day during a Monthly Period
the amount, if any, by which the sum of the Class B Monthly Interest and any
overdue Class B Monthly Interest on the related Distribution Date (and
additional interest thereon), the Class B Floating Allocation Percentage of the
Default Amount for such Monthly Period (to date) and, if the Company is no
longer the Servicer, the Class B Floating Allocation Percentage of the Monthly
Servicing Fee for the related Monthly Period exceed the Available Series
Interest Collections plus any Excess Interest Collections from other Series and
any Transferor Interest Collections in each case allocated with respect
thereto.
"Class C Certificateholders" means the record holders of the Class C
Certificates.
"Class C Certificateholders' Interest" means the interest in the assets of
the Trust allocated to the Class C Certificateholders.
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<PAGE>
"Class C Certificate Rate" means a specified margin per annum above the
arithmetic mean of LIBOR prevailing on the related LIBOR Determination Date,
but in no event in excess of % per annum.
"Class C Certificates" means the Floating Rate Accounts Receivable Trust
Certificates, Series 1995-1, Class C.
"Class C Expected Final Payment Date" means the Distribution
Date.
"Class C Fixed/Floating Allocation Percentage" is defined at page in
"Description of the Offered Certificates--Allocation Percentages."
"Class C Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of the ratio that the amount of the Class C
Invested Amount as of the end of the preceding business day bears to the
greater of (a) the total amount of Principal Receivables and amounts on deposit
in the Excess Funding Account on the last day of the preceding business day and
(b) with respect to Principal Collections only, the sum of the numerators with
respect to all classes of all Series then outstanding used to calculate the
applicable allocation percentage.
"Class C Invested Amount" is defined at page in "Description of the
Offered Certificates--Allocation Percentages."
"Class C Investor Charge-Off" is defined at page in "Description of the
Offered Certificates--Investor Charge-Offs."
"Class C Monthly Interest" is defined at page in "Description of the
Offered Certificates--Application of Collections--Payment of Fees, Interest and
Other Items."
"Class C Percentage" means a fraction, the numerator of which is the Class C
Invested Amount and the denominator of which is the sum of the Class A Invested
Amount, the Class B Invested Amount and the Class C Invested Amount.
"Class C Principal" is defined at page in "Description of the Offered
Certificates--Application of Collections--Payments of Principal."
"Class C Principal Payment Commencement Date" means the earlier of (a) the
Distribution Date on which the Class A Invested Amount and the Class B Invested
Amount has each paid in full or, if there are no Principal Collections
allocable to such Series remaining after payments have been made to the Class B
Certificates on such Distribution Date, the next succeeding Distribution Date
and (b) the Distribution Date following a sale or repurchase of the Receivables
pursuant to the Pooling and Servicing Agreement.
"Class C Required Amount" means for any business day during a Monthly Period
the amount, if and by which the sum of the Class C Monthly Interest and any
overdue Class C Monthly Interest on the related Distribution Date (and
additional interest thereon), the Class C Floating Allocation Percentage of the
Default Amount for such Monthly Period (to date) and, if the Company is no
longer the Servicer, the Class C Floating Allocation Percentage of the Monthly
Servicing Fee for the related Monthly Period exceed the Available Series
Interest Collections plus any Excess Interest Collections from other Series and
any Transferor Interest Collections in each case allocated with respect
thereto.
"Class D Certificateholders" means the record holders of the Class D
Certificates.
"Class D Certificateholders' Interest" means the interest in the assets of
the Trust allocated to the Class D Certificateholders.
"Class D Certificate Rate" means 0% per annum.
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<PAGE>
"Class D Certificates" means the Accounts Receivable Trust Certificates,
Series 1995-1, Class D.
"Class D Fixed/Floating Allocation Percentage" is defined at page in
"Description of the Offered Certificates--Allocation Percentages."
"Class D Floating Allocation Percentage" means, with respect to any business
day, the percentage equivalent of the ratio that the amount of the Class D
Invested Amount as of the end of the preceding business day bears to the
greater of (a) the total amount of Principal Receivables and amounts on deposit
in the Excess Funding Account as of the end of the preceding business day and
(b) with respect to Principal Collections only, the sum of the numerators with
respect to all classes of all Series then outstanding used to calculate the
applicable allocation percentage.
"Class D Invested Amount" is defined at page in "Description of the
Offered Certificates--Allocation Percentages."
"Class D Investor Charge-Off" is defined at page in "Description of the
Offered Certificates--Investor Charge-Offs."
"Class D Investor Default Amount" is defined at page in "Description of
the Offered Certificates--Defaulted Receivables."
"Class D Principal" is defined at page in "Description of the Offered
Certificates--Application of Collections--Payments of Principal."
"Class D Principal Payment Commencement Date" means the earlier of (a) the
Distribution Date on which the Class C Invested Amount is paid in full or, if
there are no Principal Collections allocable to such Series remaining after
payments have been made to the Class C Certificates on such Distribution Date,
the next succeeding Distribution Date and (b) the Distribution Date following a
sale or repurchase of the Receivables pursuant to the Pooling and Servicing
Agreement.
"Closing Date" means the date of the initial issuance of the Certificates.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means an account established by the Servicer for the
purpose of depositing all collections of Receivables.
"Collections" is defined at page in "Prospectus Summary--Collections."
"Commission" means the Securities and Exchange Commission.
"Contract" means [to be added].
"Controlled Amortization Period" means, with respect to the Certificates,
unless a Pay Out Event shall have occurred with respect to such Series prior
thereto, the period commencing on the Amortization Period Commencement Date and
ending upon the earliest to occur of (x) the payment in full to the holders of
the Certificates of the Invested Amount, and (y) the Termination Date.
"Cooperative" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Credit and Collection Policy" means those credit, collection, customer
relations and service policies and practices in effect on the date hereof
relating to the Accounts and the Receivables as such may be modified from time
to time.
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<PAGE>
"Defaulted Receivable" is defined at page in "Description of the Offered
Certificates--Defaulted Receivables."
"Definitive Certificates" is defined at page in "Description of the
Offered Certificates--Definitive Certificates."
"Depositaries" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Depository" is defined at page in "Description of the Offered
Certificates--General."
"Determination Date" is defined at page in "Description of the Offered
Certificates--Investor Charge-Offs."
"Discount Factor" means the percentage (which may be 0%) specified by the
Transferor from time to time; provided, however, that such percentage may be
changed by the Transferor only if such change will not cause a Pay Out Event to
occur and the Rating Agencies will have confirmed the rating of each Series
then outstanding.
"Distribution Account" is defined at page in "Description of the Offered
Certificates--Trust Accounts."
"Distribution Date" means , 1995 and the twentieth day of each
month thereafter, or if such day is not a business day, the next succeeding
business day.
"DOL" means the U.S. Department of Labor.
"DTC" means The Depository Trust Company.
"DTC Participants" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Early Amortization Period" means the period beginning on the earlier of (a)
the day on which a Pay Out Event occurs or is deemed to have occurred and (b)
the Class A Expected Final Payment Date if the Class A Invested Amount has not
been paid in full on such date, or the Class B Expected Final Payment Date if
the Class B Invested Amount has not been paid in full on such date, and ending
on the earlier of (i) the date on which the Class A Invested Amount, the Class
B Invested Amount, the Class C Invested Amount and the Class D Invested Amount
have been paid in full and (ii) the Termination Date.
"Eligible Investments" means (i) obligations fully guaranteed by the United
States of America; (ii) demand deposits, time deposits, certificates of deposit
or bankers acceptances of certain depository institutions or trust companies
having a rating in the highest category from the applicable Rating Agency;
(iii) commercial paper having, at the time of the Trust's investment, a rating
in the highest rating category from the applicable Rating Agency; (iv) money
market funds which have the highest rating from the applicable Rating Agency;
or (v) any other investment if the applicable Rating Agency confirms in writing
that such investment will not adversely affect its rating on any Series.
"Eligible Receivable" is defined at page in "The Receivables--Eligible
Receivables."
"Enhancement" means, with respect to any Series, any letter of credit, cash
collateral account, cash collateral guaranty, guaranty, collateral invested
amount, surety bond, guaranteed rate agreement, maturity guaranty facility, tax
protection agreement, interest rate cap, interest rate swap, subordination of
the rights of one class to another, or other contract or agreement for the
benefit of Certificateholders or any class of Certificateholders of such
Series.
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<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Euroclear" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Euroclear Operator" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Euroclear Participants" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Euroclear System" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Excess Funding Account" is defined at page in "Description of the Offered
Certificates--Excess Funding Account."
"Excess Interest Collections" means any Interest Collections allocable to any
Series in excess of the amounts necessary to make required payments with
respect to such Series.
"Exchange" means any tender by the Transferor to the Trustee of the
Exchangeable Transferor Certificate, pursuant to any one or more Supplements
or, if provided in the relevant Supplement, certificates representing any
Series and the Exchangeable Transferor Certificate, in exchange for one or more
new Series and a reissued Exchangeable Transferor Certificate.
"Exchangeable Transferor Certificate" means the certificate which evidences
the Transferor Interest.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Regulation" is defined at page in "Employee Benefit Plan
Considerations."
"Fixed/Floating Allocation Percentage" is defined at page in "Description
of the Offered Certificates--Allocation Percentages."
"Floating Allocation Percentage" means the sum of the Class A Floating
Allocation Percentage, the Class B Floating Allocation Percentage, the Class C
Floating Allocation Percentage and the Class D Floating Allocation Percentage.
"Foreign Person" is defined at page in "Certain Federal Tax Consequences--
Tax Consequences to Foreign Investors."
"Full Invested Amount" is defined at page in "Prospectus Summary--
Allocation of Trust Assets."
"Funding Period" is defined at page in "Prospectus Summary--Funding
Period."
"Global Securities" is defined at page A-1 in the annex.
"Interest Collections" is defined at page in "Prospectus Summary--
Receivables."
"Interest Collections Receivables" is defined at page in "Prospectus
Summary--Receivables."
"Indirect Participants" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Ineligible Receivable" means any receivable that does not satisfy the
definition of Receivable.
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"Initial Invested Amount" is defined at page in "Prospectus Summary--
Allocation of Trust Assets."
"Insolvency Event" is defined at page in "Description of the Offered
Certificates--Pay Out Events."
"Interest Accrual Period" means, with respect to a Distribution Date, the
period from and including the preceding Distribution Date to and excluding such
Distribution Date.
"Interest Funding Account" means an account established by the Trustee for
the benefit of Certificateholders.
"Invested Amount" means the sum of the Class A Invested Amount, the Class B
Invested Amount, the Class C Invested Amount, and the Class D Invested Amount.
"Investment Company Act" means the Investment Company Act of 1940, as amended
from time to time.
"Investor Default Amount" is defined at page in "Description of the
Offered Certificates--Defaulted Receivables; Dilution."
"IRA" is defined at page in "Employee Benefit Plan Considerations."
"IRS" means the Internal Revenue Service.
"LIBOR" is defined at page .
"LIBOR Determination Date" is defined at page in "Description of the
Offered Certificates--Interest Payments."
"Minimum Aggregate Principal Receivables" means, as of any date of
determination, an amount equal to the sum of (a) the initial Invested Amounts
for all outstanding Series on such date except a Series of Variable Funding
Certificates at any time, and (b) with respect to the Series created pursuant
to a Variable Funding Series Supplement, during the Revolving Period for such
Series, the Invested Amount on such date of determination or, during the
amortization period for such Series, the Invested Amount of such Series on the
last day of the Revolving Period for such Series.
"Minimum Retained Interest" means the product of the weighted average Minimum
Retained Percentages for all Series and the sum of the outstanding principal
amounts of all classes of all Series.
"Minimum Retained Percentage" means, for Series 1995-1, %.
"Minimum Transferor Interest" means the product of (i) the sum of (a) the
aggregate Principal Receivables and (b) the amounts on deposit in the Excess
Funding Account and (ii) the highest Minimum Transferor Percentage for any
Series.
"Minimum Transferor Percentage" means, for Series 1995-1, %; provided,
however that in certain circumstances such percentage may be increased.
"Monthly Period" means the period from and including the first day of each
fiscal month of the Transferor to and including the last day of such fiscal
month except that the first Monthly Period with respect to the Certificates
shall begin on and include the Closing Date and shall end on and include
, 1995.
"Monthly Servicing Fee" is defined at page in "Description of the Offered
Certificates--Servicing Compensation and Payment of Expenses."
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<PAGE>
"Moody's" means Moody's Investors Service, Inc.
"MPR" is defined at page in "Maturity Considerations."
"Negative Carry Amount" is defined at page in "Prospectus Summary--
Coverage of Interest Shortfalls from Transferor Interest Collections."
"Offered Certificates" is defined at page 1.
"OID" means original issue discount.
"OID Regulations" is defined at page in "Certain Federal Income Tax
Consequences--General."
"Participants" is defined at page in "Description of the Offered
Certificates--General."
"Paying Agent" is defined at page in "Description of the Offered
Certificates--Trust Accounts."
"Pay Out Event" is defined at page in "Description of the Offered
Certificates--Pay Out Events."
"Permitted Lien" means with respect to the Receivables: (i) liens in favor of
the Transferor created pursuant to the Purchase Agreement and assigned to the
Trustee pursuant to the Pooling and Servicing Agreement; (ii) liens in favor of
the Trustee pursuant to the Pooling and Servicing Agreement; and (iii) liens
which secure the payment of taxes, assessments, and governmental charges or
levies, if such taxes are either (a) not delinquent or (b) being contested in
good faith by appropriate legal or administrative proceedings and as to which
adequate reserves in accordance with generally accepted accounting principles
shall have been established.
"Pool Factor" means one of the Class A Pool Factor or the Class B Pool
Factor.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement,
dated as of the Closing Date, among the Transferor, the Servicer, and the
Trustee, as supplemented or amended in accordance with its terms. Unless the
context requires otherwise, the term "Pooling and Servicing Agreement" refers
to the Pooling and Servicing Agreement as supplemented by the Series 1995-1
Supplement.
"Portfolio Yield" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction, the numerator of which is the sum of the
aggregate amount of Available Series Interest Collections for such Monthly
Period calculated on a cash basis after subtracting the Investor Default Amount
and the denominator of which is the average daily Invested Amount during the
preceding Monthly Period.
"Principal Account" is defined at page in "Descriptions of the Offered
Certificates--Trust Accounts."
"Principal Collections" means, with respect to any business day, collections
received with respect to Principal Receivables.
"Principal Receivables" means, for any business day, the aggregate amount
shown on the Servicer's records as amounts payable by obligors with respect to
Eligible Receivables other than such amounts that are Interest Receivables or
(except as used in the definition of Investor Default Amount) Defaulted
Receivables, multiplied by a percentage equal to 1 minus the Discount Factor
(if any).
"Principal Shortfalls" is defined at page in Description of the Offered
Certificates Principal Payments."
"Principal Terms" is defined at page in "Description of the Offered
Certificates--Exchanges."
"Purchase Agreement" is defined at page in "Description of the Receivables
Purchase Agreement--Purchases of Receivables."
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<PAGE>
"Purchase Termination Date" is defined at page in "Description of the
Receivables Purchase Agreement--Purchase Termination Date."
"Qualified Institution" is defined at page in "Description of the Offered
Certificates--Trust Accounts."
"Rating Agencies" means .
"Rating Agency Condition" means the notification in writing by each Rating
Agency to the Transferor, the Servicer and the Trustee that any action will not
result in any Rating Agency reducing or withdrawing its then existing rating of
the investor certificates of any outstanding Series or class with respect to
which it is a Rating Agency.
"Reallocated Class B Principal Collections" is defined at page in
"Description of the Offered Certificates--Reallocated Principal Collections."
"Reallocated Class C Principal Collections" is defined at page in
"Description of the Offered Certificates--Reallocated Principal Collections."
"Reallocated Class D Principal Collections" is defined at page in
"Description of the Offered Certificates--Reallocated Principal Collections."
"Reallocated Principal Collections" is defined at page in "Description of
the Offered Certificates--Reallocated Principal Collections."
"Receivable" is defined at page in "The Receivables--Eligible
Receivables."
"Record Date" means, with respect to any Distribution Date, the business day
preceding such Distribution Date, except that, with respect to any Definitive
Certificates, Record Date shall mean the fifth day of the then current Monthly
Period.
"Recoveries" means any amounts received by the Servicer with respect to
Receivables which were previously charged off as uncollectible in accordance
with the Servicer's customary and usual servicing procedures.
"Reference Banks" is defined at page in "Description of the Offered
Certificates--Interest Payments."
"Registrar" is defined at page in "Description of the Offered Certificates
Definitive Certificates."
"Related Person" means an entity that is an affiliate of the Company, any
holder of an Investor Certificate, any provider of Enhancement, or any person
whose status would violate the conditions for a trustee contained in Section
(4)(i) of Rule 3a-7 under the Investment Company Act of 1940, as amended.
"Required Amount" is defined at page in "Description of the Offered
Certificates--Application of Collections--Payment of Fees, Interest, and Other
Items."
"Retained Interest" means, on any date of determination, the sum of the
Transferor Interest and the interest in the Trust represented by any Transferor
Retained Class of investor certificates.
"Retained Percentage" means, on any date of determination, the percentage
equivalent of a fraction the numerator of which is the Retained Interest and
the denominator of which is the aggregate amount of Principal Receivables at
the end of the day immediately prior to such date of determination plus all
amounts on deposit in the Excess Funding Account (but not including investment
earnings on such amounts).
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"Revolving Period" means the period beginning on the Closing Date and ending
with the commencement of the Amortization Period or an Early Amortization
Period.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Series" means any series of certificates issued by the Trust pursuant to a
Supplement, including the Series 1995-1 Certificates.
"Series Allocation Percentage" means, on any date of determination, the
percentage equivalent of a fraction the numerator of which is the Invested
Amount and the denominator of which is the sum of the Invested Amounts of all
Series then outstanding.
"Series 1995-1" is defined at page .
"Series 1995-1 Supplement" means the Supplement, dated as of the Closing
Date, among the Transferor, the Servicer, and the Trustee relating to the
Series 1995-1 Certificates.
"Servicer" means Green Tree Financial Corporation in its capacity as Servicer
of the Receivables pursuant to the Pooling and Servicing Agreement, and any
replacement Servicer as provided in the Pooling and Servicing Agreement.
"Servicer Default" is defined at page in "Description of the Offered
Certificates--Servicer Default."
"Service Transfer" is defined at page in "Description of the Offered
Certificates--Servicer Default."
"Servicing Fee Rate" means % per annum, or for so long as the Company is
the Servicer, a lesser rate if so specified in the Supplement.
"Shared Principal Collections" means the amount of Principal Collections for
any business day allocated by the Servicer to the Invested Amount (other than
amounts allocated to the Transferor Retained Class) remaining after covering
required deposits or payments to the Certificateholders and any similar amount
remaining for any other Series.
"Special Payment Date" means each Distribution Date during the Early
Amortization Period.
"Standard & Poor's" means Standard & Poor's Rating Group.
"Supplement" means any Supplement to the Pooling and Servicing Agreement.
"Supplemental Certificate" is defined at page in "Description of the
Offered Certificates--Exchanges."
"Tax Certificate" is defined at page A-3 in "Annex."
"Termination Date" means the Distribution Date.
"Terms and Conditions" is defined at page in "Description of the Offered
Certificates--Book-Entry Registration."
"Transfer Agent" is defined at page in "Description of the Offered
Certificates--Definitive Certificates."
"Transfer Date" is defined at page in "Description of the Offered
Certificates--Application of Collections."
"Transferor" means Green Tree Floorplan Funding Corp., a Delaware
corporation.
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<PAGE>
"Transferor Interest Collections" is defined at page in "Prospectus
Summary--Coverage of Interest Shortfalls from Transferor Interest Collections."
"Transferor Interest" means, on any date of determination, the aggregate
amount of Principal Receivables at the end of the day immediately prior to such
date of determination plus all amounts on deposit in the Excess Funding Account
(but not including investment earnings on such amounts), minus the aggregate
invested amount of all Series at the end of such day.
"Transferor Percentage" is defined at page in "Description of the Offered
Certificates--General."
"Transferor Retained Class" is defined at page in "Prospectus Summary--
Early Amortization Period."
"Trust" means the Green Tree Floorplan Receivables Master Trust.
"Trustee" means .
"Trustee's Corporate Trust Office" means the Trustee's office located at
.
"UCC" means the Uniform Commercial Code as amended from time to time as in
effect in the applicable jurisdiction.
"Underwriters" shall mean Merrill Lynch, Pierce Fenner & Smith Incorporated
and Bear, Stearns & Co. Inc.
"Underwriting Agreement" shall mean the underwriting agreement dated
, 1995, among the Transferor and the Underwriters.
"U.S. Person" is defined at page A-3 in "Annex".
95
<PAGE>
ANNEX
GLOBAL CLEARANCE SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Floating Rate
Floorplan Receivable Trust Certificates, Series 1995-1 (the "Global
Securities") will be available only in book-entry form. Investors in the Global
Securities may hold such Global Securities through any of The Depository Trust
Company ("DTC"), CEDEL or Euroclear. The Global Securities will be tradeable as
home market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
CEDEL and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-
payment basis through the respective Depositaries of CEDEL and Euroclear (in
such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject to
U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing organizations
or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, CEDEL and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practices applicable to conventional credit card certificate
issues. Investor securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or Euroclear
accounts will follow the settlement procedures applicable to conventional
eurobonds, except that there will be no temporary global security and no "lock-
up" or restricted period. Global Securities will be credited to the securities
custody accounts on the settlement date against payment in the same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and Transferor's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to conventional
credit card certificate issues in same-day funds.
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Trading between CEDEL and/or Euroclear Participants. Secondary market trading
between CEDEL Participants or Euroclear Participants will be settled using the
procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC Transferor and CEDEL or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
accounts of a CEDEL Participant or a Euroclear Participant, the purchaser will
send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment
date to and excluding the settlement date, on the basis of actual days elapsed
and a 360 day year. Payment will then be made by the respective Depositary to
the DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the CEDEL Participant's or Euroclear Participant's
account. The Global Securities credit will appear the next day (European time)
and the cash debit will be bad-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the CEDEL or Euroclear cash debit
will be valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process De-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, CEDEL Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, CEDEL Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue form the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each CEDEL Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of CEDEL Participants or Euroclear
Participants. The sale proceeds will be available to the DTC Transferor on the
settlement date. Thus, to the DTC Participants a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between CEDEL or Euroclear Transferor and DTC purchaser. Due to time
zone differences in their favor, CEDEL Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The Transferor will send
instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
CEDEL or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date on the basis of
actual days elapsed and a 360 day year. The payment will then be reflected in
the account of the CEDEL Participant or Euroclear Participant the following
day, and receipt of the cash proceeds in the CEDEL Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be
the
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preceding day, when settlement occurred in New York). Should the CEDEL
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debt in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on
the intended value date (i.e., the trade fails), receipt of the cash proceeds
in the CEDEL Participant's or Euroclear Participant's account would instead be
valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase Global
Securities from DTC Participants for delivery to CEDEL Participants or
Euroclear Participants should note that these trades would automatically fail
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the purchase
side of the day trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their CEDEL or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase form the DTC Participant is at least
one day prior to the value date for the sale to the CEDEL Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original issue discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business in the chain of intermediaries between such beneficial owner
and the U.S. entity required to withhold tax complies with applicable
certification requirements and (u) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Certificates
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status) and a
certificate under penalties of perjury (the "Tax Certificate") that such
beneficial owner is (i) not a controlled foreign corporation (within the
meaning of Section 957(a) of the Code) that is related (within the meaning of
Section 864(d)(4) of the Code) to the Trust or the Transferor and (ii) not a 10
percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of
the Trust or the Transferor. If the information shown on Form W-8 or the Tax
Certificate changes, a new Form W-8 or Tax Certificate, as the case may be,
must be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form 4224).
A non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch,
for which the interest income is effectively connected with its conduct of a
trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States).
Exemption or reduced rate for non-U.S. persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are Certificate Owners residing in a country
that has a tax treaty with the United States can obtain an exemption or reduced
tax rate (depending on the treaty terms) by filing Form 1001 (Ownership,
Exemption or Reduced Rate Certificate). If the treaty provides only for a
reduced rate, withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the Certificate Owner
or his agent.
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Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate or trust the
income of which is includible in gross income for United States tax purposes,
regardless of its source. This summary does not deal with all aspects of U.S.
Federal income tax withholding that may be relevant to foreign holders of the
Global Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRANSFEROR OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UN-
DER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF GREEN TREE FINANCIAL CORPORATION, GREEN TREE FLOORPLAN FUNDING
CORP. OR THE RECEIVABLES SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CON-
STITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SO-
LICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Certificateholders.............................................. 2
Available Information...................................................... 2
Other Information.......................................................... 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 22
The Trust.................................................................. 27
The Transferor............................................................. 27
Green Tree Financial Corporation's Commercial Finance Division............. 28
The Receivables............................................................ 31
Maturity Considerations.................................................... 33
Pool Factor and Related Information........................................ 36
Use of Proceeds............................................................ 36
Description of the Offered Certificates.................................... 36
Description of the Purchase Agreement...................................... 71
Certain Legal Aspects of the Receivables................................... 73
Certain Federal Income Tax
Consequences.............................................................. 75
Employee Benefit Plan Considerations....................................... 80
Underwriting............................................................... 82
Listing and General Information............................................ 83
Legal Matters.............................................................. 83
Glossary of Terms.......................................................... 84
Annex...................................................................... 96
</TABLE>
---------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS EFFECTING TRANS-
ACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DIS-
TRIBUTION, 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.
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LOGO
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
$ FLOATING RATE
FLOORPLAN RECEIVABLE TRUST CERTIFICATES,
SERIES 1995-1, CLASS A
$ FLOATING RATE
FLOORPLAN RECEIVABLE TRUST CERTIFICATES,
SERIES 1995-1, CLASS B
GREEN TREE FLOORPLAN FUNDING CORP.
TRANSFEROR
GREEN TREE FINANCIAL CORPORATION
SERVICER
----------------------
PROSPECTUS
, 1995
----------------------
MERRILL LYNCH & CO.
BEAR, STEARNS & CO. INC.
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<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee............................................ $ 344.83
Blue Sky fees and expenses...................................... 10,000.00
Accountant's fees and expenses.................................. **
Attorney's fees and expenses.................................... 75,000.00*
Trustee's fees and expenses..................................... 15,000.00*
Printing and engraving expenses................................. **
Rating Agency fees.............................................. 150,000.00*
Miscellaneous................................................... **
-----------
Total......................................................... $
===========
</TABLE>
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* Estimated
**To be furnished by Amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Green Tree Floorplan Funding Corp. 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 Green Tree Floorplan Funding
Corp. 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.
The registrant's parent corporation currently maintains a directors' and
officers' insurance policy.
Pursuant to the form of Underwriting Agreement, the Underwriters will agree,
subject to certain conditions, to indemnify Green Tree Financial Corporation
and Green Tree Floorplan Funding Corp., each of their directors, certain of
their officers and any persons who control Green Tree Financial Corporation or
Green Tree Floorplan Funding Corp., within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), against certain liabilities.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
None.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<C> <S>
*1.1 Proposed form of Underwriting Agreement
*3.1 Certificate of Incorporation of Green Tree Floorplan Funding Corp.
*3.2 Bylaws of Green Tree Floorplan Funding Corp.
*4.1 Form of Pooling and Servicing Agreement
*4.2 Form of 1995-1 Series Supplement to the Pooling and Servicing
Agreement
*4.3 Form of Receivables Purchase Agreement
*5.1 Opinion and consent of Dorsey & Whitney P.L.L.P. as to legality
*8.1 Opinion of Dorsey & Whitney P.L.L.P. as to tax matters
*23.1 Consent of Dorsey & Whitney P.L.L.P. (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>
--------
* To be filed by Amendment.
(b) Financial Statements:
Not Applicable
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes as follows:
(a) 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 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.
(b) (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.
(c) (1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
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(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendments thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF SAINT
PAUL, STATE OF MINNESOTA ON SEPTEMBER 6, 1995.
Green Tree Floorplan Funding Corp.
/s/ Lawrence M. Coss
By: _________________________________
LAWRENCE M. COSS
CHAIRMAN OF THE BOARD AND
PRESIDENT
POWER OF ATTORNEY
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. EACH PERSON WHOSE SIGNATURE TO THIS REGISTRATION STATEMENT
APPEARS BELOW HEREBY CONSTITUTES AND APPOINTS JOHN W. BRINK AND RICHARD G.
EVANS, AND EACH OF THEM, AS HIS TRUE AND LAWFUL ATTORNEY-IN-FACT AND AGENT,
WITH FULL POWER OF SUBSTITUTION, TO SIGN ON HIS BEHALF INDIVIDUALLY AND IN THE
CAPACITY STATED BELOW AND TO PERFORM ANY ACTS NECESSARY TO BE DONE IN ORDER TO
FILE ALL AMENDMENTS AND POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION
STATEMENT, AND ANY AND ALL INSTRUMENTS OR DOCUMENTS FILED AS PART OF OR IN
CONNECTION WITH THIS REGISTRATION STATEMENT OR THE AMENDMENTS THERETO AND EACH
OF THE UNDERSIGNED DOES HEREBY RATIFY AND CONFIRM ALL THAT SAID ATTORNEY-IN-
FACT AND AGENT, OR HIS SUBSTITUTES, SHALL DO OR CAUSE TO BE DONE BY VIRTUE
HEREOF.
SIGNATURE TITLE DATE
/s/ Lawrence M. Coss Chairman of the September 6,
------------------------------------- Board and President 1995
LAWRENCE M. COSS (Principal
Executive Officer)
/s/ John W. Brink Vice President and September 6,
------------------------------------- Treasurer 1995
JOHN W. BRINK (Principal
Financial Officer
and Principal
Accounting Officer)
and Director
/s/ Richard G. Evans Director September 6,
------------------------------------- 1995
RICHARD G. EVANS
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