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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 18, 1995
GREEN TREE FINANCIAL CORPORATION
as originator of Green Tree Recreational,
Equipment & Consumer Trust 1996-A
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(Exact name of registrant as specified in its charter)
Minnesota 1-8916 41-1807858
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(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota 55102-1639
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(Address of principal executive offices)
Registrant's telephone number, including area code: (612) 293-3400
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Not Applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
--------------------------------
Not applicable.
Item 2. Acquisition or Disposition of Assets.
------------------------------------
Not applicable.
Item 3. Bankruptcy or Receivership.
-------------------------
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
----------------------------------------------
Not applicable.
Item 5. Other Events.
------------
On January 26, 1996 the Registrant sold approximately $431,146,642 of
Class A and Class B Certificates (the "Certificates") of Green Tree
Recreational, Equipment & Consumer Trust 1996-A, evidencing
beneficial ownership interests in a trust (the "Trust") consisting of
a pool (the "Contract Pool") of retail installment sales contracts
and promissory notes (collectively, the "Contracts") and certain
related property conveyed by Green Tree Financial Corporation.
Item 6. Resignations of Registrant's Directors.
--------------------------------------
Not applicable.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
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(c) Exhibits.
The following is filed herewith. The exhibit numbers
correspond with Item 601(b) of Regulation S-K.
Exhibit No. Description
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4.1 Pooling and Servicing Agreement between Green Tree
Financial Corporation, as Seller and Servicer, and
First Trust National Association, as Trustee, dated
as of January 1, 1996, relating to Green Tree
Recreational, Equipment & Consumer Trust 1996-A.
4.2 Pledge Agreement between Green Tree RECS Guaranty
Corporation, as Pledgor, First Bank National
Association, as Collateral Agent and First Trust
National Association, as Trustee, dated as of
January 1, 1996, relating to Green Tree
Recreational, Equipment & Consumer Trust 1996-A.
8.1 Opinion and Consent of Dorsey & Whitney P.L.L.P.
with respect to tax matters.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 26, 1996 GREEN TREE FINANCIAL CORPORATION
as originator of Green Tree Recreational,
Equipment & Consumer Trust 1996-A
By: /s/ John W. Brink
---------------------------------------------
John W. Brink
Executive Vice President, Treasurer
and Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit Number Page
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4.1 Pooling and Servicing Agreement between Green Tree 5
Financial Corporation, as Seller and Servicer, and
First Trust National Association, as Trustee, dated
as of January 1, 1996, relating to Green Tree
Recreational, Equipment & Consumer Trust 1996-A
4.2 Pledge Agreement between Green Tree RECS Guaranty 126
Corporation, as Pledgor, First Bank National
Association, as Collateral Agent and First Trust
National Association, as Trustee, dated as of
January 1, 1996, relating to Green Tree
Recreational, Equipment & Consumer Trust 1996-A
8.1 Opinion of Dorsey & Whitney P.L.L.P. with respect to 139
tax matters
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Exhibit 4.1
=============================================================================
Green Tree Recreational, Equipment & Consumer Trust 1996-A
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
and
FIRST TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
Dated as of January 1, 1996
=============================================================================
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TABLE OF CONTENTS
ARTICLE I
Definitions
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Section 1.01. General......................................... 1-1
Section 1.02. Specific Terms.................................. 1-1
ARTICLE II
Establishment of Trust; Transfer of Contract
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Section 2.01. Closing......................................... 2-1
Section 2.02. Conditions to the Closing....................... 2-2
Section 2.03. Acceptance by Trustee........................... 2-3
Section 2.04. Grantor Trust Provisions........................ 2-4
ARTICLE III
Representations and Warranties
------------------------------
Section 3.01. Representations and Warranties Regarding the
Company......................................... 3-1
Section 3.02. Representations and Warranties Regarding Each
Contract........................................ 3-2
Section 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate...................... 3-5
Section 3.04. Representations and Warranties Regarding the
Contract Files.................................. 3-5
Section 3.05. Repurchase of Contracts for Breach of
Representations and Warranties.................. 3-6
ARTICLE IV
Perfection of Transfer and Protection of Security Interests
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Section 4.01. Custody of Contracts............................ 4-1
Section 4.02. Filings......................................... 4-2
Section 4.03. Name Change or Relocation....................... 4-2
Section 4.04. Chief Executive Office.......................... 4-2
Section 4.05. Costs and Expenses.............................. 4-3
ARTICLE V
Servicing of Contracts
----------------------
Section 5.01. Responsibility for Contract Administration...... 5-1
Section 5.02. Standard of Care................................ 5-1
Section 5.03. Records......................................... 5-1
Section 5.04. Inspection; Computer Tape....................... 5-1
Section 5.05. Collection Account.............................. 5-2
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Section 5.06. Enforcement..................................... 5-4
Section 5.07. Satisfaction of Contracts....................... 5-5
Section 5.08. Costs and Expenses.............................. 5-5
Section 5.09. Maintenance of Insurance........................ 5-5
Section 5.10. Repossession.................................... 5-7
Section 5.11. Commingling of Funds............................ 5-7
Section 5.12. Retitling; Security Interests................... 5-7
Section 5.13. Servicer Advances............................... 5-7
ARTICLE VI
Reports and Tax Matters
-----------------------
Section 6.01. Monthly Reports................................. 6-1
Section 6.02. Certificate of Servicing Officer................ 6-1
Section 6.03. Other Data...................................... 6-1
Section 6.04. Annual Report of Accountants.................... 6-1
Section 6.05. Statements to Certificateholders................ 6-1
Section 6.06. Payment of Taxes................................ 6-4
ARTICLE VII
Service Transfer
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Section 7.01. Event of Termination............................ 7-1
Section 7.02. Transfer........................................ 7-1
Section 7.03. Trustee to Act; Appointment of Successor........ 7-2
Section 7.04. Notification to Certificateholders.............. 7-3
Section 7.05. Effect of Transfer.............................. 7-3
Section 7.06. Transfer of Collection Account.................. 7-4
Section 7.07. Limits on Liability............................. 7-4
ARTICLE VIII
Payments
--------
Section 8.01. Monthly Payments................................ 8-1
Section 8.02. Permitted Withdrawals from the
Collection Account.............................. 8-2
Section 8.03. Payments........................................ 8-2
Section 8.04. Limited Guaranty................................ 8-7
Section 8.05. Company's or Servicer's Repurchase Option....... 8-7
Section 8.06. Spread Account.................................. 8-8
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ARTICLE IX
The Certificates
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Section 9.01. The Certificates................................ 9-1
Section 9.02. Registration of Transfer and Exchange
of Certificates................................. 9-1
Section 9.03. No Charge; Disposition of Void Certificates..... 9-4
Section 9.04. Mutilated, Destroyed, Lost or Stolen
Certificates.................................... 9-4
Section 9.05. Persons Deemed Owners........................... 9-4
Section 9.06. Access to List of Certificateholders' Names
and Addresses................................... 9-5
Section 9.07. Authenticating Agents........................... 9-5
ARTICLE X
Indemnities
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Section 10.01. Company's Indemnities........................... 10-1
Section 10.02. Liabilities to Obligors......................... 10-1
Section 10.03. Tax Indemnification............................. 10-1
Section 10.04. Servicer's Indemnities.......................... 10-2
Section 10.05. Operation of Indemnities........................ 10-2
ARTICLE XI
The Trustee
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Section 11.01. Duties of Trustee............................... 11-1
Section 11.02. Certain Matters Affecting the Trustee........... 11-2
Section 11.03. Trustee Not Liable for Certificates or
Contracts....................................... 11-3
Section 11.04. Rights of Certificateholders to Direct Trustee
and to Waive Event of Termination............... 11-3
Section 11.05. The Servicer to Pay Trustee's Fees and Expenses. 11-4
Section 11.06. Eligibility Requirements for Trustee............ 11-4
Section 11.07. Resignation or Removal of Trustee............... 11-5
Section 11.08. Successor Trustee............................... 11-5
Section 11.09. Merger or Consolidation of Trustee.............. 11-6
Section 11.10. Tax Returns..................................... 11-6
Section 11.11. Obligor Claims.................................. 11-6
Section 11.12. Appointment of Co-Trustee or Separate Trustee... 11-7
Section 11.13. Agents of Trustee............................... 11-8
ARTICLE XII
Miscellaneous
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Section 12.01. Servicer Not to Assign Duties or Resign;
Delegation of Servicing Duties.................. 12-1
Section 12.02. Maintenance of Office or Agency................. 12-1
Section 12.03. Termination..................................... 12-2
Section 12.04. Acts of Certificateholders...................... 12-3
Section 12.05. Calculations.................................... 12-4
Section 12.06. Assignment or Delegation by Company............. 12-4
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Section 12.07. Amendment....................................... 12-5
Section 12.08. Notices......................................... 12-6
Section 12.09. Merger and Integration.......................... 12-7
Section 12.10. Headings........................................ 12-7
Section 12.11. Governing Law................................... 12-7
Testimonium..................................... 12-9
Exhibit A. Form of Class A Certificate......................... A-1
Exhibit B. Form of Class B Certificate......................... B-1
Exhibit C. Form of Assignment.................................. C-1
Exhibit D. Form of Certificate of Officer...................... D-1
Exhibit E. Form of Opinion of Counsel for the Company.......... E-1
Exhibit F. Form of Trustee's Acknowledgement................... F-1
Exhibit G. Form of Certificate of Servicing Officer............ G-1
Exhibit H. Form of Certificate Regarding Repurchased Contracts. H-1
Exhibit I. Form of Monthly Report.............................. I-1
Exhibit J. Form of Pledge Agreement............................ J-1
</TABLE>
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AGREEMENT, dated as of January 1, 1996, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Minnesota, as Seller and Servicer (the "Company"), and First Trust National
Association, a national banking association organized and existing under the
laws of the United States of America, not in its individual capacity but solely
as Trustee (the "Trustee").
WHEREAS, in the regular course of its business, the Company purchases
and services retail installment sales contracts and promissory notes for the
purchase of a variety of consumer products, including but not limited to
motorcycles; marine products (including boats, boat trailers and outboard
motors); pianos and organs; horse trailers; sport vehicles (including
snowmobiles, personal watercraft and all-terrain vehicles); trucks; personal
aircraft; and recreational vehicles (collectively, the "Products"), each of
which contracts provides for installment payments by or on behalf of the
purchaser and grants a lien on or security interest in a Product; and
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions pursuant to which the "Trust," as hereinafter defined, will acquire
the "Contracts," as hereinafter defined, and the Company will manage and service
the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Company and the Trustee agree as provided
herein:
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ARTICLE I
DEFINITIONS
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SECTION 1.01. General.
For the purpose of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the terms defined in this
Article include the plural as well as the singular, the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision, and
Section references refer to Sections of the Agreement.
SECTION 1.02. Specific Terms.
"Advance Payment" means, with respect to any Monthly Period, any payment by
an Obligor that was not due under the related Contract during or before such
Monthly Period and which payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Pooling and Servicing Agreement.
"Amount Available" means, as to any Distribution Date, an amount equal to
the Collected Funds for that Distribution Date plus any amounts required to be
deposited in the Collection Account on or before such Distribution Date pursuant
to Section 8.04, 8.05 or 8.06.
"Amount Held for Future Distribution" means, as to any Distribution Date,
the total of the amounts held in the Collection Account on the last day of the
preceding Monthly Period on account of Advance Payments in respect of such
Monthly Period.
"Applicants" has the meaning assigned in Section 9.06.
"Authenticating Agent" means any authenticating agent appointed pursuant to
Section 9.07.
"Book-Entry Certificate" means any Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
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Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday, or (b)
another day on which banking institutions in the city in which a Person is
taking action hereunder are authorized or obligated by law, executive order or
governmental decree to be closed.
"Certificate" means a Class A-1, Class A-2, Class A-3, Class A-4, or Class
B Certificate, executed and delivered by the Trustee substantially in the form
of Exhibit A or B, as appropriate.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate.
"Certificate Percentage Interest" means, as to any Certificate, the
percentage interest of that Certificate with respect to all Certificates, such
percentage interest being equal to the percentage (carried to eight places)
obtained from dividing the denomination of such Certificate by the aggregate
denomination of all Certificates (which equals the sum of the Original Class A-1
Principal Balance, the Original Class A-2 Principal Balance, the Original Class
A-3 Principal Balance, the Original Class A-4 Principal Balance, and the
Original Class B Principal Balance). The aggregate Certificate Percentage
Interests shall equal 100%.
"Certificate Principal Balance" means, as of any Distribution Date, the sum
of the Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class
A-3 Principal Balance, the Class A-4 Principal Balance and the Class B Principal
Balance as of that Distribution Date.
"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate is registered on the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Company or any
Affiliate shall be deemed not to be outstanding and the Certificate or Class
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite Certificate or Class Percentage Interest
necessary to effect any such consent, request, waiver or demand has been
obtained; provided, however, that, solely for the purpose of determining whether
the Trustee is entitled to rely upon any such consent, waiver, request or
demand, only Certificates which the Trustee knows to be so owned shall be so
disregarded.
"Class," "Class A, " or "Class B" means pertaining to each Class of Class A
Certificates or Class B Certificates, as the case may be.
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"Class A Certificate" means any one of the Class A-1, Class A-2, Class
A-3 and Class A-4 Certificates executed and delivered by the Trustee and
authenticated by the Certificate Registrar substantially in the form set forth
in Exhibit A and evidencing a fractional undivided interest in the Trust.
"Class Principal Balance" means, as to any date, the Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance, the
Class A-4 Principal Balance or the Class B Principal Balance, as appropriate.
"Class A-1 Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-1 Certificates pursuant
to clauses (3) through (5) of Section 8.03(a).
"Class A-1 Interest Amount" means, as to any Distribution Date, an amount
equal to one month's interest (or, with respect to the first Distribution Date,
interest from and including the Closing Date to but excluding March 15, 1996) at
the Class A-1 Pass-Through Rate on the Class A-1 Principal Balance.
"Class A-1 Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-1
Certificates on such Distribution Date pursuant to Section 8.03(a)(3)(i) is less
than the Class A-1 Interest Amount for such Distribution Date.
"Class A-1 Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-1 Pass-Through Rate
on the Unpaid Class A-1 Principal Liquidation Loss, if any.
"Class A-1 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-1 Certificates on such Distribution Date pursuant to
Section 8.03(a)(5)(i) is less than the Class A-1 Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-1 Pass-Through Rate" means 5.55% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-1 Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-1 Principal Balance by (ii) the
Cutoff Date Pool Principal Balance.
"Class A-1 Principal Balance" means, as to any Distribution Date, the
Original Class A-1 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-1 Certificates on any prior Distribution Date
on account of principal pursuant to Section 8.03(a)(4); and (ii) all Class A-1
Principal Liquidation Losses determined as of prior Distribution Dates.
"Class A-1 Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
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(1) the amount, if any, by which (x) the remainder of (i) the Certificate
Principal Balance as of that Distribution Date, minus (ii) the sum of the
aggregate amount of principal distributed on account of the Certificates on
that Distribution Date, plus the amount of any Class A-2 Principal
Liquidation Loss, Class A-3 Principal Liquidation Loss, Class A-4 Principal
Liquidation Loss and Class B Principal Liquidation Loss determined as of
that Distribution Date, exceeds (y) the Pool Scheduled Principal Balance as
of such Distribution Date; or
(2) the Class A-1 Principal Balance as of that Distribution Date.
"Class A-1 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of Class A-1 Certificates on such Distribution Date pursuant to Section
8.03(a)(4)(i) is less than the Class A-1 Percentage of the Formula Principal
Distribution Amount for such Distribution Date, minus (y) any Class A-1
Principal Liquidation Loss determined as of that Distribution Date.
"Class A-2 Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-2 Certificates pursuant
to clauses (6) through (8) of Section 8.03(a).
"Class A-2 Interest Amount" means, as to any Distribution Date, an amount
equal to one month's interest (or, with respect to the first Distribution Date,
interest from and including the Closing Date to but excluding March 15, 1996) at
the Class A-2 Pass-Through Rate on the Class A-2 Principal Balance.
"Class A-2 Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-2
Certificates on such Distribution Date pursuant to Section 8.03(a)(6)(i) is less
than the Class A-2 Interest Amount for such Distribution Date.
"Class A-2 Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-2 Pass-Through Rate
on the Unpaid Class A-2 Principal Liquidation Loss, if any.
"Class A-2 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-2 Certificates on such Distribution Date pursuant to
Section 8.03(a)(8)(i) is less than the Class A-2 Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-2 Pass-Through Rate" means 5.70% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-2 Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-2 Principal Balance by (ii) the
Cutoff Date Pool Principal Balance.
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"Class A-2 Principal Balance" means, as to any Distribution Date, the
Original Class A-2 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-2 Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(7); and (ii) all Class A-2
Principal Liquidation Losses determined as of prior Distribution Dates.
"Class A-2 Principal Liquidation Loss" means, as to any Distribution
Date, the lesser of:
(1) the amount, if any, by which (x) the remainder of (i) the Certificate
Principal Balance as of that Distribution Date, minus (ii) the sum of the
aggregate amount of principal distributed on account of the Certificates on
that Distribution Date, plus the amount of any Class A-3 Principal
Liquidation Loss, Class A-4 Principal Liquidation Loss and Class B
Principal Liquidation Loss determined as of that Distribution Date, exceeds
(y) the Pool Scheduled Principal Balance as of such Distribution Date; or
(2) the Class A-2 Principal Balance as of that Distribution Date.
"Class A-2 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of Class A-2 Certificates on such Distribution Date pursuant to Section
8.03(a)(7)(i) is less than the Class A-2 Percentage of the Formula Principal
Distribution Amount for such Distribution Date, minus (y) any Class A-2
Principal Liquidation Loss determined as of that Distribution Date.
"Class A-3 Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-3 Certificates pursuant
to clauses (9) through (11) of Section 8.03(a).
"Class A-3 Interest Amount" means, as to any Distribution Date, an amount
equal to one month's interest (or, with respect to the first Distribution Date,
interest from and including the Closing Date to but excluding March 15, 1996) at
the Class A-3 Pass-Through Rate on the Class A-3 Principal Balance.
"Class A-3 Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-3
Certificates on such Distribution Date pursuant to Section 8.03(a)(9)(i) is less
than the Class A-3 Interest Amount for such Distribution Date.
"Class A-3 Liquidation Loss Interest Amount" means, as to any
Distribution Date, an amount equal to one month's interest at the Class A-3
Pass-Through Rate on the Unpaid Class A-3 Principal Liquidation Loss, if any.
"Class A-3 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-
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3 Certificates on such Distribution Date pursuant to Section 8.03(a)(11)(i) is
less than the Class A-3 Liquidation Loss Interest Amount for such Distribution
Date.
"Class A-3 Pass-Through Rate" means 5.80% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-3 Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-3 Principal Balance by (ii) the
Cutoff Date Pool Principal Balance.
"Class A-3 Principal Balance" means, as to any Distribution Date, the
Original Class A-3 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-3 Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(10); and (ii) all Class A-3
Principal Liquidation Losses determined as of prior Distribution Dates.
"Class A-3 Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(1) the amount, if any, by which (x) the remainder of (i) the Certificate
Principal Balance as of that Distribution Date, minus (ii) the sum of the
aggregate amount of principal distributed on account of the Certificates on
that Distribution Date, plus the amount of any Class A-4 Principal
Liquidation Loss and Class B Principal Liquidation Loss determined as of
that Distribution Date, exceeds (y) the Pool Scheduled Principal Balance as
of such Distribution Date; or
(2) the Class A-3 Principal Balance as of that Distribution Date.
"Class A-3 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of Class A-3 Certificates on such Distribution Date pursuant to Section
8.03(a)(10)(i) is less than the Class A-3 Percentage of the Formula Principal
Distribution Amount for such Distribution Date, minus (y) any Class A-3
Principal Liquidation Loss determined as of that Distribution Date.
"Class A-4 Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-4 Certificates pursuant
to clauses (12) through (14) of Section 8.03(a).
"Class A-4 Interest Amount" means, as to any Distribution Date, an amount
equal to one month's interest (or, with respect to the first Distribution Date,
interest from and including the Closing Date to but excluding March 15, 1996) at
the Class A-4 Pass-Through Rate on the Class A-4 Principal Balance.
"Class A-4 Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-4
Certificates on
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such Distribution Date pursuant to Section 8.03(a)(12)(i) is less than the Class
A-4 Interest Amount for such Distribution Date.
"Class A-4 Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-4 Pass-Through Rate
on the Unpaid Class A-4 Principal Liquidation Loss, if any.
"Class A-4 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-4 Certificates on such Distribution Date pursuant to
Section 8.03(a)(14)(i) is less than the Class A-4 Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-4 Pass-Through Rate" means 6.15% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-4 Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-4 Principal Balance by (ii) the
Cutoff Date Pool Principal Balance.
"Class A-4 Principal Balance" means, as to any Distribution Date, the
Original Class A-4 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-4 Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(13); and (ii) all Class A-4
Principal Liquidation Losses determined as of prior Distribution Dates.
"Class A-4 Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(1) the amount, if any, by which (x) the remainder of (i) the Certificate
Principal Balance as of that Distribution Date, minus (ii) the sum of the
aggregate amount of principal distributed on account of the Certificates on
that Distribution Date, plus the amount of any Class B Principal
Liquidation Loss determined as of that Distribution Date, exceeds (y) the
Pool Scheduled Principal Balance as of such Distribution Date; or
(2) the Class A-4 Principal Balance as of that Distribution Date.
"Class A-4 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of Class A-4 Certificates on such Distribution Date pursuant to Section
8.03(a)(13)(i) is less than the Class A-4 Percentage of the Formula Principal
Distribution Amount for such Distribution Date, minus (y) any Class A-4
Principal Liquidation Loss determined as of that Distribution Date.
"Class B Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class B Certificates pursuant to
clauses (15) through (17) of Section 8.03(a).
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"Class B Interest Amount" means, as to any Distribution Date, an amount
equal to one month's interest (or, with respect to the first Distribution Date,
interest from and including the Closing Date to but excluding March 15, 1996) at
the Class B Pass-Through Rate on the Class B Principal Balance.
"Class B Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class B
Certificates on such Distribution Date pursuant to Section 8.03(a)(15)(i) is
less than the Class B Interest Amount for such Distribution Date.
"Class B Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class B Pass-Through Rate
on the Unpaid Class B Principal Liquidation Loss, if any.
"Class B Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-4 Certificates on such Distribution Date pursuant to
Section 8.03(a)(17)(i) is less than the Class B Liquidation Loss Interest Amount
for such Distribution Date.
"Class B Pass-Through Rate" means 5.95% per annum, computed on the basis of
a 360-day year of twelve 30-day months.
"Class B Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class B Principal Balance by (ii) the
Cutoff Date Pool Principal Balance.
"Class B Principal Balance" means, as to any Distribution Date, the
Original Class B Principal Balance less the sum of: (i) all amounts distributed
to Holders of Class B Certificates on prior Distribution Dates on account of
principal pursuant to Section 8.03(a)(16); and (ii) all Class B Principal
Liquidation Losses determined as of prior Distribution Dates (whether or not the
amount of such Class B Principal Liquidation Losses were included in any
Guaranty Payments made by the Company).
"Class B Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of: (a) the amount, if any, by which the Certificate Principal
Balance as of that Distribution Date, minus the aggregate amount of principal
distributed on account of the Certificates on that Distribution Date, exceeds
the Pool Scheduled Principal Balance as of such Distribution Date, or (b) the
Class B Principal Balance.
"Class B Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of Class B Certificates on such Distribution Date pursuant to Section
8.03(a)(16)(i) is less than the Class B Percentage of the Formula Principal
Distribution Amount for such Distribution Date, minus (y) any Class B Principal
Liquidation Loss determined as of that Distribution Date.
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<PAGE>
"Class Percentage Interest" means, as to any Certificate, the percentage
interest evidenced thereby in distributions made on the related Class, such
percentage interest being equal to the percentage (carried to eight places)
obtained from dividing the denomination of such Certificate by the aggregate
denomination of all Certificates of the related Class (which equals the Original
Class A-1 Principal Balance in the case of a Class A-1 Certificate, the Original
Class A-2 Principal Balance in the case of a Class A-2 Certificate, the Original
Class A-3 Principal Balance in the case of a Class A-3 Certificate, the Original
Class A-4 Principal Balance in the case of a Class A-4 Certificate, or the
Original Class B Principal Balance in the case of a Class B Certificate). The
aggregate Class Percentage Interests for each Class of Certificates shall equal
100%.
"Closing Date" means January 26, 1996.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means First Bank National Association, a national
banking association, and its successors as collateral agent under the Pledge
Agreement.
"Collateral Security"means, with respect to any Contract, (i) the security
interests, if any, granted by or on behalf of the related Obligor with respect
thereto, including a first priority perfected security interest in the related
Product, (ii) all other security interests or liens and property subject thereto
from time to time purporting to secure payment of such Contract, whether
pursuant to the agreement giving rise to such Contract or otherwise, together
with all financing statements signed by the Obligor describing any collateral
securing such Contract, (iii) all guarantees, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Contract whether pursuant to the agreement giving rise to such
Contract or otherwise, and (iv) all records in respect of such Contract.
"Collected Funds" means, as to any Distribution Date, an amount equal to
(a) the sum of (i) the amount on deposit in the Collection Account as of the
close of business on the last day of the preceding Monthly Period (exclusive of
any amounts deposited therein pursuant to Sections 8.04, 8.05 or 8.06), and (ii)
any amounts required to be deposited in the Collection Account on or before the
Business Day immediately preceding such Distribution Date pursuant to Section
5.09 or 5.13, reduced by (b) the sum as of the close of business on the last day
of the preceding Monthly Period of (i) the Amount Held for Future Distribution,
and (ii) amounts permitted to be withdrawn by the Trustee from the Collection
Account pursuant to clauses (b) - (e), inclusive, of Section 8.02.
"Collection Account" means the account established and maintained pursuant
to Section 5.05.
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"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contract File" means, as to each Contract, (a) the original copy of the
Contract, including the executed promissory note or other evidence of the
obligation of the Obligor; (b) either (i) the original title document for the
related Product or a duplicate certified by the appropriate governmental
authority which issued the original thereof or the application for such title
document or (ii) if the laws of the jurisdiction in which the related Product is
located do not provide for the issuance of title documents for goods of the type
including the Product, other evidence of ownership of the related Product which
is customarily relied upon in such jurisdiction as evidence of title to such
goods; (c) evidence of one or more of the following types of perfection of the
security interest in the related Product granted by such Contract, as
appropriate: (i) notation of such security interest on the title document, (ii)
a financing statement meeting the requirements of the UCC, with evidence of
recording indicated thereon, (iii) in the case of a Contract secured by a
security interest in an aircraft, evidence of filing with the Federal Aviation
Administration Aircraft Registry or (iv) such other evidence of perfection of a
security interest in goods of the type including the Product as is customarily
relied upon in the jurisdiction in which the related Product is located; (d) the
assignment of the Contract from the originator (if other than the Company or a
wholly-owned subsidiary of the Company) to the Company or a wholly-owned
subsidiary of the Company; (e) any extension, modification or waiver
agreement(s); (f) a credit application signed by the Obligor, or a copy thereof;
and (g) if required by Section 5.09 with respect to such Contract, a certificate
of insurance or application form for insurance signed by the Obligor, or copies
thereof.
"Contract Rate" means, with respect to any particular Contract, the rate of
interest specified in that Contract and computed in accordance with the method
specified in that Contract.
"Contracts" means the retail installment sales contracts and promissory
notes described in the List of Contracts and constituting part of the corpus of
the Trust, which Contracts are to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, all related security interests and any
and all rights to receive payments which are due pursuant thereto on or after
the Cutoff Date, but excluding any rights to receive payments which are due
pursuant thereto prior to the Cutoff Date.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.08.
"Counsel for the Company" means Dorsey & Whitney P.L.L.P. or other legal
counsel for the Company.
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"Cutoff Date" means February 1, 1996.
"Cutoff Date Pool Principal Balance" means the aggregate of the Cutoff Date
Principal Balances of the Contracts.
"Cutoff Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cutoff Date after giving effect to all
installments of principal due prior thereto.
"Defaulted Contract" means a Contract with respect to which the Servicer
commenced repossession or foreclosure procedures, made a sale of such Contract
to a third party for repossession, foreclosure or other enforcement, or as to
which there was a payment delinquent 180 or more days (excluding any Contract
deemed delinquent solely because the Obligor's required monthly payment was
reduced as a result of bankruptcy or similar proceedings).
"Delinquent Payment" means, as to any Contract, with respect to any Monthly
Period, any payment or portion of a payment of principal or interest that was
originally scheduled to be made during such Monthly Period under such Contract
and was not received or applied during such Monthly Period, whether or not any
payment extension has been granted by the Servicer.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., as the registered Holder of:
(i) one Certificate evidencing $200,000,000 in initial aggregate
principal balance of the Class A-1 Certificates,
(ii) one Certificate evidencing $174,000,000 in initial aggregate
principal balance of the Class A-1 Certificates,
(iii) one Certificate evidencing $18,350,000 in initial aggregate
principal balance of the Class A-2 Certificates,
(iv) one Certificate evidencing $12,925,000 in initial aggregate
principal balance of the Class A-3 Certificates,
(v) one Certificate evidencing $12,925,000 in initial aggregate
principal balance of the Class A-4 Certificates, and
(vi) one Certificate evidencing $12,946,642 in initial aggregate
principal balance of the Class B Certificates,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in the Uniform Commercial Code of the State of
New York.
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<PAGE>
"Depository Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the third Business Day prior to each
Distribution Date during the term of this Agreement.
"Distribution Date" means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing in March 1996.
"Disqualified Organization" has the meaning assigned in Section 9.02(b)(3).
"Due Date" means, as to any Contract, the date of the month on which the
scheduled monthly payment for such Contract is due.
"Electronic Ledger" means the electronic master record of installment sale
contracts of the Company.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) an
account or accounts the deposits in which are fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a
trust account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Trustee hereunder, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the capital and surplus of the bank holding company) of not less than
$50,000,000 and the securities of such depository institution (or, if such
depository institution is a subsidiary of a bank holding company system and such
depository institution's securities are not rated, the securities of the bank
holding company) shall have a credit rating from each of Moody's, Standard &
Poor's (if rated by Standard & Poor's) and Fitch (if rated by Fitch) in one of
its generic credit rating categories which signifies investment grade; or (iv)
an account that will not cause Moody's, Standard & Poor's and Fitch to downgrade
or withdraw its then-current rating assigned to the Certificates, as confirmed
in writing by Moody's, Standard & Poor's and Fitch.
"Eligible Institution" means any depository institution (which may be the
Trustee or an Affiliate of the Trustee) organized under the laws of the United
States or any State, the deposits of which are insured to the full extent
permitted by law by the Bank Insurance Fund (currently administered by the
Federal Deposit Insurance Corporation), which is subject to supervision and
examination by federal or state authorities and whose short-term deposits have
been rated P-1 by Moody's, A-1+ by Standard & Poor's and F-1 by Fitch (if rated
by Fitch), or whose unsecured long-term debt has been rated in one of the two
highest rating categories by Moody's, Standard & Poor's and Fitch (if rated by
Fitch) in the case of unsecured long-term debt.
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"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means the Company or any Person qualified to act as
Servicer of the Contracts under applicable federal and state laws and
regulations, which Person services not less than an aggregate of $10,000,000 in
outstanding principal amount of retail installment sales contracts and/or
consumer installment loans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Contracts comprising a portion of the corpus of the Trust.
"Final Distribution Date" means the Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
12.03.
"Fitch" means Fitch Investors Service, L.P., or any successor thereto;
provided that if Fitch no longer has a rating outstanding on the Class A-1
Certificates, nor on the Class A-2 Certificates, nor on the Class A-3
Certificates, nor on the Class A-4 Certificates, nor on the Class B
Certificates, then references herein to "Fitch" shall be deemed to refer to the
NRSRO then rating any Class of the Certificates (or, if more than one such NRSRO
is then rating any Class of the Certificates, to such NRSRO as may be designated
by the Servicer), and references herein to ratings by or requirements of Fitch's
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Formula Principal Distribution Amount" means, as of any Distribution Date
(but subject to the last sentence of this definition), the sum of the following
amounts with respect to the related Monthly Period, in each case computed in
accordance with the method specified in the relevant Contract:
(i) all scheduled payments of principal due on each outstanding
Contract during the related Monthly Period as specified in the
amortization schedule at the time applicable thereto (after
adjustments for previous Partial Principal Prepayments but
before any adjustment to such amortization schedule by reason
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<PAGE>
of any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the related Monthly Period;
plus
(iii) the aggregate Scheduled Principal Balance of all Contracts that
became Liquidated Contracts during the related Monthly Period;
plus
(iv) the aggregate Scheduled Principal Balance of all Contracts
repurchased during the prior Monthly Period pursuant to Section
3.05.
The Formula Principal Distribution Amount for the Distribution Date in February
2018 shall be the Certificate Principal Balance.
"Grantor Trust" means a trust which is classified as a grantor trust under
the provisions of Sections 671 through 679 of the Code and related provisions
and any temporary, proposed or final regulations promulgated thereunder, as the
foregoing may be in effect from time to time.
"Guaranty Payment" means, as of any Distribution Date, an amount equal to
the sum of: (i) any Class B Principal Liquidation Loss determined as of that
Distribution Date; plus (ii) the amount, if any, by which (A) the amount
necessary to pay Holders of the Class B Certificates all amounts described in
clauses (15) through (17) of Section 8.03(a) on such Distribution Date exceeds
(B) the remainder of the Collected Funds as of that Distribution Date minus the
amounts to be distributed from the Collection Account on that Distribution Date
pursuant to clauses (1) through (14) of Section 8.03(a).
"Independent" means, when used with respect to any specified Person, Dorsey
& Whitney P.L.L.P. or any Person who (i) is in fact independent of the Company
and the Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Company or the Servicer or in an
Affiliate of either and (iii) is not connected with the Company or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Insurance Policy" means, with respect to each Contract, the policy of
insurance (if any) required to be maintained for the related Product by Section
5.09, and which, as provided in said Section 5.09, may be a blanket policy
maintained by the Servicer in accordance with the terms and conditions of said
Section 5.09.
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"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract.
"Limited Guaranty" means the obligation of the Company to make Guaranty
Payments pursuant to Section 8.04.
"Liquidated Contract" means any defaulted Contract as to which the Servicer
has determined that all amounts which it expects to recover from or on account
of such Contract through the date of disposition of the related Product have
been recovered; provided that any defaulted Contract in respect of which the
related Product have been realized upon and disposed of and the proceeds of such
disposition have been received shall be deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any defaulted Contract, on or prior to the date on which the
related Product is disposed of, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds and
proceeds realized on the repurchase of such Product by the originating dealer
for breach of warranties) received in connection with the liquidation of
defaulted Contracts, whether through repossession, foreclosure sale or
otherwise, including any rental income realized from the repossessed Product.
"List of Contracts" means the list identifying each Contract constituting
part of the corpus of the Trust, which list (a) identifies each Contract and (b)
sets forth as to each Contract (i) the Cutoff Date Principal Balance, (ii) the
amount of monthly payments due from the Obligor, (iii) the Contract Rate and
(iv) the maturity date, and which is attached to the Assignment from the Company
to the Trustee, conveying the Company's right, title and interest in and to the
Contracts (substantially in the form of Exhibit C).
"Monthly Period" means a calendar month during the term of this Agreement.
"Monthly Report" has the meaning assigned in Section 6.01.
"Monthly Servicing Fee" means, as of any Distribution Date on which the
Company is not acting as Servicer, any amount agreed to by the Trustee and the
successor Servicer that does not exceed one-twelfth of the product of 0.75% and
the Pool Scheduled Principal Balance for the immediately preceding Distribution
Date.
"Monthly Servicing and Guaranty Fee" means, as to any Distribution Date,
the Amount Available in the Collection Account on that Distribution Date after
payment in full of all amounts specified in clauses (1) through (18) of Section
8.03(a).
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"Moody's" means Moody's Investors Service, Inc., or any successor thereto;
provided that, if Moody's no longer has a rating outstanding on the Class A-1
Certificates, nor on the Class A-2 Certificates, nor on the Class A-3
Certificates, nor on the Class A-4 Certificates, nor on the Class B
Certificates, then references herein to "Moody's" shall be deemed to refer to
the NRSRO then rating any Class of the Certificates (or, if more than one such
NRSRO is then rating any Class of the Certificates, to such NRSRO as may be
designated by the Servicer), and references herein to ratings by or requirements
of Moody's shall be deemed to have the equivalent meanings with respect to
ratings by or requirements of such NRSRO.
"Net Liquidation Loss" means, as to a Liquidated Contract, the amount, if
any, by which (a) the outstanding principal balance of such Liquidated Contract
plus accrued and unpaid interest thereon to the date on which such Liquidated
Contract became a Liquidated Contract exceeds (b) the Net Liquidation Proceeds
for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, all
Liquidation Proceeds received on or prior to the last day of the Monthly Period
in which such Contract became a Liquidated Contract, net of Liquidation
Expenses.
"NRSRO" means any nationally recognized statistical rating organization.
"Obligor" means a Product buyer or other Person who is indebted under a
Contract.
"Officer's Certificate" means a certificate signed by the Chairman of the
Board, President or any Vice President of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may, except as
expressly provided herein, be salaried counsel for the Company, acceptable to
the Trustee and the Company.
"Original Class A-1 Principal Balance" means $374,000,000.00.
"Original Class A-2 Principal Balance" means $18,350,000.00.
"Original Class A-3 Principal Balance" means $12,925,000.00.
"Original Class A-4 Principal Balance" means $12,925,000.00.
"Original Class B Principal Balance" means $12,946,642.43.
"Original Class Principal Balance" means, with respect to any Class, the
Original Class A-1 Principal Balance, the Original Class A-2 Principal Balance,
the Original Class A-3 Principal Balance, the Original Class A-4 Principal
Balance, or the Original Class B Principal Balance, as appropriate.
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"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Collection Account pursuant to the proviso in Section 3.05(a).
"Paying Agent" has the meaning assigned in Section 8.01(c).
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
"Pledge Agreement" means that certain Pledge Agreement dated as of January
1, 1996 between the Pledgor, the Collateral Agent, and the Trustee, in the form
of Exhibit J attached hereto.
"Pledgor" means Green Tree RECS Guaranty Corporation, a
Minnesota corporation.
"Pool Factor" means, at any time and with respect to any Class of
Certificates, the eight-digit decimal derived from a fraction, the numerator of
which is the aggregate Class Principal Balance of that Class of Certificates at
such time and the denominator of which is the Original Class Principal Balance
of that Class of Certificates.
"Pool Scheduled Principal Balance" means, as of any Distribution Date, the
aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the immediately preceding Monthly Period.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (exclusive of Liquidation Proceeds) which is received in advance of its
scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled payment date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the entire
principal balance of a Contract.
"Products" means motorcycles; marine products (including boats, boat
trailers and outboard motors); pianos and organs; horse trailers; sport vehicles
(including snowmobiles, personal watercraft and all-terrain vehicles); trucks;
personal aircraft; and recreational vehicles.
"Record Date" means the Business Day immediately preceding the related
Distribution Date.
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"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05, an amount equal to (a) the remaining principal amount
outstanding on such Contract, plus (b) interest at the Contract Rate on such
Contract from the end of the Monthly Period with respect to which the Obligor
last made a payment through the end of the immediately preceding Monthly Period.
"Required Spread Account Amount" means, as of any date of determination,
the lesser of: (i) $7,329,492.92; or (ii) the sum of the Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class A-3 Principal Balance and
the Class A-4 Principal Balance as of such date of determination.
"Responsible Officer" means, with respect to the Trustee, the chairman and
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"Scheduled Principal Balance" means, as to any Contract and any
Distribution Date or the Cutoff Date, the principal balance of such Contract as
of the Due Date in the Monthly Period immediately preceding such Distribution
Date or as of the Due Date immediately preceding the Cutoff Date, as the case
may be, as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
of an Obligor or similar proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous Partial Principal Prepayments and to
the payment of principal due on such Due Date and irrespective of any
delinquency in payment by, or extension granted to, the related Obligor.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Servicer Advance" means, with respect to any Distribution Date, the
amount, if any, deposited by the Servicer in the Collection Account pursuant to
Section 5.13.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Company, as the same may be amended from time to
time.
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"Shortfall" means, with respect to any Distribution Date, the amount (if
any) by which:
(i) the sum of the amounts to be distributed from the Collection Account on
such Distribution Date pursuant to Section 8.03(a)(1) - (14) (without
giving effect to the limitation of the Amount Available in the Collection
Account),
exceeds
(ii) the remainder of the Collected Funds as of that Distribution Date
minus any amounts to be distributed from the Collection Account on that
Distribution Date pursuant to clauses (1) and (2) of Section 8.03(a),
plus, with respect to the Distribution Date in March 1996, $779,177.79
(representing interest accrued on the Cutoff Date Pool Principal Balance at the
weighted average Contract Rate from and including the Closing Date to but
excluding the Cutoff Date).
"Spread Account" means a segregated trust account established with the
Collateral Agent, and pledged to the Trustee for the benefit of the Holders of
the Class A Certificates pursuant to the Pledge Agreement, by the Pledgor.
"Spread Account Interest Subaccount" means the subaccount within the Spread
Account described in Section 8.06(a).
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or any successor thereto; provided that, if
Standard & Poor's no longer has a rating outstanding on the Class A-1
Certificates, nor on the Class A-2 Certificates, nor on the Class A-3
Certificates, nor on the Class A-4 Certificates, nor on the Class B
Certificates, then references herein to "Standard & Poor's" shall be deemed to
refer to the NRSRO then rating any Class of the Certificates (or, if more than
one such NRSRO is then rating any Class of the Certificates, to such NRSRO as
may be designated by the Servicer), and references herein to ratings by or
requirements of Standard & Poor's shall be deemed to have the equivalent
meanings with respect to ratings by or requirements of such NRSRO.
"Trust" means the trust created by this Agreement, the corpus of which
consists of all the rights, benefits, and obligations arising from and in
connection with each Contract, including any liquidation proceeds therefrom, all
rights under any hazard or other individual insurance policy on a Product
securing a Contract for the benefit of the creditor of such Contract, all
security interests in each Product, and rights under the Errors and Omissions
Protection Policy, benefits under the Limited Guaranty for the benefit of the
Class B Certificateholders, and the remittances, deposits and payments made into
the Collection Account and amounts in the Collection Account (including all
proceeds of investments thereof), and a security interest in the funds in the
Spread Account, all as provided herein.
"Uncollectible Advance" means, with respect to any Determination Date, the
portion of any Servicer Advances which the Servicer has determined in good faith
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will not be ultimately recoverable by the Servicer from insurance policies on
the Product, the Obligor or out of Net Liquidation Proceeds. The determination
by the Servicer that it has made an Uncollectible Advance shall be evidenced by
an Officer's Certificate delivered to the Trustee.
"Unpaid Class A-1 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-1 Interest Shortfall, if
any, for the immediately prior Distribution Date, plus (y) the Unpaid Class A-1
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class A-1 Certificates on
account of any Unpaid Class A-1 Interest Shortfalls pursuant to Section
8.03(a)(3)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-1
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-1 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-1
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-1 Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-1 Certificates on account of
any Unpaid Class A-1 Liquidation Loss Interest Shortfalls pursuant to Section
8.03(a)(5)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-1
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-1 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-1 Principal
Liquidation Losses for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-1 Certificates
pursuant to Section 8.03(a)(5)(iii).
"Unpaid Class A-1 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-1 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-1 Certificates pursuant to
Section 8.03(a)(4)(ii).
"Unpaid Class A-2 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-2 Interest Shortfall, if
any, for the immediately prior Distribution Date, plus (y) the Unpaid Class A-2
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class A-2 Certificates on
account of Class A-2 Interest Shortfalls pursuant to Section 8.03(a)(6)(ii) on
such immediately prior Distribution Date, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class A-2 Pass-Through Rate on
such remainder from such immediately prior Distribution Date to the current
Distribution Date.
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"Unpaid Class A-2 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-2
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-2 Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-2 Certificates on account of
any Unpaid Class A-2 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(8)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-2
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-2 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-2 Principal
Liquidation Losses for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-2 Certificates
pursuant to Section 8.03(a)(8)(iii).
"Unpaid Class A-2 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-2 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-2 Certificates pursuant to
Section 8.03(a)(7)(ii).
"Unpaid Class A-3 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-3 Interest Shortfall, if
any, for the immediately prior Distribution Date, plus (y) the Unpaid Class A-3
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class A-3 Certificates on
account of any Unpaid Class A-3 Interest Shortfall pursuant to Section
8.03(a)(9)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-3
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-3 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-3
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-3 Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-3 Certificates on account of
any Unpaid Class A-3 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(11)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-3
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-3 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-3 Principal
Liquidation Losses for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-3 Certificates
pursuant to Section 8.03(a)(11)(iii).
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"Unpaid Class A-3 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-3 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-3 Certificates pursuant to
Section 8.03(a)(10)(ii).
"Unpaid Class A-4 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-4 Interest Shortfall, if
any, for the immediately prior Distribution Date, plus (y) the Unpaid Class A-4
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class A-4 Certificates on
account of any Unpaid Class A-4 Interest Shortfall pursuant to Section
8.03(a)(12)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-4
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-4 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-4
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-4 Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-4 Certificates on account of
any Unpaid Class A-4 Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(14)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-4
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-4 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-4 Principal
Liquidation Losses for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-4 Certificates
pursuant to Section 8.03(a)(14)(iii).
"Unpaid Class A-4 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-4 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-4 Certificates pursuant to
Section 8.03(a)(13)(ii).
"Unpaid Class B Interest Shortfall" means, as to any Distribution Date, the
amount, if any, of the remainder of (x) the Class B Interest Shortfall, if any,
for the immediately prior Distribution Date, plus (y) the Unpaid Class B
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class B Certificates on
account of any Unpaid Class B Interest Shortfall pursuant to Section
8.03(a)(15)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class B
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
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"Unpaid Class B Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class B
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class B Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class B Certificates on account of any
Unpaid Class B Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(17)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class B
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class B Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class B Principal Liquidation
Losses for all prior Distribution Dates is in excess of the amounts distributed
on prior Distribution Dates to Holders of Class B Certificates pursuant to
Section 8.03(a)(17)(iii).
"Unpaid Class B Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class B Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class B Certificates pursuant to Section
8.03(a)(16)(ii).
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
---------------------------------------------
SECTION 2.01. Closing.
a. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Green Tree Recreational, Equipment & Consumer Trust
1996-A. The Trust shall be administered pursuant to the provisions of this
Agreement for the benefit of the Certificateholders. The Trustee is hereby
specifically empowered to conduct any business dealings with the Company on
behalf of the Trust.
b. On the Closing Date, the Company shall transfer, assign, set over and
otherwise convey to the Trust by execution of an assignment substantially in the
form of Exhibit C hereto (1) all the right, title and interest of the Company in
and to the Contracts (including but not limited to all right, title and interest
in and to the Collateral Security), all interest and principal received by the
Company on or with respect to the Contracts, including any liquidation proceeds
therefrom (other than principal and interest due on the Contracts before the
Cutoff Date), (2) all rights under each Insurance Policy on any Product securing
a Contract for the benefit of the creditor of such Contract and all blanket
insurance policies to the extent they relate to the Contracts, (3) all rights
under the Errors and Omissions Protection Policy as such policy relates to the
Contracts, (4) all documents contained in the Contract Files, and (5) all
proceeds and products of the foregoing. On the Closing Date, the Pledgor shall
grant the Trustee a security interest in the funds in the Spread Account and all
investments thereof, for the benefit of the Holders of the Certificates, by
executing and delivering the Pledge Agreement.
c. Although the parties intend that the conveyance of the Company's
right, title and interest in and to the Contracts and the Collateral Security
pursuant to this Agreement shall constitute a purchase and sale and not a pledge
of security for loans from the Certificateholders, it is the intent of this
Agreement that if such conveyances are deemed to be a pledge of security for
loans from the Certificateholders or any other Persons (the "Secured
Obligations"), the parties intend that the rights and obligations of the parties
to the Secured Obligations shall be established pursuant to the terms of this
Agreement. The parties also intend and agree that the Company shall be deemed
to have granted to the Trustee, and the Company does hereby grant to the
Trustee, a perfected first-priority security interest in the items designated in
Section 2.01(b)(1) through 2.01(b)(5) above, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement shall constitute a security
agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person under any
Certificates or the Secured Obligations, the security interest created hereby
shall continue in full force and effect and the Trustee shall be deemed to be
the collateral agent for the benefit of such Person.
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SECTION 2.02. Conditions to the Closing.
On or before the Closing Date, the Company shall deliver or cause to be
delivered the following documents to the Trustee:
a. The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the Company.
b. A certificate of an officer of the Company substantially in the form
of Exhibit D hereto.
c. An Opinion of Counsel for the Company substantially in the form of
Exhibit E hereto.
d. A letter from Coopers & Lybrand LLP or another nationally recognized
accounting firm, stating that such firm has reviewed the Contracts on a
statistical sampling basis and, based on such sampling, concluding that such
Contracts conform in all material respects to the List of Contracts, to a
confidence level of 97.5%, with an error rate generally not in excess of 1.8%,
specifying those Contracts which do not so conform.
e. Copies of resolutions of the board of directors of the Company or of
the executive committee of the board of directors of the Company approving the
execution, delivery and performance of this Agreement, the creation of the Trust
and the transactions contemplated hereunder, certified in each case by the
secretary or an assistant secretary of the Company.
f. Officially certified recent evidence of due incorporation and good
standing of the Company under the laws of the State of Delaware.
g. Evidence of filing with the Secretary of State of Minnesota of a UCC-1
financing statement, executed by the Company as debtor, naming the Trustee as
secured party and listing the Contracts as Collateral.
h. An executed copy of the Assignment substantially in the form of
Exhibit C hereto.
i. An Officer's Certificate listing the Servicer's Servicing Officers.
j. Evidence of continued coverage of the Company under the Errors and
Omissions Protection Policy.
k. Evidence of deposit in the Collection Account of all funds received
with respect to the Contracts prior to the Closing Date which were due on or
after the Cutoff Date, together with an Officer's Certificate to the effect that
such amount is correct.
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l. An Officer's Certificate confirming that the Company's internal audit
department has reviewed the original or a copy of each Contract and each
Contract File, that each Contract and Contract File conforms in all material
respects with the List of Contracts and that each Contract File is complete in
all material respects and that each Product securing a Contract is covered by an
Insurance Policy as required by Section 3.02(f).
m. A letter from Moody's confirming that the Class A-1 Certificates have
been assigned a rating of Aaa by Moody's, a letter from Standard & Poor's
confirming that the Class A-1 Certificates have been assigned a rating of AAA by
Standard & Poor's, and a letter from Fitch confirming that the Class A-1
Certificates have been assigned a rating of AAA by Fitch.
n. A letter from Moody's confirming that the Class A-2 Certificates have
been assigned a rating of Aa3 by Moody's, a letter from Standard & Poor's
confirming that the Class A-2 Certificates have been assigned a rating of AA by
Standard & Poor's, and a letter from Fitch confirming that the Class A-2
Certificates have been assigned a rating of AA by Fitch.
o. A letter from Moody's confirming that the Class A-3 Certificates have
been assigned a rating of A3 by Moody's, a letter from Standard & Poor's
confirming that the Class A-3 Certificates have been assigned a rating of A+ by
Standard & Poor's, and a letter from Fitch confirming that the Class A-3
Certificates have been assigned a rating of A by Fitch.
p. A letter from Moody's confirming that the Class A-4 Certificates have
been assigned a rating of Baa3 by Moody's, a letter from Standard & Poor's
confirming that the Class A-4 Certificates have been assigned a rating of BBB by
Standard & Poor's, and a letter from Fitch confirming that the Class A-1
Certificates have been assigned a rating of BBB- by Fitch.
q. A letter from Moody's confirming that the Class B Certificates have
been assigned a rating of Baa1 by Moody's, a letter from Standard & Poor's
confirming that the Class B Certificates have been assigned a rating of A- by
Standard & Poor's, and a letter from Fitch confirming that the Class B
Certificates have been assigned a rating of A by Fitch.
r. The Pledge Agreement, duly executed by the Pledgor and the Collateral
Agent, together with evidence of the deposit in the Spread Account of
$779,177.79 (representing interest accrued on the Cutoff Date Pool Principal
Balance at the weighted average Contract Rate from and including the Closing
Date to but excluding the Cutoff Date).
s. Any other documents or certificates that the Trustee may reasonably
request.
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SECTION 2.03. Acceptance by Trustee.
On the Closing Date, if the conditions set forth in Section 2.02 have been
satisfied, the Trustee shall deliver a certificate to the Company substantially
in the form of Exhibit F hereto acknowledging conveyance of the Contracts and
Contract Files to the Trustee and declaring that the Trustee, directly or
through the Servicer, as agent for the Trustee and custodian, pursuant to
Section 4.01, will hold all Contracts that have been delivered in trust, upon
the trusts herein set forth, for the use and benefit of all Certificateholders
and shall issue to or upon the order of the Company Certificates representing
ownership of a beneficial interest in 100% of the Trust.
SECTION 2.04. Grantor Trust Provisions.
The Company, as Servicer, the Trustee and the Certificateholders and the
Certificate Owners, by acceptance of the Certificates or an interest therein,
each agree that the Trust is intended to be treated as a Grantor Trust for
federal income tax purposes. In furtherance of the foregoing, the Trustee (at
the direction of the Company or the Servicer), the Company and the Servicer
shall take, or refrain from taking, all such action as is necessary to maintain
the status of the Trust as a Grantor Trust. After the Closing Date, neither the
Trustee, the Company nor any Servicer shall (i) accept any contribution of
assets to the Trust other than deposits pursuant to Section 3.05, advances
pursuant to Section 5.13, Guaranty Payments pursuant to Section 8.04 and
transfers from the Spread Account pursuant to Section 8.06, (ii) dispose of any
portion of the Trust other than as provided in Sections 3.05 and 8.05, or (iii)
engage in any activity which would, directly or indirectly, adversely affect the
status of the Trust as a Grantor Trust.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company makes the following representations and warranties, effective
as of the Closing Date, on which the Trustee will rely in accepting the
Contracts in trust and issuing the Certificates on behalf of the Trust. The
repurchase obligation of the Company set forth in Section 3.05 constitutes the
sole remedy available to the Trust or Certificateholders for a breach of a
representation or warranty of the Company set forth in Section 2.02(l), 3.02,
3.03 or 3.04 of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company.
The Company represents and warrants to the Trustee and the
Certificateholders that:
a. Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Company.
b. Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and to cause the Trust to
be created. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
c. No Consent Required. The Company is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
d. No Violations. The execution, delivery and performance of this
Agreement by the Company will not violate any provision of any existing law or
regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Company, or constitute a material breach of any
mortgage, indenture,
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contract or other agreement to which the Company is a party or by which the
Company may be bound.
e. Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Company threatened, against the Company or any of its
properties or with respect to this Agreement, the Certificates which, if
adversely determined, would in the opinion of the Company have a material
adverse effect on the transactions contemplated by this Agreement.
f. Licensing. The Company is duly registered as a finance company in
each state in which Contracts were originated, to the extent such registration
is required by applicable law.
g. Chief Executive Office. The chief executive office of the Company is
at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
The Company represents and warrants to the Trustee and the
Certificateholders as to each Contract and as of the Closing Date:
a. List of Contracts. The information set forth in the List of Contracts
is true and correct as of its date.
b. Payments. The most recent scheduled payment was made by or on behalf
of the Obligor (without any advance from the Company or any Person acting at the
request of the Company) or was not delinquent for more than 59 days.
c. No Waivers. The terms of the Contract have not been waived, altered
or modified in any respect, except by instruments or documents identified in the
Contract File.
d. Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
e. No Defenses. The Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
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f. Insurance Coverage. The Product securing the Contract is covered by
an Insurance Policy to the extent (if any) required by Section 5.09. All
premiums due as of the Closing Date on such insurance have been paid in full.
g. Origination. The Contract was originated by a dealer of goods of a
class including the Product subject to the Contract, or by the Company, in the
regular course of its business and, if originated by a dealer, was purchased by
the Company in the regular course of its business.
h. Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract pursuant to this Agreement or pursuant to transfers of
Certificates, or the ownership of the Contract by the Trust, unlawful or render
the Contract unenforceable.
i. Compliance with Law. At the date of origination of the Contract, all
requirements of any federal and state laws, rules and regulations applicable to
the Contract, including, without limitation, usury, truth in lending and equal
credit opportunity laws, have been complied with, and the Company shall for at
least the period of this Agreement, maintain in its possession, available for
the Trustee's inspection, and shall deliver to the Trustee upon demand, evidence
of compliance with all such requirements. Such compliance is not affected by
the Trust's ownership of the Contract.
j. Contract in Force. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Product securing the
Contract has not been released from the lien of the Contract in whole or in
part.
k. Valid Security Interest. The Contract creates a valid and enforceable
perfected first priority security interest in favor of the Company in the
Product covered thereby as security for payment of the Cutoff Date Principal
Balance of such Contract. The Company has assigned all of its right, title and
interest in such Contract, including the security interest in the Product
covered thereby, to the Trustee. The Trustee has and will have a valid and
perfected and enforceable first priority security interest in such Contract and
Product.
l. Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal capacity to
execute the Contract.
m. Good Title. In the case of a Contract purchased from a dealer, the
Company purchased the Contract for fair value and took possession thereof in the
ordinary course of its business, without knowledge that the Contract was subject
to a security interest. The Company has not sold, assigned or pledged the
Contract to any person and prior to the transfer of the Contract by the Company
to the Trustee, the Company had good and marketable title thereto free and clear
of any encumbrance, equity, loan, pledge, charge, claim or security interest and
was the sole owner thereof with full right to transfer the Contract to the
Trustee. No financing statement
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describing or referring to any Contract (other than any financing statement
naming the Trustee as secured party, or filed by the Company as secured party to
perfect its interest in a Contract purchased from a dealer) is on file in any
public office.
n. No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract
(except payment delinquencies permitted by clause (b) above). The Company has
not waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above. As of the Closing
Date, the related Product is, to the best of the Company's knowledge, free of
damage and in good repair.
o. No Liens. There are, to the best of the Company's knowledge, no liens
or claims which have been filed for work, labor or materials affecting the
Product securing the Contract which are or may be liens prior to, or equal or
coordinate with, the lien of the Contract.
p. Equal Installments. Each Contract has a fixed Contract Rate and
provides for level monthly payments which fully amortize the loan over its term.
q. Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
r. One Original. There is only one original executed Contract (other
than an original in the possession of the relevant Obligor), which Contract has
been delivered to the Trustee or its custodian on or before the Closing Date.
Each Contract has been stamped to reflect the assignment of such Contract to the
Trustee.
s. Notation of Security Interest. With respect to each Contract, if the
related Product is located in a state in which notation of a security interest
on the title document is required or permitted to perfect such security
interest, the title document shows, or if a new or replacement title document
with respect to such Product is being applied for such title document will be
issued within 180 days and will show, the Company as the holder of a first
priority security interest in such Product; if the related Product is located in
a state in which the filing of a financing statement under the UCC is required
to perfect a security interest in goods of the type including the Product, such
filings or recordings have been duly made and show the Company as secured party;
and if the related Product is an aircraft subject to registration with the
Federal Aviation Administration's Aircraft Registry, and the recordation of a
mortgage, security agreement or similar conveyance with such Registry is
required to perfect the lien created thereby, such recordation has been duly
made and shows the Company as secured party or mortgagee. In any case, the
Trustee has the same rights as the secured party of record would have (if such
secured party were still the owner of the Contract) against all Persons
(including the
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<PAGE>
Company and any trustee in bankruptcy of the Company) claiming an interest in
such Product.
t. No Government Contracts. No Obligor is the United States government
or an agency, authority, instrumentality or other political subdivision of the
United States government.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
The Company represents and warrants to the Trustee and the
Certificateholders that:
a. Amounts. The aggregate principal amounts payable by Obligors under
the Contracts as of the Cutoff Date equal the Cutoff Date Pool Principal
Balance.
b. Characteristics. The Contracts have the following characteristics as
of the Cutoff Date: (i) the Obligors on not more than 25% of the Contracts by
Cutoff Date Pool Principal Balance are located in any one state; (ii) no
Contract has a remaining maturity of fewer than 2 months or more than 240
months; (iii) the final scheduled payment date on the Contract with the latest
maturity is in January 2016; (iv) each Contract had an original principal
balance of at least $1,050.00 and not more than $398,050.00 and a remaining
principal balance as of the Cutoff Date of at least $1,001.15 and not more than
$395,934.27; and (v) each Contract had a contractual rate of interest of at
least 6.56% and not more than 25.37%.
c. Computer Tape. The Computer Tape made available by the Company was
complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Contracts.
d. Marking Records. By the Closing Date, the Company has caused the
portions of the Electronic Ledger relating to the Contracts to be clearly and
unambiguously marked to indicate that such Contracts constitute part of the
Trust and are owned by the Trust in accordance with the terms of the trust
created hereunder.
e. No Adverse Selection. Except for the effect of the representations
and warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract Files.
The Company represents and warrants to the Trustee and the
Certificateholders that:
a. Possession. Immediately prior to the Closing Date, the Company will
have possession of each original Contract and the related Contract File and
there are and there will be no custodial agreements in effect materially and
adversely affecting
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the rights of the Company to make, or cause to be made, any delivery required
hereunder.
b. Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files by the Company pursuant to this Agreement is
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction.
SECTION 3.05. Repurchase of Contracts for Breach of Representations and
Warranties.
a. The Company shall repurchase a Contract, at its Repurchase Price, not
later than the last day of the Monthly Period prior to the Monthly Period that
is 90 days after the day on which the Company, the Servicer or the Trustee first
discovers, or the Company or the Servicer should have discovered a breach of a
representation or warranty of the Company set forth in Sections 2.02(l), 3.02,
3.03 or 3.04 of this Agreement that materially adversely affects the Trust's or
the Certificateholders' interest in such Contract and which breach has not been
cured; provided, however, that (i) in the event that a party other than the
Company first becomes aware of such breach, such discovering party shall notify
the Company in writing within five Business Days of the date of such discovery
and (ii) with respect to any Contract incorrectly described on the List of
Contracts with respect to unpaid principal balance, which the Company would
otherwise be required to repurchase pursuant to this Section, the Company may,
in lieu of repurchasing such Contract, deposit in the Collection Account no
later than the first Determination Date that is 90 or more days from the date of
such discovery cash in an amount sufficient to cure such deficiency or
discrepancy. Any such cash so deposited shall be distributed to
Certificateholders on the immediately following Distribution Date as a
collection of principal or interest on such Contract, according to the nature of
the deficiency or discrepancy. Notwithstanding any other provision of this
Agreement, the obligation of the Company under this Section shall not terminate
upon a Service Transfer pursuant to Article VII. Notwithstanding the foregoing,
the Company shall repurchase any Contract, at such Contract's Repurchase Price,
if the Company has failed to deliver the related Contract File to the Trustee
within 30 days of the Closing Date.
b. Upon receipt by the Trust by deposit in the Collection Account of the
Repurchase Price under subsection (a) above, and upon receipt of a certificate
of a Servicing Officer in the form attached hereto as Exhibit H, the Trustee
shall convey and assign to the Company all of the Certificateholders' right,
title and interest in the repurchased Contract without recourse, representation
or warranty, except as to the absence of liens, charges or encumbrances created
by or arising as a result of actions of the Trustee.
c. The Company shall defend and indemnify the Trustee, the Collateral
Agent and the Certificateholders against all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel,
arising out of any claims which may be asserted against or incurred by any of
them as a result of any
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third-party action arising out of any breach of any representation set forth in
Sections 2.02(l), 3.02, 3.03 or 3.04 of this Agreement.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
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SECTION 4.01. Custody of Contracts.
a. Subject to the terms and conditions of this Section the Trustee
appoints the Servicer to maintain custody of the Contract Files for the benefit
of the Certificateholders and the Trustee, and the Servicer shall maintain
custody of the Contract Files for the benefit of the Certificateholders and the
Trustee and shall act as custodian therefor.
b. The Servicer agrees to maintain the related Contract Files at its
office where they are currently maintained, or at such other offices of the
Servicer in the State of Minnesota as shall from time to time be identified to
the Trustee by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures.
c. As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Certificateholders and
the Trustee, maintain accurate records pertaining to each Contract
to enable it to comply with the terms and conditions of this
Agreement, maintain a current inventory thereof, conduct annual
physical inspections of Contract Files held by it under this
Agreement and certify to the Trustee annually that it continues to
maintain possession of such Contract Files;
(ii) implement policies and procedures, in writing and signed by a
Servicing Officer, with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes; and
(iii) attend to all details in connection with maintaining custody of
the Contract Files on behalf of the Certificateholders and the
Trustee.
d. In performing its duties under this Section, the Servicer agrees to
act with reasonable care, using that degree of skill and care that it exercises
with respect to similar contracts owned and/or serviced by it. The Servicer
shall promptly report to the Trustee any failure by it to hold the Contract
Files as herein provided and shall promptly take appropriate action to remedy
any such failure. In acting as custodian of the Contract Files, the Servicer
agrees further not to assert any beneficial ownership interests in the Contracts
or the Contract Files. The Servicer agrees to indemnify the Certificateholders
and the Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever
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which may be imposed on, incurred or asserted against the Certificateholders and
the Trustee as the result of any act or omission by the Servicer relating to the
maintenance and custody of the Contract Files; provided, however, that the
Servicer will not be liable for any portion of any such amount resulting from
the negligence or willful misconduct of any Certificateholder or the Trustee.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Company shall cause the UCC-1
financing statement referred to in Section 2.02(h) to be filed. The Trustee
shall cause to be filed all necessary continuation statements of the UCC-1
financing statement. From time to time the Servicer shall take and cause to be
taken such actions and execute such documents as are necessary to perfect and
protect the Certificateholders' interests in the Contracts and their proceeds
and the Products against all other persons, including, without limitation, the
filing of financing statements, amendments thereto and continuation statements,
the execution of transfer instruments and the making of notations on or taking
possession of all records or documents of title. The Servicer will maintain the
Trustee's first priority perfected security interest in each Product so long as
the related Contract is property of the Trust.
SECTION 4.03. Name Change or Relocation.
a. During the term of this Agreement, the Company shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Trustee and the Servicer. In addition, following
any such change in the name, identity, structure or location of the chief
executive office of the Company, the Company shall given written notice of any
such change to Moody's, Standard & Poor's and Fitch.
b. If any change in the Company's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause any such financing or continuation statement or notice of
lien to become unperfected (whether immediately or with lapse of time), the
Company, no later than five days after the effective date of such change, shall
file, or cause to be filed, such amendments or financing statements as may be
required to preserve, perfect and protect the Certificateholders' interests in
the Contracts and proceeds thereof and in the Products.
SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Company will maintain its chief
executive office in one of the States of the United States, except Tennessee.
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SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Certificateholders' right, title and interest in and to
the Contracts (including, without limitation, the security interests in the
Products granted thereby).
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ARTICLE V
SERVICING OF CONTRACTS
----------------------
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Servicer may delegate duties under this Agreement to any of the
Servicer's Affiliates. In addition, the Servicer may at any time perform the
specific duty of repossessing Products through subcontractors who are in the
business of servicing consumer receivables. The Servicer may also perform other
specific duties through subcontractors; provided that the Servicer gives notice
to the Trustee and each of Moody's, Standard & Poor's and Fitch of the use of
any such subcontractors; and provided further that no such delegation of duties
by the Servicer shall relieve the Servicer of its responsibility with respect
thereto. The Trustee, at the request of a Servicing Officer, shall furnish the
Servicer with any powers of attorney or other documents necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
hereunder. The Company is hereby appointed the Servicer until such time as any
Service Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the highest degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer;
provided, however, that notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance on any Contract.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder, maintain
such books of account and other records as will enable the Trustee to determine
the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records, which have not previously been provided to the Trust,
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Trustee or its authorized agents. The
examination referred to in this Section will be conducted in a manner which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Trustee may make, the Trustee may, using generally accepted audit procedures,
verify the status of each Contract
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and review the Electronic Ledger and records relating thereto for conformity to
Monthly Reports prepared pursuant to Article VI and compliance with the
standards represented to exist as to each Contract in this Agreement.
b. At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Certificateholders.
c. On or before the ninth Business Day of each month, the Servicer will
provide to the Trustee a Computer Tape setting forth a list of all the
outstanding Contracts and the outstanding principal balance of each such
Contract as of the end of the next preceding Monthly Period.
SECTION 5.05. Collection Account.
a. On or before the Closing Date, the Trustee shall establish the
Collection Account on behalf of the Trust, which must be an Eligible Account.
The Collection Account shall be entitled "First Trust National Association, as
Trustee for the benefit of holders of Certificates Issued by Green Tree
Recreational, Consumer & Equipment Trust 1996-A (Green Tree Financial
Corporation, Servicer)." The Servicer shall pay into the Collection Account: (i)
as promptly as practicable (not later than the next Business Day) following
receipt thereof all payments from Obligors and Net Liquidation Proceeds (other
than late payment penalty fees, extension fees and assumption fees, which shall
be retained by the Servicer as additional compensation for servicing the
Contracts, and any payments that were due prior to the Cutoff Date, which shall
be remitted to the Company); and (ii) on the Business Day immediately prior to
each Distribution Date, all Servicer Advances required to be made with respect
to such Distribution Date pursuant to Section 5.13. The Company shall deposit
into the Collection Account all Guaranty Payments required by Section 8.04, on
the date on which such Guaranty Payments are due. The Pledgor or the Collateral
Agent shall transfer into the Collection Account all amounts to be transferred
from the Spread Account pursuant to Section 8.06, on the date such transfers are
due. All amounts paid into the Collection Account under this Agreement shall be
held in trust for the Trustee and the Certificateholders until payment of any
such amounts is authorized under this Agreement. Only the Trustee may withdraw
funds from the Collection Account.
b. If the Servicer so directs, the institution maintaining the Collection
Account shall, in the name of the Trustee in its capacity as such, invest the
amounts in the Collection Account in Eligible Investments that mature not later
than one Business Day prior to the next succeeding Distribution Date. Once such
funds are invested, such institution shall not change the investment of such
funds. All income and gain from such investments shall be added to the
Collection Account and distributed on such Distribution Date pursuant to Section
8.03(a). The Company, the Servicer and the Trustee shall in no way be liable
for losses on amounts invested in accordance with the provisions hereof. Funds
in the Collection Account not so invested must be insured to the extent
permitted by law
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by the Federal Deposit Insurance Corporation. "Eligible Investments" are any of
the following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of
the United States of America and which are noncallable;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee or
any Affiliate of the Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by
federal and/or state authorities, so long as, at the time of such
investment or contractual commitment providing for such
investment, the commercial paper or other short-term deposits of
such depository institution or trust company (or, in the case of a
depository institution which is the principal subsidiary of a
holding company, the commercial paper or other short-term debt
obligations of such holding company) are rated at least P-1 by
Moody's, at least A-1+ by Standard & Poor's and at least F-1 by
Fitch (if rated by Fitch) and (B) any other demand or time deposit
or certificate of deposit which is fully insured by the Federal
Deposit Insurance Corporation;
(iii) shares of an investment company registered under the Investment
Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then
available from Moody's and Fitch (if rated by Fitch) and are rated
AAAm or AAAm-G by Standard & Poor's and whose only investments are
in securities described in clauses (i) and (ii) above;
(iv) repurchase obligations with respect to (A) any security described
in clause (i) above or (B) any other security issued or guaranteed
by an agency or instrumentality of the United States of America,
in either case entered into with a depository institution or trust
company (acting as principal) described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at
least Aaa from Moody's, at least AAA by Standard & Poor's and in
one of the two highest rating categories from Fitch (if rated by
Fitch) at the time of such investment; provided, however, that
securities issued by any particular corporation will not be
Eligible Investments to the extent that investment therein will
cause the then outstanding
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principal amount of securities issued by such corporation and
held as part of the corpus of the Trust to exceed 10% of amounts
held in the Collection Account; and
(vi) commercial paper having a rating of at least P-1 from Moody's, at
least A-1+ from Standard & Poor's and at least F-1+ by Fitch (if
rated by Fitch) at the time of such investment or pledge as a
security.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
The Trustee may trade with itself or an Affiliate in the purchase or sale
of such Eligible Investments.
c. If at any time the Trustee receives notice (from any of Moody's,
Standard & Poor's and Fitch, the Servicer or otherwise) that the Collection
Account has ceased to be an Eligible Account, the Trustee must, as soon as
practicable but in no event later than 5 Business Days of the Trustee's receipt
of such notice, transfer the Collection Account and all funds and Eligible
Investments therein to an Eligible Account. Following any such transfer, the
Trustee must notify each of Moody's, Standard & Poor's, Fitch and the Servicer
of the location of the Collection Account.
SECTION 5.06. Enforcement.
a. The Servicer shall, consistent with customary servicing procedures and
the terms of this Agreement, act with respect to the Contracts in such manner as
will maximize the receipt of principal and interest on such Contracts and
Liquidation Proceeds with respect to Liquidated Contracts.
b. The Servicer may sue to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems necessary to enforce the Contract,
including bringing suit in its name or the names of the Certificateholders.
c. The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Trustee's behalf to reassign the Contract or to resell the
related Product to the person against whom recourse exists at the price set
forth in the document creating the recourse.
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d. So long as the Company is the Servicer, the Servicer may grant to the
Obligor on any Contract any rebate, refund or adjustment out of the Collection
Account that the Servicer in good faith believes is required because of
prepayment in full of the Contract. The Servicer will not permit any rescission
or cancellation of any Contract.
e. So long as the Company is the Servicer, the Servicer may, consistent
with its customary servicing procedures and consistent with Section 5.02, grant
to the Obligor on any Contract an extension of payments due under such Contract,
provided that Obligors may not be solicited for extensions and no more than one
extension of payments under a Contract may be granted in any twelve-month
period. The Servicer may not permit the extension of any payment beyond January
2016.
f. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract, if such modification or waiver would be treated as a taxable exchange
under Section 1001 of the Code.
SECTION 5.07. Satisfaction of Contracts.
Upon payment in full on any Contract, the Servicer will notify the Trustee
and the Company (if the Company is not the Servicer) on the next succeeding
Distribution Date by certification of a Servicing Officer (which certification
shall include a statement to the effect that all amounts received in connection
with such payments which are required to be deposited in the Collection Account
pursuant to Section 5.05 have been so deposited). The Servicer is authorized to
execute an instrument in satisfaction of such Contract and to do such other acts
and execute such other documents as the Servicer deems necessary to discharge
the Obligor thereunder and eliminate the lien on the related Product. The
Servicer shall determine when a Contract has been paid in full; to the extent
that insufficient payments are received on a Contract credited by the Servicer
as prepaid or paid in full and satisfied, the shortfall shall be paid by the
Servicer out of its own funds.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its duties
hereunder, including all fees and expenses incurred in connection with the
enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Products securing such Contracts) shall be paid by the Servicer
and the Servicer shall not be entitled to reimbursement hereunder, except that
the Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Contract for Liquidation Expenses incurred by it. The Servicer shall not incur
such Liquidation Expenses unless it determines in its good faith business
judgment that incurring such expenses will increase the Net Liquidation Proceeds
on the related Contract.
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SECTION 5.09. Maintenance of Insurance.
a. Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained:
(i) with respect to each Contract financing the purchase of an
aircraft, one or more insurance policies providing complete coverage in
flight and on the ground;
(ii) with respect to each Contract financing the purchase of a truck,
one or more physical damage insurance policies; and
(iii) with respect to each Contract financing the purchase of a
Product other than an aircraft, truck or keyboard instrument, with an
original principal balance of $7,501 or more, one or more insurance
policies providing comprehensive and collision coverage that is customary
for goods of the class including the relevant Product;
in each case, issued by a company authorized to issue such policies in the state
in which the related Product is located and in an amount which is not less than
the maximum insurable value of such Product or the principal balance due from
the Obligor on the related Contract, whichever is less; provided, however, that
the amount of coverage provided by each Insurance Policy shall be sufficient to
avoid the application of any co-insurance clause contained therein; and
provided, further, that such Insurance Policies may provide for customary
deductible amounts. Each Insurance Policy caused to be maintained by the
Servicer shall contain a standard loss payee clause in favor of the Servicer and
its successors and assigns. If any Obligor is in default in the payment of
premiums on its Insurance Policy or Policies, the Servicer shall pay such
premiums out of its own funds and may separately add such premium to the
Obligor's obligation as provided by the Contract, but shall not add such premium
to the remaining principal balance of the Contract.
b. The Servicer may, in lieu of causing individual Insurance Policies to
be maintained pursuant to subsection (a) of this Section 5.09, maintain one or
more blanket insurance policies covering any losses caused by damage to such
Product that would have been covered by an individual Insurance Policy. Any
such blanket policy shall be substantially in the form and in the amount carried
by the Servicer as of the date of this Agreement. The Servicer shall pay the
premium for such policy on the basis described therein and shall deposit into
the Collection Account from its own funds any deductible amount with respect to
claims under such blanket insurance policy relating to the Contracts. The
Servicer shall not, however, be required to deposit any deductible amount with
respect to claims under individual Insurance Policies maintained pursuant to
subsection (a) of this Section. If the insurer under such blanket insurance
policy shall cease to be acceptable to the Servicer, the Servicer shall exercise
its best reasonable efforts to obtain from another insurer a replacement policy
comparable to such policy.
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c. With respect to each Product that has been repossessed in connection
with a defaulted Contract, the Servicer shall either (i) maintain one or more
Insurance Policies thereon or (ii) self-insure such Products and deposit into
the Collection Account from its own funds any losses caused by damage to such
Product that would have been covered by a Insurance Policy.
d. The Servicer shall keep in force throughout the term of this Agreement
(i) a policy or policies of insurance covering errors and omissions for failure
to maintain insurance as required by this Agreement and (ii) a fidelity bond.
Such policy or policies and such fidelity bond shall be in such form and amount
as is generally customary among Persons which service a portfolio of retail
installment sales agreements having an aggregate principal amount of $10,000,000
or more and which are generally regarded as servicers acceptable to
institutional investors.
SECTION 5.10. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Product or take
such other steps that in the Servicer's reasonable judgment will maximize the
receipt of principal and interest or Net Liquidation Proceeds with respect to
the Contract secured by such Product (which may include retitling) subject to
the requirements of the applicable state and federal law, no later than five
Business Days after the time when such Contract becomes a Defaulted Contract.
In connection with such repossession or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be consistent with Section 5.02. In the event that title to any
Product is acquired in foreclosure or by deed in lieu of foreclosure, the deed
or certificate of sale shall be issued to the Trustee, as Trustee, or, at its
election, to its nominee on behalf of the Trustee, as Trustee.
SECTION 5.11. Commingling of Funds.
So long as the Company is Servicer, any collections in respect of Contracts
collected by the Company shall, prior to the deposit thereof in the Collection
Account, be held in bank accounts entitled substantially as follows: "[name of
depository], as agent for First Trust National Association, as Trustee, other
trustees, and Green Tree Financial Corporation, as their interests may appear."
SECTION 5.12. Retitling; Security Interests.
a. If, at any time, a Service Transfer has occurred and the Company is no
longer the Servicer and the new Servicer is unable to foreclose upon a Product
because the title document for such Product does not show such Servicer or the
Trustee as the holder of the first priority security interest in the Product,
such Servicer shall take all necessary steps to apply for a replacement title
document showing it or the Trustee as the secured party.
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b. In order to facilitate the Servicer's actions, as described in
subsection (a) of this section, the Company will provide the Servicer with any
necessary power of attorney permitting it to retitle the Product.
c. If the Servicer is still unable to retitle the Product, the Company
will take all actions necessary to act with the Servicer to foreclose upon the
Product.
SECTION 5.13. Servicer Advances.
Not later than the Business Day immediately preceding each
Distribution Date, the Servicer shall advance to the Trust (each such advance, a
"Servicer Advance") all Delinquent Payments for the immediately preceding
Monthly Period by depositing the aggregate amount of such Delinquent Payments in
the Collection Account, provided, however, that the Servicer shall be obligated
to advance Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such advances from subsequent
collections, including Net Liquidation Proceeds.
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ARTICLE VI
REPORTS AND TAX MATTERS
-----------------------
SECTION 6.01. Monthly Reports.
No later than 1:00 p.m. on each Determination Date, the Servicer shall
deliver to the Trustee, the Paying Agent, the Company (if the Company is not the
Servicer), Moody's, Standard & Poor's and Fitch a "Monthly Report,"
substantially in the form of Exhibit I hereto.
SECTION 6.02. Certificate of Servicing Officer.
Each Monthly Report pursuant to Section 6.01 shall be accompanied by a
certificate of a Servicing Officer substantially in the form of Exhibit G,
certifying the accuracy of the Monthly Report and that no Event of Termination
or event that with notice or lapse of time or both would become an Event of
Termination has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 6.03. Other Data.
In addition, the Company and (if different from the Company) the Servicer
shall, on request of the Trustee, Moody's, Standard & Poor's, Fitch or a
Certificateholder, furnish the Trustee and/or Moody's, Standard & Poor's, Fitch
or a Certificateholder such underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants.
On or before March 31 of each year, commencing March 31, 1997, the Servicer
at its expense shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to make
available to the Trustee, Moody's, Standard & Poor's and Fitch a report stating
that such firm has examined selected documents and records relating to the
servicing of retail installment sales contracts, including the contracts covered
by this Agreement, in accordance with the Mortgage Bankers Association of
America's Uniform Single Attestation Program for Mortgage Bankers, or any
successor uniform program, and that, on the basis of such examination, such
servicing has been conducted in compliance with the minimum servicing standards
identified therein, except for such significant exceptions or errors in records
that, in the opinion of such firm, generally accepted auditing standards
requires it to report.
SECTION 6.05. Statements to Certificateholders.
a. The Servicer shall prepare and furnish to the Trustee the statements
specified below relating to the Certificates on or before the third Business Day
next preceding each Distribution Date.
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b. Concurrently with each distribution to Holders of Certificates charged
to the Collection Account the Trustee, so long as it has received the Monthly
Report from the Servicer, shall forward or cause to be forwarded by mail to each
Holder of a Certificate and (if the Company is not the Servicer) the Company a
statement setting forth the following:
(i) the amount of such distribution to Holders of each Class of
Certificates allocable to interest, separately identifying any
Unpaid Class A-1 Interest Shortfall, Unpaid Class A-2 Interest
Shortfall, Unpaid Class A-3 Interest Shortfall, Unpaid Class A-4
Interest Shortfall and any Unpaid Class B Interest Shortfall
included in such distribution and any remaining Unpaid Class A-1
Interest Shortfall, Unpaid Class A-2 Interest Shortfall, Unpaid
Class A-3 Interest Shortfall, Unpaid Class A-4 Interest Shortfall
and any Unpaid Class B Interest Shortfall after giving effect to
such distribution;
(ii) the Class A-1 Interest Shortfall, the Class A-2 Interest
Shortfall, the Class A-3 Interest Shortfall, the Class A-4
Interest Shortfall and the Class B Interest Shortfall, if any, for
such Distribution Date;
(iii) the amount of such distribution to Holders of each Class of
Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments and Unpaid Class A-1
Principal Shortfall, Unpaid Class A-2 Principal Shortfall, Unpaid
Class A-3 Principal Shortfall, Unpaid Class A-4 Principal
Shortfall and any Unpaid Class B Principal Shortfall included
therein, and any remaining Unpaid Class A-1 Principal Shortfall,
Unpaid Class A-2 Principal Shortfall, Unpaid Class A-3 Principal
Shortfall, Unpaid Class A-4 Principal Shortfall and any Unpaid
Class B Principal Shortfall after giving effect to such
distribution;
(iv) the Class A-1 Principal Shortfall, the Class A-2 Principal
Shortfall, the Class A-3 Principal Shortfall, the Class A-4
Principal Shortfall and the Class B Principal Shortfall, if any,
for such Distribution Date;
(v) the Class A-1 Principal Balance, the Class A-2 Principal Balance,
the Class A-3 Principal Balance, the Class A-4 Principal Balance
and the Class B Principal Balance after giving effect to the
distribution of principal on such Distribution Date;
(vi) the amount, if any, of any Class A-1 Principal Liquidation Loss,
Class A-2 Principal Liquidation Loss, Class A-3 Principal
Liquidation Loss, Class A-4 Principal Liquidation Loss, and Class
B Principal Liquidation Loss determined as of that Distribution
Date;
(vii) the amount of such distribution to Holders of each Class of
Certificates allocable to liquidation losses, separately
identifying the
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Class A-1 Liquidation Loss Interest Amount, the Class A-2
Liquidation Loss Interest Amount, the Class A-3 Liquidation Loss
Interest Amount, the Class A-4 Liquidation Loss Interest Amount,
the Class B Liquidation Loss Interest Amount and any Unpaid Class
A-1 Liquidation Loss Interest Shortfall, Unpaid Class A-1
Principal Liquidation Loss, Unpaid Class A-2 Liquidation Loss
Interest Shortfall, Unpaid Class A-2 Principal Liquidation Loss,
Unpaid Class A-3 Liquidation Loss Interest Shortfall, Unpaid Class
A- Principal Liquidation Loss, Unpaid Class A-4 Liquidation Loss
Interest Shortfall, Unpaid Class A-4 Principal Liquidation Loss,
Unpaid Class B Liquidation Loss Interest Shortfall and Unpaid
Class B Principal Liquidation Loss included therein, and any
remaining Unpaid Class A-1 Liquidation Loss Interest Shortfall,
Unpaid Class A-1 Principal Liquidation Loss, Unpaid Class A-2
Liquidation Loss Interest Shortfall, Unpaid Class A-2 Principal
Liquidation Loss, Unpaid Class A-3 Liquidation Loss Interest
Shortfall, Unpaid Class A-3 Principal Liquidation Loss, Unpaid
Class A-4 Liquidation Loss Interest Shortfall, Unpaid Class A-4
Principal Liquidation Loss, Unpaid Class B Liquidation Loss
Interest Shortfall and Unpaid Class B Principal Liquidation Loss
after giving effect to such distribution;
(viii) the Class A-1 Liquidation Loss Interest Shortfall, the Class A-2
Liquidation Loss Interest Shortfall, the Class A-3 Liquidation
Loss Interest Shortfall, the Class A-4 Liquidation Loss Interest
Shortfall and the Class B Liquidation Loss Interest Shortfall, if
any, for such Distribution Date;
(ix) the amount, if any, deposited in or withdrawn from the Spread
Account on such Distribution Date;
(x) the amount, if any, on deposit in the Spread Account after giving
effect to all withdrawals and deposits on such Distribution Date;
(xi) the amount, if any, of the Guaranty Payment on such Distribution
Date;
(xii) the amount of the Monthly Servicing and Guaranty Fee, if any, paid
to the Company with respect to the immediately preceding Monthly
Period and (if the Company is not acting as Servicer) the amount
of the Monthly Servicing Fee paid to the Servicer with respect to
such Monthly Period;
(xiii) the Pool Scheduled Principal Balance for such Distribution
Date;
(xiv) the Pool Factor for each Class after giving effect to the
distribution of principal on such Distribution Date;
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(xv) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days and (b) 60 or more days;
(xvi) the number of Products that were repossessed during the Monthly
Period ending immediately prior to such Distribution Date;
(xvii) the number of Products that were repossessed but remain in
inventory as of the last day of the Monthly Period ending
immediately prior to such Distribution Date;
(xviii) the number of Contracts that became Liquidated Contracts during
the immediately preceding Monthly Period; and
(xix) the aggregate amount of Servicer Advances made by the Servicer
with respect to such Distribution Date, and the aggregate amount
paid to the Servicer as reimbursement of Servicer Advances made on
prior Distribution Dates.
The Trustee and the Servicer shall inform any of the Certificateholders,
Lehman Brothers Inc. or Morgan Stanley & Co. Incorporated that inquires by
telephone of the information contained in the most recent Monthly Report.
In the case of information furnished pursuant to clauses (i) through (vi)
above, the amounts shall be expressed as a dollar amount per Certificate with a
1% Class Percentage Interest in its Class or per $1,000 denomination of
Certificate.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Certificate a statement containing
the information with respect to interest accrued and principal paid on its
Certificates during such calendar year. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code as from time to time in force.
c. Copies of all reports provided to the Trustee for the
Certificateholders shall also be provided to Moody's, Standard & Poor's and
Fitch. Certificate Owners may receive such reports, or any other reports
provided to or by the Trustee, upon written request to the Trustee at the
address specified in or pursuant to Section 12.08, together with a certification
that they are Certificate Owners and payment of reproduction and postage
expenses associated with the distribution of such reports.
SECTION 6.06. Payment of Taxes.
The Servicer shall be responsible for and agrees to prepare, make and file
all federal, state, local or other tax returns, information statements and other
returns and documents of every kind and nature whatsoever required to be made or
filed by or on behalf of the Trust pursuant to the Code and other applicable tax
laws and
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regulations. Each such return, statement and document shall, to the
extent required by the Code or other applicable law and at the request of the
Servicer, be signed on behalf of the Trust by the Trustee. The Trustee shall
have no responsibility whatsoever for the accuracy or completeness of any such
return, statement or document. The Servicer agrees to indemnify the Trustee and
hold it harmless for, from, against and in respect to any and all liability,
loss, damage and expense which may be incurred by the Trustee based upon or as a
result of the Trustee's execution of any and all such tax returns, statements
and documents. The Servicer may, at its expense, retain such outside assistance
as it deems necessary in the performance of its obligations under this
paragraph.
Each of the Holders of the Certificates and the Certificate Owners, by
acceptance thereof, agrees to file tax returns consistent with and in accordance
with any elections, decisions or other reports made or filed with regard to
federal, state or local taxes on behalf of the Trust. The Company shall
represent the Trust in connection with all examinations of the Trust's affairs
by tax authorities, including resulting administrative and judicial proceedings.
Each of the holders of the Certificates, by acceptance thereof, agrees to
cooperate with the Company in such matters and to do or refrain from doing any
or all things reasonably required by the Company to conduct such proceedings,
provided that no such action shall be required by the Company of any
Certificateholder that would entail unnecessary or unreasonable expenses for
such Certificateholder in the performance of such action.
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ARTICLE VII
SERVICE TRANSFER
----------------
SECTION 7.01. Event of Termination.
"Event of Termination" means the occurrence of any of the following:
a. Any failure by the Servicer to make any deposit into an account
required to be made hereunder and the continuance of such failure for a period
of five Business Days after the Servicer has become aware, or should have become
aware, that such deposit was required;
b. Failure on the Servicer's part to observe or perform in any material
respect any covenant or agreement in this Agreement (other than a covenant or
agreement which is elsewhere in this Section specifically dealt with) which
continues unremedied for 30 days after the date on which 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 Certificate Percentage Interests aggregating not less
than 25%;
c. Any assignment by the Servicer of its duties hereunder except as
specifically permitted hereunder, or any attempt to make such an assignment;
d. A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
e. The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
f. The failure of the Servicer to be an Eligible Servicer.
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, either the
Trustee or Certificateholders with aggregate Certificate Percentage Interests
representing 25%
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or more of the Trust, by notice in writing to the Servicer (and to the Trustee
if given by the Certificateholders) may terminate all (but not less than all) of
the Servicer's management, administrative, servicing and collection functions
(such termination being herein called a "Service Transfer"). On receipt of such
notice (or, if later, on a date designated therein), or upon resignation of the
Servicer in accordance with Section 12.01, all authority and power of the
Servicer under this Agreement, whether with respect to the Contracts, the
Contract Files or otherwise (except with respect to the Collection Account, the
transfer of which shall be governed by Section 7.06), shall pass to and be
vested in the Trustee pursuant to and under this Section 7.02; and, without
limitation, the Trustee is authorized and empowered to execute and deliver on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments (including, without limitation, documents required to make
the Trustee or a successor servicer the sole lienholder or legal title holder of
record of each Product) and to do any and all acts or things necessary or
appropriate to effect the purposes of such notice of termination. Each of the
Company and the Servicer agrees to cooperate with the Trustee in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the Trustee for administration by
it of all cash amounts which shall at the time be held by the Servicer for
deposit, or have been deposited by the Servicer, in the Collection Account, or
for its own account in connection with its services hereafter or thereafter
received with respect to the Contracts and the execution of any documents
required to make the Trustee or a successor servicer the sole lienholder or
legal title holder of record in respect of each Product. The Servicer shall be
entitled to receive any other amounts which are payable to the Servicer under
the Agreement, at the time of the termination of its activities as Servicer. The
Servicer shall transfer to the new servicer (i) the Servicer's records relating
to the Contracts in such electronic form as the new servicer may reasonably
request and (ii) any Contracts and Contract Files in the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02 or the resignation of the Servicer in accordance with
Section 12.01, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Trustee will not assume any obligations of the
Company pursuant to Section 3.05 and (ii) the Trustee shall not be liable for
any acts or omissions of the Servicer occurring prior to such Service Transfer
or for any breach by the Servicer of any of its obligations contained herein or
in any related document or agreement. As compensation therefor, the Trustee
shall be entitled to receive reasonable compensation not in excess of the
Monthly Servicing Fee. Notwithstanding the above, the Trustee may, if it shall
be unwilling so to act, or shall, if it is legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, an Eligible Servicer as
the successor to the Servicer
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hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Pending appointment of a successor to
the Servicer hereunder, unless the Trustee is prohibited by law from so acting,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Contracts as it and such
successor shall agree; provided, however, that no such monthly compensation
shall, without the written consent of 100% of the Certificateholders, exceed the
Monthly Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
SECTION 7.04. Notification to Certificateholders.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, Moody's, Standard &
Poor's, Fitch and the Certificateholders at their respective addresses appearing
on the Certificate Register.
b. Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to Moody's, Standard & Poor's, Fitch and the
Certificateholders at their respective addresses appearing on the Certificate
Register.
c. The Trustee shall give written notice to Moody's, Standard & Poor's
and Fitch at least 30 days prior to the date upon which any Eligible Servicer
(other than the Trustee) is to assume the responsibilities of Servicer pursuant
to Section 7.03, naming such successor Servicer.
SECTION 7.05. Effect of Transfer.
a. After the Service Transfer, the Trustee or new Servicer may notify
Obligors to make payments directly to the new Servicer that are due under the
Contracts after the effective date of the Service Transfer.
b. After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article X and Sections 3.05, 11.06 and 11.11(f))
other than those relating to the management, administration, servicing or
collection of the Contracts.
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SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.02, if the Collection Account
shall be maintained with the Servicer and an Event of Termination shall occur
and be continuing, the Servicer shall, after five days' written notice from the
Trustee, or in any event within ten days after the occurrence of the Event of
Termination, establish an Eligible Account with an institution other than the
Servicer and promptly transfer all funds in the Collection Account to such new
account, which shall thereafter be deemed the Collection Account for the
purposes hereof.
SECTION 7.07. Limits on Liability.
The Servicer will be liable to the Trust or the Certificateholders only to
the extent of the obligations specifically undertaken by the Servicer under this
Agreement and will have no other obligations or liabilities hereunder. Neither
the Servicer nor any of its directors, officers, employees or agents will have
any liability to the Trust or the Certificateholders (except as explicitly
provided in this Agreement) for any action taken, or for refraining from taking
any action, pursuant to this Agreement, other than any liability that would
otherwise be imposed by reason of the Servicer's breach of this Agreement or
willful misfeasance, bad faith or negligence (including errors in judgment) in
the performance of its duties, or by reason of reckless disregard of obligations
and duties under this Agreement or any violation of law.
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ARTICLE VIII
PAYMENTS
--------
SECTION 8.01. Monthly Payments.
a. Subject to the terms of this Article VIII, each Holder of a
Certificate as of a Record Date shall be paid on the next succeeding
Distribution Date by check mailed to such Certificateholder at the address for
such Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates with an aggregate Certificate Percentage
Interest of at least 5% and so requests, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such
Distribution Date), the sum equal to such Certificateholder's Class Percentage
Interest of the Class A-1 Distribution Amount, the Class A-2 Distribution
Amount, the Class A-3 Distribution Amount, the Class A-4 Distribution Amount, or
the Class B Distribution Amount, as applicable. Final payment of any
Certificate shall be made only upon presentation of such Certificate at the
office or agency of the Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate are
to be made by the Depository and the Depository Participants in accordance with
the provisions of the Book Entry Certificates. Neither the Trustee, the
Certificate Registrar, the Seller nor the Servicer shall have any responsibility
therefor except as otherwise provided by applicable law. To the extent
applicable and not contrary to the rules of the Depository, the Trustee shall
comply with the provisions of the forms of the Class A and Class B Certificates
as set forth in Exhibits A and B hereto.
c. The Trustee shall either act as the paying agent or shall appoint an
institution meeting the eligibility requirements set forth in Section 11.06 to
be the paying agent (in either case, the "Paying Agent") and cause it to make
the payments to the Certificateholders required hereunder. The Trustee's
corporate trust operations department, with an office at 180 East Fifth Street,
St. Paul, Minnesota 55101 shall initially act as Paying Agent. The Trustee
shall require the Paying Agent (if other than the Trustee) to agree in writing
that all amounts held by the Paying Agent for payment hereunder will be held in
trust for the benefit of the Certificateholders and that it will notify the
Trustee of any failure by the Servicer to make funds available to the Paying
Agent for the payment of amounts due on the Certificates.
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SECTION 8.02. Permitted Withdrawals from the Collection Account.
The Trustee may, from time to time as provided herein, make withdrawals
from the Collection Account of amounts deposited in said account pursuant to
Section 5.05 that are attributable to the Contracts only for the following
purposes:
a. to make payments in the amounts and in the manner provided for in
Section 8.03;
b. to pay to the Company with respect to each Contract or property
acquired in respect thereof that has been repurchased pursuant to Section 3.05,
all amounts received thereon and not required to be distributed to
Certificateholders as of the date on which the related Scheduled Principal
Balance or Repurchase Price is determined;
c. to reimburse the Servicer out of Liquidation Proceeds for Liquidation
Expenses incurred by it, to the extent such reimbursement is permitted pursuant
to Section 5.08;
d. to withdraw any amount deposited in the Collection Account that was
not required to be deposited therein; or
e. to make any rebates or adjustments deemed necessary by the Servicer
pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clauses (b) and (c), the
Company's or the Servicer's entitlement thereto is limited to collections or
other recoveries on the related Contract, the Servicer shall keep and maintain a
separate accounting, on a Contract by Contract basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to such clauses.
SECTION 8.03. Payments.
a. On each Distribution Date the Trustee shall withdraw the Amount
Available (as determined on the immediately preceding Determination Date) from
the Collection Account and apply such funds to make payment in the following
order of priority (subject to the limitations contained in Subsection 8.03(c)
below):
1. Monthly Servicing Fee. If neither the Company nor a wholly owned
subsidiary of the Company is the Servicer, to pay the Monthly Servicing Fee
and any other compensation owed to the Servicer pursuant to Section 7.03;
2. Reimbursement of Servicer Advances. After payment of the amount
specified in clause (1) above, to reimburse the Servicer for Uncollectible
Advances and for Servicer Advances made with respect to Delinquent Payments
that were recovered during the prior Monthly Period;
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3. Class A-1 Interest. After payment of the amounts specified in
clauses (1) and (2) above, to pay the Holders of the Class A-1 Certificates
the amounts, and in the priority, set forth below:
(i) the Class A-1 Interest Amount; and
(ii) any Unpaid Class A-1 Interest Shortfall;
4. Class A-1 Principal. After payment of the amounts specified in
clauses (1) through (3) above, to pay the Holders of the Class A-1
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-1 Percentage of the Formula Principal Distribution
Amount, to be applied to the Class A-1 Principal Balance, but in
no event more than the outstanding Class A-1 Principal Balance;
and
(ii) any Unpaid Class A-1 Principal Shortfall;
5. Class A-1 Liquidation Loss Interest and Principal. After payment
of the amounts specified in clauses (1) through (4) above, to pay the
Holders of the Class A-1 Certificates the amounts, and in the priority, set
forth below:
(i) any Class A-1 Liquidation Loss Interest Amount;
(ii) any Unpaid Class A-1 Liquidation Loss Interest Shortfall; and
(iii) any Unpaid Class A-1 Principal Liquidation Loss;
6. Class A-2 Interest. After payment of the amounts specified in
clauses (1) through (5) above, to pay the Holders of the Class A-2
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-2 Interest Amount; and
(ii) any Unpaid Class A-2 Interest Shortfall;
7. Class A-2 Principal. After payment of the amounts specified in
clauses (1) through (6) above, to pay the Holders of the Class A-2
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-2 Percentage of the Formula Principal Distribution
Amount, to be applied to the Class A-2 Principal Balance, but in
no event more than the outstanding Class A-2 Principal Balance;
and
(ii) any Unpaid Class A-2 Principal Shortfall;
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8. Class A-2 Liquidation Loss Interest and Principal. After payment
of the amounts specified in clauses (1) through (7) above, to pay the
Holders of the Class A-2 Certificates the amounts, and in the priority, set
forth below:
(i) any Class A-2 Liquidation Loss Interest Amount;
(ii) any Unpaid Class A-2 Liquidation Loss Interest Shortfall; and
(iii) any Unpaid Class A-2 Principal Liquidation Loss;
9. Class A-3 Interest. After payment of the amounts specified in
clauses (1) through (8) above, to pay the Holders of the Class A-3
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-3 Interest Amount; and
(ii) any Unpaid Class A-3 Interest Shortfall;
10. Class A-3 Principal. After payment of the amounts specified
in clauses (1) through (9) above, to pay the Holders of the Class A-3
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-3 Percentage of the Formula Principal Distribution
Amount, to be applied to the Class A-3 Principal Balance, but in
no event more than the outstanding Class A-3 Principal Balance;
and
(ii) any Unpaid Class A-3 Principal Shortfall;
11. Class A-3 Liquidation Loss Interest and Principal. After
payment of the amounts specified in clauses (1) through (10) above, to pay
the Holders of the Class A-3 Certificates the amounts, and in the priority,
set forth below:
(i) any Class A-3 Liquidation Loss Interest Amount;
(ii) any Unpaid Class A-3 Liquidation Loss Interest Shortfall; and
(iii) any Unpaid Class A-3 Principal Liquidation Loss;
12. Class A-4 Interest. After payment of the amounts specified in
clauses (1) through (11) above, to pay the Holders of the Class A-4
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-4 Interest Amount; and
(ii) any Unpaid Class A-4 Interest Shortfall;
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13. Class A-4 Principal. After payment of the amounts specified
in clauses (1) through (12) above, to pay the Holders of the Class A-4
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-4 Percentage of the Formula Principal Distribution
Amount, to be applied to the Class A-4 Principal Balance, but in
no event more than the outstanding Class A-4 Principal Balance;
and
(ii) any Unpaid Class A-4 Principal Shortfall;
14. Class A-4 Liquidation Loss Interest and Principal. After
payment of the amounts specified in clauses (1) through (13) above, to pay
the Holders of the Class A-4 Certificates the amounts, and in the priority,
set forth below:
(i) any Class A-4 Liquidation Loss Interest Amount;
(ii) any Unpaid Class A-4 Liquidation Loss Interest Shortfall; and
(iii) any Unpaid Class A-4 Principal Liquidation Loss;
15. Class B Interest. After payment of the amounts specified in
clauses (1) through (14) above, to pay the Holders of the Class B
Certificates the amounts, and in the priority, set forth below:
(i) the Class B Interest Amount; and
(ii) any Unpaid Class B Interest Shortfall;
16. Class B Principal. After payment of the amounts specified in
clauses (1) through (15) above, to pay the Holders of the Class B
Certificates the amounts, and in the priority, set forth below:
(i) the Class B Percentage of the Formula Principal Distribution
Amount, to be applied to the Class B Principal Balance, but in no
event more than the outstanding Class B Principal Balance; and
(ii) any Unpaid Class B Principal Shortfall;
17. Class B Liquidation Loss Interest and Principal. After
payment of the amounts specified in clauses (1) through (16) above, to pay
the Holders of the Class B Certificates the amounts, and in the priority,
set forth below:
(i) any Class B Liquidation Loss Interest Amount;
(ii) any Unpaid Class B Liquidation Loss Interest Shortfall; and
(iii) any Unpaid Class B Principal Liquidation Loss;
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18. Spread Account. After payment of the amounts specified in
clauses (1) through (17) above, to pay the lesser of (i) the amount, if
any, by which the amount on deposit in the Spread Account as of the
Distribution Date is less than the Required Spread Account Amount, or (ii)
the remaining Amount Available to the Collateral Agent for deposit in the
Spread Account, for the account of the Pledgor.
19. Monthly Servicing and Guaranty Fee. After payment of the
amounts specified in clauses (1) through (18) above, to pay the remaining
Amount Available to the Company, as compensation for its providing the
Limited Guaranty and acting as initial Servicer, as the Monthly Servicing
and Guaranty Fee (which shall be due and payable even if the Company is no
longer acting as Servicer), and (if the Company is acting as Servicer) any
other compensation owed to the Servicer pursuant to Section 7.02.
b. If the Trustee shall not have received the applicable Monthly Report
by any Distribution Date, the Trustee shall distribute all funds then in the
Collection Account to Certificateholders in accordance with Section 8.03(a), to
the extent of such funds, on such Distribution Date.
c. Notwithstanding the order of priority of payment set out in Subsection
8.03(a): (i) amounts transferred to the Collection Account from the Spread
Account may only be used to pay the amounts specified in clauses (3) through
(14) of Section 8.03(a); (ii) amounts transferred to the Collection Account from
the Spread Account Interest Subaccount may only be used to pay the amounts
specified in clauses (3), (6), (9) and (12) of Section 8.03(a); and (iii) the
amount of any Guaranty Payment may only be used to pay the amounts specified in
clauses (15) through (17) of Section 8.03(a). Since certain Certificateholders'
entitlement to amounts withdrawn from the Collection Account may be limited by
the preceding sentence, depending on the source of such amounts in the
Collection Account, the Trustee shall keep and maintain a separate accounting of
amounts deposited in the Collection Account from the Spread Account, the Spread
Account Interest Subaccount or any Guaranty Payment, for the purpose of
justifying any withdrawal of such amounts from the Collection Account.
SECTION 8.04. Limited Guaranty.
a. No later than the Determination Date prior to each Distribution Date,
the Servicer (if other than the Company) shall notify the Company of the amount
of the Guaranty Payment (if any) for such Distribution Date. Not later than the
Business Day preceding each Distribution Date, the Company shall deposit the
Guaranty Payment, if any, for such Distribution Date into the Collection
Account.
b. The obligations of the Company under this Section shall not terminate
upon or otherwise be affected by a Service Transfer pursuant to Article VII of
this Agreement.
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c. The obligation of the Company to provide the Limited Guaranty under
this Agreement shall terminate on the Final Distribution Date.
d. The obligation of the Company to make the Guaranty Payments described
in subsection (a) above shall be unconditional and irrevocable. The Company
acknowledges that its obligation to make the Guaranty Payments described in
subsection (a) above shall be deemed a guaranty by the Company of that portion
of the Obligors' obligations under the Contracts that is allocable to the Class
B Certificateholders.
e. If the Company fails to make a Guaranty Payment in whole or in part,
the Company shall promptly notify the Trustee, and the Trustee shall promptly
notify Moody's, Standard & Poor's and Fitch.
SECTION 8.05. Company's or Servicer's Repurchase Option.
a. Subject to the conditions in subsection (b) below, the Company or the
Servicer may repurchase all of the Contracts and all Products acquired in
respect of any Contract remaining in the Trust at a price equal to the greater
of:
A. the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which title to the underlying Product has
been acquired and whose fair market value is included pursuant to clause
(y) below), plus (y) the fair market value of such acquired Product (as
determined by the Company as of the close of business on the third Business
Day next preceding the date upon which notice of any such termination is
furnished to Certificateholders pursuant to Section 12.04) or
B. the aggregate fair market value (as determined by the Company as
of the close of business on such third Business Day) of all of the assets
of the Trust (but in no event more than the Certificate Principal Balance
plus any unpaid fees and expenses of the Trustee),
plus, in either case, any Unpaid Class A-1 Interest Shortfall, Unpaid Class A-2
Interest Shortfall, Unpaid Class A-3 Interest Shortfall, Unpaid Class A-4
Interest Shortfall,Unpaid Class B Interest Shortfall, Unpaid Class A-1 Principal
Liquidation Loss, Unpaid Class A-2 Principal Liquidation Loss, Unpaid Class A-3
Principal Liquidation Loss, Unpaid Class A-4 Principal Liquidation Loss, Unpaid
Class B Principal Liquidation Loss, Unpaid Class A-1 Liquidation Loss Interest
Shortfall, Unpaid Class A-2 Liquidation Loss Interest Shortfall, Unpaid Class A-
3 Liquidation Loss Interest Shortfall, Unpaid Class A-4 Liquidation Loss
Interest Shortfall and any Unpaid Class B Liquidation Loss Interest Shortfall,
as well as one month's interest at the applicable Contract Rate on the Scheduled
Principal Balance of each Contract (including any Contract as to which the
related Product has been repossessed).
b. The purchase by the Company or the Servicer of all of the Contracts
pursuant to Section 8.05(a) above shall be at the option of the Company on any
Distribution Date, but shall be conditioned upon (1) the Pool Scheduled
Principal Balance, as of the end of the Monthly Period immediately preceding
such Distribution Date, aggregating less than 10% of the Cutoff Date Pool
Principal
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Balance, (2) the Company or the Servicer having provided the Trustee
and the Depository (if any) with at least 30 days' written notice (which may be
given prior to the end of the Monthly Period referred to in clause (1) above)
and (3) the Company or the Servicer (as applicable) shall have delivered to the
Trustee an unqualified Opinion of Counsel stating that payment of the purchase
price to the Certificateholders will not constitute a voidable preference or
fraudulent transfer under the United States Bankruptcy Code. In the event the
notice described in the preceding sentence is given in connection with the
Company's election to purchase the Contracts, the Company shall deposit in the
Collection Account on the relevant Distribution Date in immediately available
funds an amount equal to the above-described purchase price and upon such
deposit Certificateholders will be entitled to the amount of such purchase price
but not amounts in excess thereof, all as provided herein. Upon certification
to the Trustee by a Servicing Officer, following such final deposit, the Trustee
shall promptly release to the Company the Contract Files for the remaining
Contracts, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.
SECTION 8.06. Spread Account.
a. All amounts deposited in the Spread Account shall be deemed to be
deposited in the Spread Account Interest Subaccount to the extent necessary to
cause the amount in the Spread Account Interest Subaccount to be equal to two
tenths of one percent (0.2%) of the sum of the Class A-2 Principal Balance, the
Class A-3 Principal Balance and the Class A-4 Principal Balance. All amounts
held in the Spread Account shall be invested as provided in the Pledge
Agreement. The Spread Account is not, and shall not under any circumstances be
deemed to be, included in the Trust.
b. No later than the third Business Day prior to each Distribution Date,
the Servicer shall notify the Pledgor and the Trustee of the Shortfall (if any)
for such Distribution Date. No later than the second Business Day preceding
each Distribution Date, the Pledgor shall direct the Collateral Agent to
transfer the lesser of such Shortfall or the amount on deposit in the Spread
Account into the Collection Account on the Distribution Date. If the Pledgor
fails to give such directions, then no later than the Business Day preceding
such Distribution Date, the Trustee shall direct the Collateral Agent to make
such transfer. Any amount transferred from the Spread Account Interest
Subaccount shall be used solely to pay the amounts specified in clauses (3),
(6), (9) and (12) of Section 8.03(a).
c. In the event that the amount on deposit in the Spread Account exceeds
the Required Spread Account Amount, the excess shall be released to the Pledgor.
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ARTICLE IX
THE CERTIFICATES
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SECTION 9.01. The Certificates.
The Class A and the Class B Certificates shall be substantially in the
forms set forth in Exhibits A and B, respectively, and shall, on original issue,
be executed by the Trustee on behalf of the Trust to or upon the order of the
Company. The Class A and the Class B Certificates shall include (i) one or more
Class A-1 Certificates representing $374,000,000.00 initial aggregate principal
balance, (ii) one or more Class A-2 Certificates representing $18,350,000.00
initial aggregate principal balance, (iii) one or more Class A-3 Certificates
representing $12,925,000.00 initial aggregate principal balance, (iv) one or
more Class A-4 Certificates representing $12,925,000.00 initial aggregate
principal balance, and (v) one or more Class B Certificates representing
$12,946,642.43 initial aggregate principal balance, beneficial ownership of such
Classes of Certificates to be held through Book-Entry Certificates in minimum
dollar denominations of $1,000 and integral dollar multiples of $1,000 in excess
thereof, except for one Class B Certificate with a denomination representing the
remainder of the Original Class B Principal Balance.
The Certificates shall be executed by manual signature on behalf of the
Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates bearing the signatures of individuals who were at any time the
proper officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificate or did not hold such offices at the
date of such Certificates. No Certificates shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless such Certificate has
been executed by manual signature in accordance with this Section, and such
signature upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly executed and delivered hereunder.
All Certificates shall be dated the date of their execution, except for those
Certificates executed on the Closing Date, which shall be dated the Closing
Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates.
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.02 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee initially appoints
itself to be the "Certificate Registrar" and transfer agent for the purpose of
registering Certificates and transfers and exchanges of Certificates as provided
herein. The Trustee will give prompt written notice to Certificateholders and
the Servicer of any change in the Certificate Registrar.
b. (1) No transfer of a Class A-2, A-3, A-4 or B Certificate or any
interest therein shall be made to any employee benefit plan, trust or
account that is
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subject to ERISA, or that is described in Section 4975(e)(1) of the Code
(each, a "Plan"), unless the prospective transferee of a Certificate or
interest therein provides the Servicer and the Trustee with a certification
of facts and, at its own expense, an Opinion of Counsel which establish to
the satisfaction of the Servicer and the Trustee that such transfer will
not result in a violation of Section 406 of ERISA or Section 4975 of the
Code or cause the Servicer, the Company or the Trustee to be deemed a
fiduciary of such Plan or result in the imposition of an excise tax under
Section 4975 of the Code.
(2) No transfer of a Class B Certificate with a denomination of less
than $1.00 shall be made by the original Holder thereof to any Person under
any circumstances.
(3) Any transfer, sale or other disposition not in compliance with the
provisions of this Section 9.02(b) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed to not
be the Certificateholder for any purpose hereunder, including, but not
limited to, the receipt of distributions on the Certificate, and shall be
deemed to have no interest whatsoever in the Certificate.
c. At the option of a Certificateholder, Certificates may be exchanged
for other Certificates of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates to be exchanged at such
office. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and deliver the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificates presented or
surrendered for transfer or exchange shall be duly endorsed by, or shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by the holder thereof or his
or her attorney duly authorized in writing.
d. Except as provided in paragraph (e) below the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of the Certificates on the books of the Depository
shall be governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating firms as representatives of
the Certificate Owners of the Certificates for purposes of exercising the rights
of Holders under this Agreement, and requests and directions for and votes of
such representatives shall not be deemed to be inconsistent if they are made
with respect to different Certificate Owners; and (vi) the Trustee may rely and
shall be fully protected in relying upon information furnished by the Depository
with respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and
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persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
e. If (x)(i) the Company or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository and (ii) the Trustee or the Company is unable to
locate a qualified successor, (y) the Company at its sole option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository, or (z) after the occurrence of an Event of Termination, the Holders
of Certificates evidencing a 51% or greater Certificate Percentage Interest
advise the Trustee, through the Depository, that continuation of a book-entry
system is no longer in their best interests, then the Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any such event
and of the availability of definitive, fully registered Class A Certificates or
Class B Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of the Class A Certificates
or Class B Certificates by the Depository, accompanied by instructions from the
Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Company nor the Trustee shall be liable for any delay
in delivery of such instructions and the Company and the Trustee may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-4 Certificate and one Class B Certificate, each in
registered form registered in the name of the Depository's nominee, Cede & Co.,
the total face amount of which represents 100% of the Original Class A-1
Principal Balance, the Original Class A-2 Principal Balance, the Original Class
A-3 Principal Balance, the Original Class A-4 Principal Balance and the Original
Class B Principal Balance minus $0.43, respectively. If, however, the aggregate
principal amount of a Class of Class A Certificates, or a Class of Class B
Certificates exceeds $200,000,000, one Class A Certificate and/or one Class B
Certificate will be issued with respect to each $200,000,000 of principal amount
and an additional Certificate of such Class or Classes will be issued with
respect to any remaining principal amount. Each such Class A or Class B
Certificate registered in the name of the Depositary's nominee shall bear the
following legend:
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"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
SECTION 9.03. No Charge; Disposition of Void Certificates.
No service charge shall be made to a Certificateholder for any transfer or
exchange of Certificates, but the Certificate Registrar may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be disposed of in a manner approved
by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate has been acquired by
a bona fide purchaser, the Trustee shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like tenor and original denomination. Upon the issuance of any
new Certificate under this Section 9.04, the Trustee may require the payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith. Any
duplicate Certificate issued pursuant to this Section 9.04 shall constitute
complete and indefeasible evidence of ownership of the Class Percentage
Interest, as if originally issued, whether or not the mutilated, destroyed, lost
or stolen Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Company, the Trustee, the Paying Agent and the Certificate
Registrar may treat the person in whose name any Certificate is registered as
the owner of such Certificate for the purpose of receiving remittances pursuant
to Section 8.01 and for all other purposes whatsoever, and none of the Servicer,
the Company, the Trustee, the Certificate Registrar, the Paying Agent or any
agent of the Servicer, the Company, the Trustee, the Paying Agent or the
Certificate Registrar shall be affected by notice to the contrary.
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SECTION 9.06. Access to List of Certificateholders' Names and Addresses.
The Certificate Registrar will furnish to the Trustee and the Servicer,
within five days after receipt by the Certificate Registrar of a request
therefor from the Trustee in writing, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If either (x) three or more Holders, or (y) a
Holder or Holders of Certificates evidencing Certificate Percentage Interests
representing 25% or more (hereinafter referred to as "Applicants") apply in
writing to the Trustee, and such application states that the Applicants desire
to communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
Applicants access during normal business hours to the most recent list of
Certificateholders held by the Trustee. If such list is as of a date more than
90 days prior to the date of receipt of such Applicants' request, the Trustee
shall promptly request from the Certificate Registrar a current list as provided
above, and shall afford such Applicants access to such list promptly upon
receipt. Every Certificateholder, by receiving and holding a Certificates,
agrees with the Certificate Registrar and the Trustee that none of the Company,
the Certificate Registrar or the Trustee shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 9.07. Authenticating Agents.
The Trustee may appoint one or more Authenticating Agents with power to act
on its behalf and subject to its direction in the execution and delivery of the
Certificates. For all purposes of this Agreement, the execution and delivery of
Certificates by the Authenticating Agent pursuant to this Section shall be
deemed to be the execution and delivery of Certificates "by the Trustee."
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ARTICLE X
INDEMNITIES
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SECTION 10.01. Company's Indemnities.
The Company will defend and indemnify the Trust, the Trustee (including the
Paying Agent and any other agents of the Trustee), the Collateral Agent and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation of any third-party claims (i) arising out of or resulting from the
origination of any Contract (including but not limited to truth in lending
requirements) or the servicing of such Contract prior to its transfer to the
Trust (but only to the extent such cost, expense, loss, damage, claim or
liability is not provided for by the Company's repurchase of such Contract
pursuant to Section 3.05) or (ii) arising out of or resulting from the use or
ownership of any Products by the Company or the Servicer or any Affiliate of
either. Notwithstanding any other provision of this Agreement, the obligation
of the Company under this Section shall not terminate upon a Service Transfer
pursuant to Article VII, except that the obligation of the Company under this
Section shall not relate to the actions of any subsequent Servicer after a
Service Transfer.
SECTION 10.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust or the Certificateholders under or as a
result of this Agreement and the transactions contemplated hereby and, to the
maximum extent permitted and valid under mandatory provisions of law, the Trust
and the Certificateholders expressly disclaim such assumption.
SECTION 10.03. Tax Indemnification.
The Company agrees to pay, and to indemnify, defend and hold harmless the
Trust, the Trustee (including the Paying Agent and any other agents of the
Trustee), the Collateral Agent and the Certificateholders from, any taxes which
may at any time be asserted with respect to, and as of the date of, the transfer
of the Contracts to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates), any tax imposed on the Trust
as a result of the Company's repurchase of any Contract pursuant to Section
3.05(c), and costs, expenses and reasonable counsel fees in defending against
the same, whether arising by reason of the acts to be performed by the Company,
the Servicer or the Trustee under this Agreement or imposed against the Trust, a
Certificateholder or otherwise.
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SECTION 10.04. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Trustee (including
the Paying Agent and any other agents of the Trustee), the Collateral Agent and
the Certificateholders against any and all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation, in respect of any action taken or omitted to be taken by
the Servicer with respect to any Contract. This indemnity shall survive any
Service Transfer (but the original Servicer's obligations under this Section
10.04 shall not relate to any actions of any subsequent Servicer after a Service
Transfer) and any payment of the amount owing under, or any repurchase by the
Company of, any such Contract.
SECTION 10.05. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments to the Trustee pursuant
to this Article and the Trustee thereafter collects any of such amounts from
others, the Trust will repay such amounts collected to the Company or the
Servicer, as the case may be, without interest.
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ARTICLE XI
THE TRUSTEE
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SECTION 11.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Termination has occurred (which has not been cured),
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however, that:
a. Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment made in good
faith by a Responsible Officer of the Trustee, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent facts;
c. The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders with aggregate Certificate Percentage
Interests representing 25% or more of the Trust relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
and
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d. The Trustee shall not be charged with knowledge of any event referred
to in Section 7.01 unless a Responsible Officer of the Trustee at the Corporate
Trust Office obtains actual knowledge of such event or the Trustee receives
written notice of such event from the Servicer or the Holders of Certificates
evidencing, as to any Class, Class Percentage Interests representing 25% or
more.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. The Trustee shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
b. The Trustee may consult with counsel and any opinion of any counsel
for the Company or the Servicer shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
c. The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
litigation hereunder or in relation hereto, at the request, order or direction
of any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; provided, however, that nothing contained herein
shall relieve the Trustee of the obligations, upon the occurrence of an Event of
Termination (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
d. Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in any
resolution,
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certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing so
to do by Holders of Certificates evidencing Certificate Percentage Interests
representing 25% or more; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the Servicer or,
if paid by the Trustee, shall be reimbursed by the Servicer upon demand; and
e. The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
f. The Trustee, in its individual capacity or otherwise, and any of its
Affiliates may hold Certificates or an interest therein in their own names or as
pledges.
SECTION 11.03. Trustee Not Liable for Certificates or Contracts.
The Trustee assumes no responsibility for the correctness of the recitals
contained herein, in the Certificates (other than the Trustee's execution
thereof) or in the Pledge Agreement. The Trustee makes no representations as to
the validity or sufficiency of this Agreement, of the Pledge Agreement, of the
Certificates (other than its execution thereof) or of any Contract, Contract
File or related document. The Trustee shall not be accountable for the use or
application by the Servicer or the Company of funds paid to the Company in
consideration of conveyance of the Contracts to the Trust by the Company or
deposited into or withdrawn from the Collection Account by the Servicer.
SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive
Event of Termination.
Holders of Certificates evidencing Certificate Percentage Interests
representing 25% or more shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that,
subject to Section 11.01, the Trustee shall have the right to decline to follow
any such direction if the Trustee being advised by counsel determines that the
action so directed may not lawfully be taken, or if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that the
proceedings so directed would be illegal or involve it in personal liability or
be unduly prejudicial to the rights of Certificateholders not parties to such
direction; and provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction by the Certificateholders; and
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provided further that the Trustee shall instead follow the directions of Holders
of Certificates evidencing Certificate Percentage Interests aggregating 51% or
more whenever it receives conflicting directions from Certificateholders.
Holders of each Class of Certificates evidencing, as to each such Class, Class
Percentage Interests representing 51% or more may on behalf of
Certificateholders waive any past Event of Termination hereunder and its
consequences, except a default in respect of a covenant or provision hereof
which under Section 12.07 cannot be modified or amended without the consent of
all Certificateholders, and upon any such waiver, such Event of Termination
shall cease to exist and shall be deemed to have been cured for every purpose of
this Agreement; but no such waiver shall extend to any subsequent or other Event
of Termination or impair any right consequent thereon.
SECTION 11.05. The Servicer to Pay Trustee's Fees and Expenses.
The Servicer agrees:
a. to pay to the Trustee reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
b. except as otherwise expressly provided herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any provision of this Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
c. to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust and its duties hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
All such payments by the Servicer shall be made from its own funds. The
covenants in this Section 11.05 shall be for the benefit of the Trustee in its
capacities as Trustee, Paying Agent and Certificate Registrar hereunder, and
shall survive the termination of this Agreement.
SECTION 11.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a financial institution
organized and doing business under the laws of the United States of America or
any State, authorized under such laws to exercise corporate trust powers, and
shall have a combined capital and surplus of at least $50,000,000 or shall be a
member of a bank holding system the aggregate combined capital and surplus of
which is $50,000,000, provided that the Trustee's separate capital and surplus
shall at all times be at least the amount required by Section 310(a)(2) of the
Trust Indenture Act of 1939, as
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amended. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of a supervising or examining authority,
then for the purposes of this Section 11.06, the combined capital and surplus of
such Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In addition, the Trustee
shall at all times have a long-term deposit rating (or, if the Trustee is a
wholly owned subsidiary of a bank holding company system and not rated, the
long-term senior unsecured debt rating of the bank holding company) from Moody's
of at least Baa3 or as shall be otherwise acceptable to Moody's, rated BBB or
higher by Standard & Poor's or as shall be otherwise acceptable to Standard &
Poor's and a rating from Fitch (if rated by Fitch) of at least BBB- or as shall
be otherwise acceptable to Fitch. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
SECTION 11.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer and the Company. A
copy of any such notice shall be sent to Moody's, Standard & Poor's and Fitch.
Upon receiving such notice of resignation, the Servicer shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Company and one copy to the successor
Trustee. If no successor Trustee shall have been so appointed and shall have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.06 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Servicer may remove the
Trustee. If the Servicer shall have removed the Trustee under the authority of
the immediately preceding sentence, the Servicer shall promptly appoint a
successor Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.08.
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SECTION 11.08. Successor Trustee.
Any successor Trustee appointed as provided in Section 11.07 shall execute,
acknowledge and deliver to the Servicer, the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. The
predecessor Trustee shall deliver or cause to be delivered to the successor
Trustee the Contracts, Contract Files and any related documents and statements
held by it hereunder; and the Servicer, the Company and the predecessor Trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
11.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.08, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to each Certificateholder at their addresses as shown in
the Certificate Register. If the Servicer fails to mail such notice within ten
days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
SECTION 11.09. Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.06, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee shall promptly notify Moody's, Standard & Poor's
and Fitch in the event it is a party to any merger, conversion or consolidation.
SECTION 11.10. Tax Returns.
Upon the Servicer's request, the Trustee will furnish the Servicer with all
such information as the Servicer may reasonably require in connection with
preparing all tax returns of the Trust and the Trustee shall execute such
returns.
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SECTION 11.11. Obligor Claims.
In connection with any offset defenses, or affirmative claims for recovery,
asserted in legal actions brought by Obligors under one or more Contracts based
upon provisions therein complying with, or upon other rights or remedies arising
from, any legal requirements applicable to the Contracts, including, without
limitation, the Federal Trade Commission's Trade Regulation Rule Concerning
Preservation of Consumers' Claims and Defenses (16 C.F.R. (S) 433) as amended
from time to time:
a. The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a joint
venturer with or an Affiliate of, or acting in concert or cooperation with, any
seller of Products, in the arrangement, origination or making of Contracts. The
Trustee is the holder of the Contracts only as trustee on behalf of the
Certificateholders, and not as a principal or in any individual or personal
capacity;
b. The Trustee shall not be personally liable for or obligated to pay
Obligors any affirmative claims asserted thereby, or responsible to
Certificateholders for any offset defense amounts applied against Contract
payments, pursuant to such legal actions;
c. The Trustee will pay, solely from available Trust monies, affirmative
claims for recovery by Obligors only pursuant to final judicial orders or
judgments, or judicially approved settlement agreements, resulting from such
legal actions;
d. The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal actions to
recover affirmative claims against Certificateholders.
e. The Trustee will cooperate with and assist Certificateholders in their
defense of legal actions by Obligors to recover affirmative claims if such
cooperation and assistance is not contrary to the interests of the Trustee as a
party to such legal actions and if the Trustee is satisfactorily indemnified for
all liability, costs and expenses arising therefrom; and
f. The Company hereby agrees to indemnify, hold harmless and defend the
Trustee and the Certificateholders from and against any and all liability, loss,
costs and expenses of the Trustee and the Certificateholders resulting from any
affirmative claims for recovery asserted or collected by Obligors under the
Contracts. Notwithstanding any other provision of this Agreement, the
obligation of the Company under this Section 11.11(f) shall not terminate upon a
Service Transfer pursuant to Article VII.
SECTION 11.12. Appointment of Co-Trustee or Separate Trustee.
The Company shall have the power from time to time to appoint one or more
persons or corporations to act either as co-trustees jointly with the Trustee,
or
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as separate trustees, or as custodians, for the purpose of conforming to any
legal requirement, restriction or condition (i) with respect to the holding of
the Contracts and the Contract Files or (ii) with respect to the enforcement of
a Contract in any state in which a Product is located or in any state in which
any portion of the Trust is located. The separate trustees, co-trustees, or
custodians so appointed shall be trustees or custodians for the benefit of all
Certificateholders and shall, subject to the provisions of the following
paragraph, have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee.
Every separate trustee, co-trustee and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(A) all powers, duties, obligations and rights conferred upon the
Trustee in respect of the receipt, custody and payment of monies shall be
exercised solely by the Trustee;
(B) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee, to the extent also imposed upon such separate
trustees, co-trustees or custodians, shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee, co-
trustee, or custodian jointly, except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed,
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations (including
holding of the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed by such separate trustee, co-trustee, or
custodian;
(C) no separate trustee, co-trustee or custodian hereunder shall be
personally liable by reason of any act or omission of any other separate
trustee, co-trustee or custodian hereunder; and
(D) the Company may at any time accept the resignation of or remove
any separate trustee, co-trustee or custodian, so appointed by it.
If any separate trustee, co-trustee or custodian shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee or custodian. The reasonable fees and expenses of any such separate
trustee, co-trustee or custodian shall be treated as additional fees and
expenses of the Trustee subject to Section 11.05 and payable by the Servicer if
and only to the extent the Servicer shall have consented in writing to his or
its appointment, which consent shall not be unreasonably withheld.
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SECTION 11.13. Agents of Trustee.
To the extent not prohibited by law and not inconsistent with the terms of
this Agreement (including, without limitation, Section 11.12), the Trustee may,
with the prior consent of the Company, appoint one or more agents to carry out
ministerial matters on behalf of the Trustee under this Agreement.
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ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Duties.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee or Monthly Servicing and Guaranty Fee payable to it. The Servicer
shall not resign from the obligations and duties hereby imposed on it except
upon determination that the performance of its duties hereunder is no longer
permissible under applicable law or is in material conflict by reason of
applicable law with any other activities carried on by it. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel for the Servicer to such effect addressed and delivered to
the Trustee. No such resignation shall become effective until the Trustee or a
successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Sections 7.02 and 7.03.
Notwithstanding the foregoing:
a. Any person into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Servicer shall satisfy
the criteria set forth in the definition of an Eligible Servicer. The Servicer
shall promptly notify Moody's, Standard & Poor's, and Fitch of any such merger
to which it is a party.
b. The Servicer may delegate duties under this Agreement to any of the
Servicer's Affiliates. In addition, the Servicer may at any time perform the
specific duty of repossessing Products through subcontractors who are in the
business of servicing consumer receivables, and may also perform other specific
duties through subcontractors; provided that the Servicer gives notice to the
Trustee and each of Moody's, Standard & Poor's and Fitch, and provided further
that no such delegation of duties by the Servicer shall relieve the Servicer of
its responsibility with respect thereto.
SECTION 12.02. Maintenance of Office or Agency.
The Trustee will maintain in St. Paul, Minnesota, an office or agency where
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. On the date hereof the Trustee's office for
such purposes is located at 180 East Fifth Street, St. Paul, Minnesota 55101,
Attention: Corporate
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Trust Administration, Structured Finance. The Trustee will give prompt written
notice to Certificateholders of any change in the location of the Certificate
Register or any such office or agency.
SECTION 12.03. Termination.
a. This Agreement shall terminate (after distribution of all amounts due
to Certificateholders pursuant to Sections 8.01 and 8.03) on the earlier of (a)
the first Distribution Date after the Pool Scheduled Principal Balance is
reduced to zero or the last Contract has been liquidated and all Products
repossessed have been disposed of and all amounts payable to Certificateholders
on such Distribution Date have been distributed to Certificateholders or (b) the
Distribution Date on which the Company or the Servicer repurchases the Contracts
pursuant to Section 8.05; provided, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the
United States to the Court of St. James, living on the date hereof; and
provided, further, that the Servicer's and the Company's representations and
warranties and indemnities by the Company and the Servicer shall survive
termination.
b. Notice of any termination, specifying the Final Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
all Certificateholders may surrender their Certificates to the Company for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee (upon direction by the Company five days prior to the date such
notice is to be mailed) by letter to Moody's, Standard & Poor's, Fitch, the
Depository (if any) and the Certificateholders (if there is no Depository,
delivered no later than thirty days prior to the Final Distribution Date
specifying (1) the Final Distribution Date upon which final payment on the
Certificates will be made upon presentation and surrender of Certificates at the
office or agency of the Company therein designated; (2) the amount of any such
final payment; and (3) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Company therein
specified. Each such notice shall, to the extent required by applicable law, be
signed on behalf of the Trust by the Trustee. The Trustee shall give such
notice to the Certificate Registrar at the time such notice is given to the
Certificateholders. In the event such notice is given in connection with the
Company's election to purchase the Contracts, the Company shall deposit in the
Collection Account on the Business Day immediately prior to the Final
Distribution Date in immediately available funds an amount equal to the above-
described purchase price and upon such deposit Certificateholders will be
entitled to the amount of such purchase price but not amounts in excess thereof,
all as provided herein. Upon certification to the Trustee by a Servicing
Officer, following such final deposit the Trustee shall promptly release to the
Company the Contract Files for the remaining Contracts, and the Trustee shall
execute all assignments, endorsements and other instruments necessary to
effectuate such transfer.
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c. Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed from the Collection Account, in the order of priority
specified in Section 8.03(a), to Certificateholders on the final Distribution
Date in proportion to their respective Class Percentage Interests an amount
equal to (i) as to Class A Certificates, the Class A-1 Principal Balance, the
Class A-2 Principal Balance, the Class A-3 Principal Balance, the Class A-4
Principal Balance, any Unpaid Class A-1 Principal Liquidation Loss, any Unpaid
Class A-2 Principal Liquidation Loss, any Unpaid Class A-3 Principal Liquidation
Loss, and any Unpaid Class A-4 Principal Liquidation Loss, together with any
Unpaid Class A-1 Interest Shortfall, any Unpaid Class A-2 Interest Shortfall,
any Unpaid Class A-3 Interest Shortfall, any Unpaid Class A-4 Interest
Shortfall, any Unpaid Class A-1 Liquidation Loss Interest Shortfall, any Unpaid
Class A-2 Liquidation Loss Interest Shortfall, any Unpaid Class A-3 Liquidation
Loss Interest Shortfall, any Unpaid Class A-4 Liquidation Loss Interest
Shortfall, and one month's interest at the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, and the Class A-4
Pass-Through Rate on the sum of the Class A-l Principal Balance and any Unpaid
Class A-1 Liquidation Loss, the Class A-2 Principal Balance and any Unpaid Class
A-2 Liquidation Loss, the Class A-3 Principal Balance and any Unpaid Class A-3
Liquidation Loss, and the Class A-4 Principal Balance and any Unpaid Class A-4
Liquidation Loss, respectively, and (ii) as to Class B Certificates, the Class B
Principal Balance and any Unpaid Class B Principal Liquidation Loss, together
with any Unpaid Class B Interest Shortfall, any Unpaid Class B Liquidation Loss
Interest Shortfall, and one month's interest at the Class B Pass-Through Rate on
the sum of the Class B Principal Balance and any Unpaid Class B Principal
Liquidation Loss, and (iii) the amount which remains on deposit in the
Collection Account (other than amounts retained to meet claims) after
application pursuant to clauses (i) and (ii) above to the Company; provided that
any Guaranty Payment deposited in the Collection Account shall be distributed
only to the Class B Certificateholders and any amount transferred from the
Spread Account shall be distributed only to the Class A Certificateholders. The
distribution on the Final Distribution Date shall be in lieu of the distribution
otherwise required to be made on such Distribution Date in respect of each Class
of Certificates.
d. In the event that all of the Certificateholders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Company shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
three months after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee shall transfer to the Company all
amounts remaining on deposit in the Collection Account, to hold in trust for
Certificateholders who have not surrendered their Certificates for cancellation,
together with the final record list of Certificateholders, and the Company shall
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain in trust hereunder.
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SECTION 12.04. Acts of Certificateholders.
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver or
other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates of the specified Class or Classes evidencing, as
to each such Class, Class Percentage Interests aggregating 51% or more.
b. Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
c. The fact and date of the execution by any Certificateholder of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
d. The ownership of Certificates shall be proved by the Certificate
Register.
e. Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder shall bind every holder of every Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Company in reliance thereon, whether or not notation of such
action is made upon such Security.
f. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
SECTION 12.05. Calculations.
Except as otherwise provided in this Agreement, all interest rate and basis
point calculations under this Agreement will be made on the basis of a 360-day
year and twelve 30-day months and will be carried out to at least three decimal
places.
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SECTION 12.06. Assignment or Delegation by Company.
Except as specifically authorized hereunder, and except for its obligations
as Servicer which are dealt with under Article V and Article VII, the Company
may not convey and assign or delegate any of its rights or obligations hereunder
absent the prior written consent of Holders of Certificates of each Class
evidencing, as to each such Class, Class Percentage Interests aggregating 66
2/3% or more, and any attempt to do so without such consent shall be void. It
is understood that the foregoing does not prohibit the pledge or assignment by
the Company of any right to payment pursuant to Article VIII.
Notwithstanding the foregoing, any person into which the Company may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Company shall be a party, or any Person succeeding
to the business of the Company, shall be the successor of the Company hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Company shall promptly notify Moody's, Standard & Poor's and Fitch of any such
merger to which it is a party.
SECTION 12.07. Amendment.
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, to make such changes as are necessary to maintain the status of
the Trust as a grantor trust under the Code or to otherwise effectuate the
benefits of such status to the Trust, the Certificateholders, including, without
limitation, to add or amend any provision as required by Moody's, S&P, Fitch, or
any other nationally recognized statistical rating organization in order to
improve or maintain the rating of any Class of Certificates, or to make any
other provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel for the Company, adversely affect in any material respect the interests
of any Certificateholder.
b. This Agreement may also be amended from time to time by the Servicer,
the Company and the Trustee, with the consent of Holders of Certificates of each
Class affected thereby evidencing, as to each such Class, Class Percentage
Interests aggregating 51% or more, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Certificateholders; provided,
however, that no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions which are required to be made on any Certificate, (b)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the holders of all Certificates then outstanding, (c)
result in the
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disqualification of the Trust as a grantor trust under the Code, (d) adversely
affect the status of the Trust as a grantor trust or (e) cause any tax to be
imposed on the Trust.
c. This Agreement shall not be amended under this Section without the
consent of 100% of Certificateholders if such amendment would result in the
disqualification of the Trust as a grantor trust under the Code.
d. Concurrently with the solicitation of any consent pursuant to this
Section 12.07, the Trustee shall furnish written notification to Moody's,
Standard & Poor's and Fitch of such solicitation. Promptly after the execution
of any amendment pursuant to this Section 12.07, the Trustee shall furnish
written notification of the substance of such amendment to Moody's, Standard &
Poor's, Fitch and each Certificateholder.
e. It shall not be necessary for the consent of Certificateholders under
this Section 12.07 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
f. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
g. In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an unqualified Opinion of Counsel to the Servicer
to the effect that such amendment is authorized or permitted by the Agreement.
h. In the absence of the consent described in subsection (c) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment will not
adversely affect the status of the Trust as a grantor trust.
i. Upon the execution of any amendment or consent pursuant to this
Section 12.07, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Certificateholder hereunder shall be bound thereby.
SECTION 12.08. Notices.
All communications and notices pursuant hereto to the Servicer, the Company
and the Trustee shall be in writing and delivered or mailed to it at the
appropriate following address:
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If to the Company or the Servicer:
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (612) 293-5746
If to the Trustee:
First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
Telecopier Number: (612) 244-0089
If to Moody's:
Moody's Investors Service, Inc.
ABS Monitoring Department
99 Church Street
New York, New York 10007
If to Standard & Poor's:
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Attention: Mortgage Surveillance Group
Telecopier Number: (212) 208-1582
If to Fitch:
Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attention: ABS Surveillance Group
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder shall
be in writing and delivered or mailed at the address shown in the Certificate
Register.
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SECTION 12.09. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 12.10. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 12.11. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
12-8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 26th
day of January, 1996.
GREEN TREE FINANCIAL CORPORATION
By /s/ John W. Brink
-----------------------------------------
John W. Brink, Executive Vice President
and Chief Financial Officer
FIRST TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Trustee
By /s/ Kathi Mohammadzadah
-----------------------------------------
Name: Kathi Mohammadzadah
Title: Trust Officer
By /s/ Christina Hatfield
-----------------------------------------
Name: Christina Hatfield
Title: Assistant Vice President
12-9
<PAGE>
EXHIBIT A
------- -
FORM OF CLASS A CERTIFICATE
---------------------------
[THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1[,
CLASS A-2][AND CLASS A-3] CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
Class A-[1][2][3][4 No.
Cutoff Date: Pass-Through Rate: ____%
February 1, 1996
First Distribution Date: Denomination: $___________
March 15, 1996
Aggregate Denomination of
All Class A-[1][2][3][4]Certificates:
Servicer: $___________
Green Tree Financial Corporation
Final Scheduled Distribution Date:
---------------------
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP:
-------
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1996-A
__% CLASS A-[1][2][3][4] CERTIFICATES
-------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
This certifies that ____________________ is the registered owner of the
undivided Class Percentage Interest represented by the original principal amount
set forth above in Green Tree Recreational, Equipment & Consumer Trust 1996-A
(the "Trust"), which includes among its assets a pool of retail installment
sales contracts and promissory notes (including, without limitation, all related
security interests and any and all rights to receive payments which are due
pursuant thereto on or after February 1, 1996). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
January 1, 1996, between Green
A-1
<PAGE>
Tree Financial Corporation, as Seller and Servicer (the "Company"), and First
Trust National Association, as Trustee (the "Trustee"). This Certificate is one
of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Distribution Date") of each calendar month commencing in March 1996, so
long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Certificates with an aggregate Certificate Percentage
Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such
Distribution Date) to the registered Certificateholder at the address appearing
on the Certificate Register as of the Business Day immediately preceding such
Distribution Date, in an amount equal to the Certificateholder's Class
Percentage Interest of the Class A-[1][2][3][4] Distribution Amount to be
distributed on that Distribution Date. The Final Scheduled Distribution Date of
this Certificate is February 15, 2018 or the next succeeding Business Day if
such February 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Collection Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St. Paul, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Class Percentage
Interest will be issued to the designated transferee or transferees.
A-2
<PAGE>
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
A-3
<PAGE>
IN WITNESS WHEREOF, Green Tree Recreational, Equipment & Consumer Trust
1996-A has caused this Certificate to be duly executed by the manual signature
of a duly authorized officer of the Trustee.
Dated: ___________, 1996 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1996-A
By FIRST TRUST NATIONAL
ASSOCIATION
By
----------------------------------
Authorized Signatory
A-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within ____ % Class A-[1][2][3][4]
Certificate and does hereby irrevocably constitute and appoint
______________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: By
--------------------------------
Signature
A-5
<PAGE>
EXHIBIT B
------- -
FORM OF CLASS B CERTIFICATE
---------------------------
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
Class B No.
Cutoff Date: Pass-Through Rate: ___%
February 1, 1996
Denomination: $_____________
First Distribution Date:
March 15, 1996 Aggregate Denomination of
All Class B Certificates:
$_______________
Servicer:
Green Tree Financial Corporation Final Scheduled Distribution Date:
----------------------
(or if such day is not a
Business Day, then the next
succeeding Business Day)
CUSIP:
-----
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1996-A
__% CLASS B CERTIFICATES
------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT
SET FORTH IN THE AGREEMENT.
This certifies that ____________________ is the registered owner of the
undivided Class Percentage Interest represented by the original principal amount
set forth above in Green Tree Recreational, Equipment & Consumer Trust 1996-A
(the "Trust"), which includes among its assets a pool of retail installment sale
contracts and promissory notes (including, without limitation, all related
security interests and any and all rights to receive payments which are due
pursuant thereto on or after February 1, 1996). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
January 1, 1996, between Green Tree Financial Corporation, as Seller and
Servicer (the "Company"), and First Trust National Association, as Trustee (the
"Trustee"). This Certificate is one of the
B-1
<PAGE>
Certificates described in the Agreement and is issued pursuant and subject to
the Agreement. By acceptance of this Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Distribution Date") of each calendar month commencing in March 1996, so
long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B Certificates with an aggregate Certificate
Percentage Interest of at least 5% and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least 10 days prior to such
Distribution Date) to the registered Certificateholder at the address appearing
on the Certificate Register as of the Business Day immediately preceding such
Distribution Date, in an amount equal to the Certificateholder's Class
Percentage Interest of the Class B Distribution Amount to be distributed on that
Distribution Date. The Final Scheduled Distribution Date of this Certificate is
February 15, 2018, or the next succeeding Business Day if such February 15 is
not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Collection Account and the Limited
Guaranty of the Company to the extent available for distribution to the
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
St. Paul, Minnesota, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Class Percentage
Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to Issuer or its
agent
B-2
<PAGE>
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
B-3
<PAGE>
IN WITNESS WHEREOF, Green Tree Recreational, Equipment & Consumer Trust
1996-A has caused this Certificate to be duly executed by the manual signature
of a duly authorized officer of the Trustee.
Dated: ______________, 1996 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1996-A
By FIRST TRUST NATIONAL
ASSOCIATION
By
-------------------------------
Authorized Officer
B-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________________ the within _____ % Class B Certificate and
does hereby irrevocably constitute and appoint ______________________________
Attorney to transfer the said certificate on the Certificate Register maintained
by the Trustee, with full power of substitution in the premises.
Dated: By
------------------------------
Signature
B-5
<PAGE>
EXHIBIT C
FORM OF ASSIGNMENT
------------------
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of January 1, 1996 between Green Tree Financial Corporation (the
"Company") and First Trust National Association, as Trustee (the "Trustee"), the
Company does hereby transfer, assign, set over and otherwise convey to the
Trustee (i) all right, title and interest in the retail installment contracts
and promissory notes for the purchase of a variety of Products (collectively,
the "Contracts"), including, without limitation, all related Collateral
Security, all security interests created thereby and any and all rights to
receive payments which are due pursuant thereto from and after February 1, 1996,
but excluding any rights to receive payments which were due pursuant thereto
prior to February 1, 1996) identified in the List of Contracts delivered
pursuant to Section 2.02(a) of the Agreement, which List of Contracts is also
attached hereto, (ii) all rights under every Insurance Policy on a Product
securing a Contract for the benefit of the creditor of such Contract and all
rights under all blanket insurance policies and the proceeds from the Errors and
Omissions Protection Policy to the extent they relate to the Products, (iii) all
documents contained in the Contract Files and (iv) all proceeds in any way
derived from any of the foregoing. Capitalized terms used herein but not defined
herein have the meanings assigned to them in the Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this 26th day of January, 1996.
GREEN TREE FINANCIAL CORPORATION
By
-----------------------------------
[Name]
[Title]
C-1
<PAGE>
EXHIBIT D
---------
FORM OF CERTIFICATE OF OFFICER
------------------------------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE OF OFFICER
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company in
connection with the Pooling and Servicing Agreement dated as of January 1, 1996
(the "Agreement") between the Company and First Trust National Association, as
Trustee (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
(i) attached hereto as Exhibit I is a true and correct copy of the
Certificate of Incorporation of the Company, together with all amendments
thereto as in effect on the date hereof;
(ii) attached hereto as Exhibit II is a true and correct copy of the
Bylaws of the Company, as amended, as in effect on the date hereof;
(iii) the representations and warranties of the Company contained
in Sections 3.01 and 3.04 of the Agreement are true and correct on and as
of the date hereof and, to the best of his knowledge, the representations
and warranties of the Company contained in Sections 3.02 and 3.03 of the
Agreement are true and correct on and as of the date hereof;
(iv) no event with respect to the Company has occurred and is
continuing which would constitute an Event of Termination or an event that
with notice or lapse of time or both would become an Event of Termination
under the Agreement; and
(v) each of the agreements and conditions of the Company to be
performed on or before the date hereof pursuant to the Agreement have been
performed in all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this 26th day of
January, 1996.
GREEN TREE FINANCIAL CORPORATION
----------------------------------
[Name]
[Title]
D-1
<PAGE>
EXHIBIT E
---------
FORM OF OPINION OF COUNSEL FOR THE COMPANY
------------------------------------------
The opinion of Dorsey & Whitney P.L.L.P. shall be to the effect that
(capitalized terms have the meanings set forth in the Pooling and Servicing
Agreement):
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with corporate power
to execute, deliver and perform its obligations under the Pooling and Servicing
Agreement (including the Limited Guaranty contained therein). The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the performance of its duties under the Pooling
and Servicing Agreement would require such qualification.
2. The Pooling and Servicing Agreement has been duly authorized by all
requisite corporate action, duly executed and delivered by the Company, and
constitutes the valid and binding obligations of the Company enforceable in
accordance with their terms. The Certificates have been duly authorized by all
requisite corporate action and, when duly and validly executed by the Trustee in
accordance with the Pooling and Servicing Agreement, will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing Agreement.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by the Company
for the consummation of the transactions contemplated by the Pooling and
Servicing Agreement, except such as may be required under blue sky laws under
any jurisdiction in connection with the offering of the Certificates by
Underwriter pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and the Trust is not
required to be registered as an investment company under the Investment Company
Act of 1940.
5. Neither the transfer of the Contracts to the Trustee acting on behalf
of the Trust, nor the assignment of the Company's security interest in the
related Products, nor the issuance or sale of the Certificates, nor the
execution and delivery of the Pooling and Servicing Agreement (including the
Limited Guaranty contained therein), nor the consummation of any other of the
transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates or the Pooling and Servicing
Agreement by the Company will conflict with, or result in a breach, violation or
acceleration of, or constitute a default under, any term or provision of the
Certificate of Incorporation or Bylaws of the Company or of any indenture or
other agreement or instrument known to us to which the Company is a party or by
which it is bound, or result in a violation of, or contravene
E-1
<PAGE>
the terms of any statute, order or regulation, applicable to the Company, of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it.
6. There are no actions or proceedings pending or, to the best of our
knowledge, actions, proceedings or investigations pending or overtly threatened
against the Company before any court, administrative agency or other tribunal
(A) asserting the invalidity of the Pooling and Servicing Agreement, the
Certificates, the hazard insurance policies applicable to any Contracts or the
Errors and Omissions Protection Policy, (B) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions contemplated by
the Pooling and Servicing Agreement, (C) which is likely materially and
adversely to affect the performance by the Company of its obligations under, or
the validity or enforceability of the Pooling and Servicing Agreement, the
Certificates, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates described in the Prospectus under the heading
"Certain Federal Income Tax Consequences."
7. The transfer of the Contracts to the Trust in accordance with Section
2.01 of the Pooling and Servicing Agreement would not be avoidable as a
preferential transfer under Section 547 of the United States Bankruptcy Code (11
U.S.C. (S) 547), as in effect on the date hereof, in the event that the Company
became a debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Company has
transferred to the Trustee acting on behalf of the Trust all of the Company's
right, title and interest in the Contracts, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Contracts. No filing or other action, other than the filing of a
financing statement on Form UCC-1 with the Secretary of State of the State of
Minnesota identifying the Contracts as collateral and naming the Company as
debtor and the Trust as secured party, and the filing of continuation statements
as required by Section 4.02 of the Pooling and Servicing Agreement, is necessary
to perfect as against third parties the assignment of the Contracts by the
Company to the Trust. We have separately provided you with our opinion
concerning whether such assignment could be recharacterized as a pledge rather
than a sale in the event the Company became a debtor under the United States
Bankruptcy Code. However, in the event such assignment were characterized as a
pledge securing a loan from the Certificateholders to the Company, it is our
opinion that the Trustee would be deemed to have a valid and perfected security
interest in the Contracts and the proceeds thereof, which security interest
would be prior to any other security interest that may be perfected under the
Uniform Commercial Code as in effect in the State of Minnesota and over any
"lien creditor" (as defined in Minn. Stat. (S)336.9-301(3)) who becomes such
after the Closing Date, except that a subsequent purchaser of any Contract who
gives new value and takes possession thereof in the ordinary course of his
business would have priority over the Trustee's security interest in such
Contract, if such purchaser acts without knowledge that such Contract was
subject to a security interest.
E-2
<PAGE>
9. For federal income tax purposes, the Trust created pursuant to the
Pooling and Servicing Agreement will be treated as a grantor trust under Subpart
E, Part I, of Subchapter J of the Internal Revenue Code of 1986, as amended (the
"Code") and not as an association taxable as a corporation under the Code, and
under Section 671 of the Code, each Certificateholder will be treated as the
owner of an undivided pro rata interest in each of the Contracts in the Trust.
10. The transfer of the Contracts and the proceeds thereof by the Company
to the Trustee on the date hereof pursuant to the Pooling and Servicing
Agreement would not be avoidable as a fraudulent transfer under the Uniform
Fraudulent Transfer Act as in effect in Minnesota on the date hereof (Minn.
Stat. (S)(S) 513.41 through 513.51), nor, should the Company become a debtor
under the United States Bankruptcy Code, as a fraudulent transfer under Section
548 of the United States Bankruptcy Code (11 U.S.C. (S) 548) as in effect on the
date hereof.
E-3
<PAGE>
EXHIBIT F
FORM OF TRUSTEE'S ACKNOWLEDGEMENT
---------------------------------
First Trust National Association, a national banking association organized
under the laws of the United States of America, acting as trustee (the
"Trustee") of the trust created pursuant to the Pooling and Servicing Agreement,
dated as of January 1, 1996, between Green Tree Financial Corporation and the
Trustee (the "Pooling and Servicing Agreement") (all capitalized terms used
herein without definition having the respective meanings specified in the
Pooling and Servicing Agreement), acknowledges, pursuant to Section 2.03 of the
Pooling and Servicing Agreement, that the Trustee has received and holds in
trust thereunder the following: (i) all right, title and interest in the retail
installment sales agreements and promissory notes (including, without
limitation, any and all rights to receive payments which are due pursuant
thereto on or after February 1, 1996, but excluding any rights to receive
payments which were due pursuant thereto prior to February 1, 1996), identified
in the List of Contracts delivered pursuant to Section 2.02 of the Pooling and
Servicing Agreement, (ii) all rights under every Insurance Policy on a Product
securing a Contract for the benefit of the creditor of such Contract and all
rights under all blanket insurance policies and the proceeds from the Errors and
Omissions Protection Policy to the extent they relate to the Products, (iii) all
documents contained in the Contract Files (as defined in Section 1.02 of the
Pooling and Servicing Agreement), (iv) the Limited Guaranty, (v) a security
interest in all amounts in the Spread Account and all investments thereof and
(vi) all proceeds and products of the foregoing.
The Trustee further acknowledges that the Trustee, directly or through a
custodian, will hold said rights, interests and proceeds in trust for the use
and benefit of all Certificateholders.
IN WITNESS WHEREOF, First Trust National Association, as Trustee, has
caused this acknowledgement to be executed by its duly authorized officer and
its corporate seal affixed hereto as of this 26th day of January, 1996.
FIRST TRUST NATIONAL ASSOCIATION
as Trustee
By
------------------------------
Name:
Title:
By
------------------------------
Name:
Title:
F-1
<PAGE>
EXHIBIT G
---------
FORM OF CERTIFICATE OF SERVICING OFFICER
----------------------------------------
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of January 1, 1996 between the Company and First Trust
National Association, as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Monthly Report for the period from ____________________ to
____________________ attached to this certificate is complete and accurate in
accordance with the requirements of Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this __________
day of _________________________, 19_____.
GREEN TREE FINANCIAL CORPORATION
By
--------------------------------
[Name]
[Title]
G-1
<PAGE>
EXHIBIT H
---------
FORM OF
-------
CERTIFICATE REGARDING REPURCHASED CONTRACTS
-------------------------------------------
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 3.05 of the Pooling and Servicing Agreement (the
"Agreement"), dated as of January 1, 1996 between the Company and First Trust
National Association, as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Contracts on the attached schedule are to be repurchased by the
Company on the date hereof pursuant to Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to Section 3.05 of the Agreement, be assigned by the
Trustee to the Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
________, 19__.
GREEN TREE FINANCIAL CORPORATION
By
----------------------------------
[Name]
Title]
H-1
<PAGE>
EXHIBIT I
---------
FORM OF MONTHLY REPORT
----------------------
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1996-A
Distribution Date:______________
1. Amount Available
(a) Payments on Contracts ----------
(b) Repurchase Proceeds ----------
(c) Servicer Advances ----------
(d) Guaranty Payment ----------
(e) Transfers from Spread Account ----------
(f) Self-Insurance Payments ----------
2. Monthly Servicing Fee ----------
3. Servicer Advances Reimbursed ----------
Class A-1 Certificates
- ----------------------
Class A-1 Interest
4. Amount distributed on account of interest ----------
5. Class A-1 Interest Amount ----------
6. Amount Applied to Class A-1 Interest Amount ----------
7. Class A-1 Interest Shortfall ----------
8. Amount applied to Unpaid Class A-1 Interest Shortfall ----------
9. Remaining Unpaid Class A-1 Interest Shortfall ----------
Class A-1 Principal
10. Amount due on account of principal: ----------
(a) Scheduled principal ----------
(b) Principal Prepayments ----------
(c) Liquidated Contracts ----------
(d) Repurchases ----------
I-1
<PAGE>
11. Class A-1 Percentage of amount due or Class A-1 Principal
Balance, whichever is less ----------
12. Amount distributed on account of principal ----------
13. Class A-1 Principal Shortfall ----------
14. Unpaid Class A Principal Shortfall
(if any) following prior Distribution Date ----------
15. Amount applied to Unpaid Class A Principal Shortfall
(if any) on current Distribution Date ----------
16. Remaining Unpaid Class A Principal Shortfall ----------
Class A-1 Liquidation Loss Interest and Principal
17. Class A-1 Liquidation Loss Interest Amount ----------
18. Amount distributed on account of Class A-1 Liquidation
Loss Interest Amount ----------
19. Class A-1 Liquidation Loss Interest Shortfall ----------
20. Amount applied to Unpaid Class A-1 Liquidation Loss
Interest Shortfall ----------
21. Remaining Unpaid Class A-1 Liquidation Loss Interest
Shortfall ----------
22. Class A-1 Principal Liquidation Loss ----------
23. Amount applied to Unpaid Class A-1 Principal
Liquidation Loss ----------
24. Remaining Unpaid Class A-1 Principal
Liquidation Loss ----------
25. Class A-1 Principal Balance after giving effect to
Distribution and Class A-1 Principal Liquidation Loss ----------
Class A-2 Certificates
- ----------------------
Class A-2 Interest
26. Amount distributed on account of interest ----------
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27. Class A-2 Interest Amount ----------
28. Amount Applied to Class A-2 Interest Amount ----------
29. Class A-2 Interest Shortfall ----------
30. Amount applied to Unpaid Class A-2 Interest Shortfall ----------
31. Remaining Unpaid Class A-2 Interest Shortfall ----------
Class A-2 Principal
32. Amount due on account of principal: ----------
(a) Scheduled principal ----------
(b) Principal Prepayments ----------
(c) Liquidated Contracts ----------
(d) Repurchases ----------
33. Class A-2 Percentage of amount due or Class A-2 Principal
Balance, whichever is less ----------
34. Amount distributed on account of principal ----------
35. Class A-2 Principal Shortfall ----------
36. Unpaid Class A Principal Shortfall
(if any) following prior Distribution Date ----------
37. Amount applied to Unpaid Class A Principal Shortfall
(if any) on current Distribution Date ----------
38. Remaining Unpaid Class A Principal Shortfall ----------
Class A-2 Liquidation Loss Interest and Principal
39. Class A-2 Liquidation Loss Interest Amount ----------
40. Amount distributed on account of Class A-2 Liquidation
Loss Interest Amount ----------
41. Class A-2 Liquidation Loss Interest Shortfall ----------
42. Amount applied to Unpaid Class A-2 Liquidation Loss
Interest Shortfall ----------
43. Remaining Unpaid Class A-2 Liquidation Loss Interest
Shortfall ----------
44. Class A-2 Principal Liquidation Loss ----------
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45. Amount applied to Unpaid Class A-2 Principal
Liquidation Loss ----------
46. Remaining Unpaid Class A-2 Principal
Liquidation Loss ----------
47. Class A-2 Principal Balance after giving effect to
Distribution and Class A-2 Principal Liquidation Loss ----------
Class A-3 Certificates
- ----------------------
Class A-3 Interest
48. Amount distributed on account of interest ----------
49. Class A-3 Interest Amount ----------
50. Amount Applied to Class A-3 Interest Amount ----------
51. Class A-3 Interest Shortfall ----------
52. Amount applied to Unpaid Class A-3 Interest Shortfall ----------
53. Remaining Unpaid Class A-3 Interest Shortfall ----------
Class A-3 Principal
54. Amount due on account of principal: ----------
(a) Scheduled principal ----------
(b) Principal Prepayments ----------
(c) Liquidated Contracts ----------
(d) Repurchases ----------
55. Class A-3 Percentage of amount due or Class A-3 Principal
Balance, whichever is less ----------
56. Amount distributed on account of principal ----------
57. Class A-3 Principal Shortfall ----------
58. Unpaid Class A Principal Shortfall
(if any) following prior Distribution Date ----------
59. Amount applied to Unpaid Class A Principal Shortfall
(if any) on current Distribution Date ----------
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60. Remaining Unpaid Class A Principal Shortfall ----------
Class A-3 Liquidation Loss Interest and Principal
61. Class A-3 Liquidation Loss Interest Amount ----------
62. Amount distributed on account of Class A-3 Liquidation
Loss Interest Amount ----------
63. Class A-3 Liquidation Loss Interest Shortfall ----------
64. Amount applied to Unpaid Class A-3 Liquidation Loss
Interest Shortfall ----------
65. Remaining Unpaid Class A-3 Liquidation Loss Interest
Shortfall ----------
66. Class A-3 Principal Liquidation Loss ----------
67. Amount applied to Unpaid Class A-3 Principal
Liquidation Loss ----------
68. Remaining Unpaid Class A-3 Principal
Liquidation Loss ----------
69. Class A-3 Principal Balance after giving effect to
Distribution and Class A-3 Principal Liquidation Loss ----------
Class A-4 Certificates
- ----------------------
Class A-4 Interest
70. Amount distributed on account of interest ----------
71. Class A-4 Interest Amount ----------
72. Amount Applied to Class A-4 Interest Amount ----------
73. Class A-4 Interest Shortfall ----------
74. Amount applied to Unpaid Class A-4 Interest Shortfall ----------
75. Remaining Unpaid Class A-4 Interest Shortfall ----------
Class A-4 Principal
76. Amount due on account of principal: ----------
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(a) Scheduled principal ----------
(b) Principal Prepayments ----------
(c) Liquidated Contracts ----------
(d) Repurchases ----------
77. Class A-4 Percentage of amount due or Class A-4 Principal
Balance, whichever is less ----------
78. Amount distributed on account of principal ----------
79. Class A-4 Principal Shortfall ----------
80. Unpaid Class A Principal Shortfall
(if any) following prior Distribution Date ----------
81. Amount applied to Unpaid Class A Principal Shortfall
(if any) on current Distribution Date ----------
82. Remaining Unpaid Class A Principal Shortfall ----------
Class A-4 Liquidation Loss Interest and Principal
83. Class A-4 Liquidation Loss Interest Amount ----------
84. Amount distributed on account of Class A-4 Liquidation
Loss Interest Amount ----------
85. Class A-4 Liquidation Loss Interest Shortfall ----------
86. Amount applied to Unpaid Class A-4 Liquidation Loss
Interest Shortfall ----------
87. Remaining Unpaid Class A-4 Liquidation Loss Interest
Shortfall ----------
88. Class A-4 Principal Liquidation Loss ----------
89. Amount applied to Unpaid Class A-4 Principal
Liquidation Loss ----------
90. Remaining Unpaid Class A-4 Principal
Liquidation Loss ----------
91. Class A-4 Principal Balance after giving effect to
Distribution and Class A-4 Principal Liquidation Loss ----------
Class B Certificates
- --------------------
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Class B Interest
92. Amount distributed on account of interest ----------
93. Class B Interest Amount ----------
94. Amount Applied to Class B Interest Amount ----------
95. Class B Interest Shortfall ----------
96. Amount applied to Unpaid Class B Interest Shortfall ----------
97. Remaining Unpaid Class B Interest Shortfall ----------
Class B Principal
98. Amount due on account of principal: ----------
(a) Scheduled principal ----------
(b) Principal Prepayments ----------
(c) Liquidated Contracts ----------
(d) Repurchases ----------
99. Class B Percentage of amount due or Class B Principal
Balance, whichever is less ----------
100. Amount distributed on account of principal ----------
101. Class B Principal Shortfall ----------
102. Unpaid Class B Principal Shortfall
(if any) following prior Distribution Date ----------
103. Amount applied to Unpaid Class B Principal Shortfall
(if any) on current Distribution Date ----------
104. Remaining Unpaid Class B Principal Shortfall ----------
Class B Liquidation Loss Interest and Principal
105. Class B Liquidation Loss Interest Amount ----------
106. Amount distributed on account of Class B Liquidation
Loss Interest Amount ----------
107. Class B Liquidation Loss Interest Shortfall ----------
108. Amount applied to Unpaid Class B Liquidation Loss
Interest Shortfall ----------
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109. Remaining Unpaid Class B Liquidation Loss Interest
Shortfall ----------
110. Class B Principal Liquidation Loss ----------
111. Amount applied to Unpaid Class B Principal
Liquidation Loss ----------
112. Remaining Unpaid Class B Principal
Liquidation Loss ----------
113. Class B Principal Balance after giving effect to
Distribution and Class B Principal Liquidation Loss ----------
Class A and Class B Certificates
- --------------------------------
114. Amount deposited in drawn from) Spread Account ----------
115. Balance in Spread Account ----------
116. Balance in Spread Account Interest Subaccount ----------
117. Amount of Guaranty Payment ----------
118. Monthly Servicing and Guaranty Fee ----------
119. Pool Scheduled Principal Balance ----------
120. Pool Factor
(a) Class A-1 ----------
(b) Class A-2 ----------
(c) Class A-3 ----------
(d) Class A-4 ----------
(e) Class B ----------
Aggregate Scheduled Balances of delinquent Contracts as of Determination Date
121. 30 - 59 days
(a) Number ----------
(b) Aggregate Principal Amount ----------
122. 60 days or more
(a) Number ----------
(b) Aggregate Principal Amount ----------
123. Number of Products repossessed (by Product type) ----------
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124. Number of Products repossessed (by Product type)
but remaining in inventory ----------
125. Number of Contracts that became Liquidated Contracts ----------
The amounts set out in lines __ through __ above are expressed as a dollar
amount per Certificate with a 1% Class Percentage Interest or per $1,000
denomination of Certificate.
Please contact _____________________ of First Trust National Association,
___________________ with any questions regarding this Statement or your
Distribution.
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Exhibit 4.2
PLEDGE AGREEMENT
This Pledge Agreement is dated as of January 1, 1996 between Green Tree
RECS Guaranty Corporation (the "Pledgor"), First Bank National Association, as
Collateral Agent (together with its permitted successors hereunder, the
"Collateral Agent"), and First Trust National Association, as Trustee (the
"Trustee") of Green Tree Recreational, Equipment & Consumer Trust 1996-A (the
"Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool of retail
installment sales contracts and promissory notes for the purchase of a variety
of products (the "Contracts") under a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of January 1, 1996 between Green
Tree, as originator of the Trust and servicer, and the Trustee, as trustee. On
the establishment of the Trust in accordance with the terms of the Pooling and
Servicing Agreement, the Trustee will issue to, or upon the order of, Green Tree
certificates (the "Certificates") representing undivided fractional interests in
the Trust. In order to facilitate the sale of the Certificates by Green Tree,
the Pledgor is entering into this Agreement.
Section 1. Definitions. All capitalized terms not otherwise defined
herein shall have the meanings assigned to them in the Pooling and Servicing
Agreement, as existing on the Closing Date. The following terms have the
following meanings:
"Letter of Credit" means any irrevocable letter of credit, or any
replacement Letter of Credit, obtained in accordance with Section 3(h).
"Qualified Bank" means any depository institution whose unsecured long-term
debt (or in the case of the principal bank in a bank holding company system the
unsecured long-term debt of such bank holding company) has been rated in one of
the two highest rating categories by each of Moody's, Standard & Poor's and
Fitch (if rated by Fitch), and whose short-term debt (or in the case of the
principal bank in a bank holding company system the short-term debt of such bank
holding company) is rated in the highest rating category by each of Moody's,
Standard & Poor's and Fitch (if rated by Fitch).
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"Spread Account Eligible Investments" means Eligible Investments held by
the Collateral Agent in the Spread Account: (a) which are held in an account
with an Eligible Institution (which may be the Collateral Agent) in the name of
the Collateral Agent, (b) if such Eligible Investments are securities, which are
(i) certificated securities (as such term is used in Minn. Stat. (S) 336.8-
102(a)(4)), securities deemed to be certificated securities under applicable
regulations of the United States government, or uncertificated securities issued
by an issuer organized under the laws of the State of New York or the State of
Delaware, (ii) either (A) in the possession of such Eligible Institution, (B) in
the possession of a clearing corporation (as such term is used in Minn. Stat.
(S) 336.8-102(a)(5)) in the State of New York, registered in the name of such
clearing corporation or its nominee, not endorsed for collection or surrender or
any other purpose not involving transfer, not containing any evidence of a right
or interest inconsistent with the Trustee's security interest therein, and held
by such clearing corporation in an account of such Eligible Institution, (C)
held in an account of such Eligible Institution with the Federal Reserve Bank of
New York or the Federal Reserve Bank of Minneapolis, or (D) in the case of
uncertificated securities, issued in the name of such Eligible Institution,
(iii) identified, by book entry or otherwise, as held for the account of the
Collateral Agent on the records of such Eligible Institution, and such Eligible
Institution shall have sent the Collateral Agent a confirmation thereof, and
(iv) identified, by book entry or otherwise, as held for the account of, or
pledged to, the Trustee on the records of the Collateral Agent, and the
Collateral Agent shall have sent the Trustee a confirmation thereof, (c) if such
Eligible Investments are repurchase obligations, which are: (i) held in an
account with an Eligible Institution in the name of the Collateral Agent, (ii)
identified by such Eligible Institution, by book entry or otherwise, as held for
the account of the Collateral Agent, (iii) identified by the Collateral Agent as
held for the account of, or pledged to, the Trustee on the records of the
Collateral Agent, and (iv) related to securities held in accordance with the
requirements of clause (b) above, and (d) with respect to Eligible Investments
other than securities and repurchase agreements, which are held in a manner
acceptable to the Collateral Agent. Subject to the other provisions hereof, the
Collateral Agent shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Collateral Agent or its
agent, together with each document of transfer, if any, necessary to transfer
title to such investment to the Collateral Agent in a manner which complies with
this definition.
Section 2. Representations and Warranties of the Pledgor. The Pledgor
represents and warrants that:
a. Organization and Good Standing. The Pledgor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and has the corporate power to own its assets and to transact the
business
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<PAGE>
in which it is currently engaged. The Pledgor is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the character of the business transacted by it or properties owned or leased by
it requires such qualification and in which the failure so to qualify would have
a material adverse effect on the business, properties, assets, or condition
(financial or other) of the Pledgor.
b. Authorization; Binding Obligations. The Pledgor has the power
and authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under the Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Pledgor enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
c. No Consent Required. The Pledgor is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except that no representation is made as to
the manner of offering of the Certificates (except that the Pledgor has not
offered for sale, or solicited offers to purchase, any Certificate).
d. No Violations. The execution, delivery and performance of this
Agreement by the Pledgor will not violate any provision of any existing law or
regulation or any order or decree of any court or the Articles of Incorporation
or Bylaws of the Pledgor, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Pledgor is a party or by
which the Pledgor may be bound.
e. Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Pledgor threatened, against the Pledgor or any of its
properties or with respect to this Agreement or the Certificates which (i) if
adversely determined, would have a material adverse effect on the transactions
contemplated by this Agreement or (ii) is likely to have a material adverse
effect on the financial condition or business prospects of the Pledgor.
Section 3. Establishment and Pledge of Spread Account.
a. Establishment of Spread Account. On or prior to the Closing
Date, the Pledgor shall establish with the Collateral Agent a segregated trust
account
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<PAGE>
referred to herein as the "Spread Account." The Spread Account is separate from
the Trust and any amount on deposit therein will not constitute a part of the
property of the Trust. For all tax purposes, the Spread Account and all amounts
deposited therein and investments thereof are owned by the Pledgor, and all
assets transferred to the Spread Account are taxable to the Pledgor. The Spread
Account shall be maintained by the Collateral Agent at all times separate and
apart from any other account of the Pledgor or the Trust, at an Eligible
Institution or in an account otherwise acceptable to Fitch, Moody's and Standard
& Poor's. All amounts paid to the Pledgor under Section 8.03(a)(18) of the
Pooling and Servicing Agreement shall be deposited into the Spread Account.
Amounts shall be withdrawn from the Spread Account only in accordance with the
provisions of this Section 3 and Section 8.06 of the Pooling and Servicing
Agreement. No passbook, certificate of deposit or other similar instrument
evidencing the Spread Account shall be issued, and all contracts, receipts and
other papers governing or evidencing the Spread Account or any of the Collateral
shall be delivered to the Collateral Agent. On termination of this Agreement, as
provided in Section 3(f), any amount remaining in the Spread Account shall be
released to the Pledgor.
b. Pledge of Spread Account. The Pledgor hereby pledges, assigns,
hypothecates, transfers and delivers to the Collateral Agent (for the benefit of
the Trustee and the Certificateholders), and hereby grants the Collateral Agent
(for the benefit of the Trustee and the Certificateholders) a security interest
in, all of the Pledgor's right, title, interest and power, free and clear of any
other interest, in, to and with respect to, the Spread Account up to the Spread
Account Required Amount, the amounts deposited therein, the investments thereof
and all proceeds of the liquidation of any investment thereof. Such grant is
made to secure the payment, on each Distribution Date, of any Shortfall on such
Distribution Date, subject to the limit of the amount available in the Spread
Account plus any subsequent deposits into the Spread Account.
The Collateral Agent and the Trustee acknowledge and accept the grant
of the security interest in the Spread Account for the benefit of the
Certificateholders under this Section 3(b) in accordance with the terms hereof.
The Pledgor and the Collateral Agent shall maintain, at all times
during the term of this Agreement, the lien on, or security interest in, the
Spread Account as a valid and perfected security interest of first priority
under the Uniform Commercial Code (or other applicable law) as in effect from
time to time in the state where the Spread Account is located in order to secure
the full and timely performance of the obligations of the Pledgor pursuant to
this Agreement. Amounts properly withdrawn by the Collateral Agent and paid into
the Collection Account pursuant to Section 3(d) or properly withdrawn by the
Collateral Agent and paid to the Pledgor pursuant to Section 3(e) shall be
deemed released from the provisions of
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<PAGE>
this Section 3(b) and the security interest established by this Section 3(b),
and the Pledgor shall in no event be required to refund any such distributed
amount.
c. Investment of Spread Account. The Collateral Agent shall at the
written direction of the Pledgor invest the funds in the Spread Account in
Spread Account Eligible Investments. Funds in the Spread Account shall be
invested in investments that mature on or before the Business Day prior to each
Distribution Date. Upon any such investment, the Collateral Agent shall (i)
make an appropriate notation of the Trustee's security interest in such Spread
Account Eligible Investment by book entry or otherwise and (ii) send the Trustee
a written confirmation of its security interest in such Spread Account Eligible
Investment. All income and gain realized from any such investments as well as
any interest earned on deposits in the Spread Account shall be deposited and
retained in the Spread Account. Losses, if any, realized on amounts in the
Spread Account invested pursuant to this paragraph shall first be credited
against undistributed investment earnings on amounts in the Spread Account
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Spread Account. The Pledgor and the Collateral
Agent shall not be liable for the amount of any loss incurred in respect of any
investment, or lack of investment, of funds held in the Spread Account. All
income or loss on funds held in the Spread Account shall be taxable to the
Pledgor.
d. Payment of Shortfall. If the Servicer informs the Pledgor and
the Trustee of the existence of a Shortfall, the Pledgor, subject to the limit
of the amount available in the Spread Account, shall direct the Collateral Agent
to, and the Collateral Agent shall, transfer the amount of the Shortfall from
the Spread Account to the Collection Account or, if the Pledgor shall not have
given such directions by the Business Day prior to the Distribution Date, the
Trustee shall instruct the Collateral Agent to, and the Collateral Agent shall,
transfer the cash pledged by the Pledgor under this Agreement and deposited in
the Spread Account to the Collection Account and apply it to the payment of the
Shortfall in accordance with Sections 8.03 and 8.06 of the Pooling and Servicing
Agreement.
e. Release of Spread Account Excess. If on any Distribution Date,
the amount in the Spread Account exceeds the Required Spread Account Amount
immediately following the payment to Certificateholders on such Distribution
Date, the Collateral Agent shall withdraw the amount of such excess from the
Spread Account and distribute such amount to the Pledgor.
f. Termination. This Agreement shall terminate (after distribution
of any funds remaining in the Spread Account pursuant to the following sentence)
on the termination of the Pooling and Servicing Agreement in accordance with
Section 12.03 thereof. On the Final Distribution Date, any amount remaining in
the
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<PAGE>
Spread Account, after payment of any amounts into the Collection Account
pursuant to Section 3(d), shall be distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor to
transfer the amount of any Shortfall to the Collection Account shall be
unconditional and irrevocable and shall not terminate upon, or otherwise be
affected by, a Service Transfer pursuant to Article VII of the Pooling and
Servicing Agreement.
h. Letter of Credit and Other Credit Enhancement.
(i) At any time, the Pledgor may obtain the release of all or a
portion of the cash on deposit in the Spread Account, by delivering to the
Collateral Agent (A) a Letter of Credit that satisfies the conditions set
forth in Section 3(h)(iii) or (B) any other form of credit enhancement that
satisfies the conditions set forth in Section 3(h)(iv). Section 3(h)(ii)
shall be operative only after a Letter of Credit that satisfies the
conditions of Section 3(h)(iii) has been delivered to the Collateral Agent.
(ii) If the expiration date of a Letter of Credit is anticipated to
occur before the termination of the Trust pursuant to Section 12.03 of the
Pooling and Servicing Agreement, the Pledgor shall use its best efforts to
obtain a replacement Letter of Credit that satisfies the conditions of
Section 3(h)(iii). If on or before the tenth Business Day prior to the
expiration date of such Letter of Credit, the Pledgor shall not have
delivered to the Collateral Agent a replacement Letter of Credit that
satisfies the conditions set forth in Section 3(h)(iii), the Collateral
Agent shall, prior to 11:00 A.M. Minneapolis, Minnesota time on the fifth
Business Day prior to such expiration date, draw under such Letter of
Credit the amount (the "Final Draw Amount") available thereunder, and
deposit the Final Draw Amount in the Spread Account. If, on or before such
fifth Business Day, the Pledgor shall obtain on behalf of and deliver to
the Collateral Agent a replacement Letter of Credit that satisfies the
conditions of Section 3(h)(iii), then the Collateral Agent shall replace
the related Letter of Credit with such replacement Letter of Credit.
The Collateral Agent shall, when required pursuant to the terms of a
Letter of Credit, deliver the existing Letter of Credit to the related
issuing bank upon extension of the expiration date thereof in accordance
with its terms in exchange for the extended or amended Letter of Credit.
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<PAGE>
(iii) Any initial or replacement Letter of Credit delivered to the
Collateral Agent shall satisfy the following conditions:
(A) it shall be issued by a Qualified Bank or confirmed by a
Qualified Bank;
(B) it and the related agreement that provides for the issuance
of such Letter of Credit shall be in such form and substance as is
acceptable to the Collateral Agent, and shall require the Qualified
Bank to give the Collateral Agent prompt notice if at any time it
shall fail to be a Qualified Bank;
(C) it shall be accompanied by an Opinion of Counsel or Opinions
of Counsel in form and substance satisfactory to the Collateral Agent
as to enforceability of the Letter of Credit; and
(D) Moody's, Standard & Poor's and Fitch shall each have advised
the Trustee and the Collateral Agent in writing that it will not
reduce, withdraw or qualify its then-current ratings of the Class A
Certificates as a result of the delivery and acceptance of such Letter
of Credit.
The cost of obtaining and maintaining any initial or replacement
Letter of Credit shall be borne solely by the Pledgor and Green Tree. If
the Collateral Agent receives notice that the institution issuing such
Letter of Credit is no longer a Qualified Bank, the Collateral Agent shall
immediately notify the Pledgor. On the day of receipt of such notice (or
the next Business Day thereafter, if such day is not a Business Day), the
Collateral Agent shall draw under the Letter of Credit the full amount
available under such Letter of Credit and deposit the proceeds thereof in
immediately available funds in the Spread Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Moody's, Standard & Poor's and
Fitch shall each have advised the Trustee and the Collateral Agent in
writing that it will not reduce, withdraw or qualify its then-current
ratings of the Class A Certificates as a result of the delivery and
acceptance of such alternate form of credit enhancement.
The cost of obtaining and maintaining any such alternate form of
credit enhancement shall be borne solely by the Pledgor and Green Tree.
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<PAGE>
(v) At any time when the Collateral Agent holds any Letter of Credit
or other form of credit enhancement, (x) the amount available to be drawn
under such Letter of Credit or other form of credit enhancement shall be
deemed to be in the Spread Account for purposes of determining whether the
balance thereof equals or exceeds the Required Spread Account Amount, and
(y) if a Shortfall is determined to exist with respect to any Distribution
Date, the Collateral Agent shall draw the lesser of (1) the amount
available to be drawn under the Letter of Credit or other form of credit
enhancement, or (2) the amount, if any, by which the Shortfall exceeds the
amount in the Spread Account in a form other than a Letter of Credit or
other form of credit enhancement, and deposit such amount to the Spread
Account, for transfer to the Collection Account, on the Business Day prior
to such Distribution Date.
Section 4. Appointment of Collateral Agent.
a. Subject to the terms and conditions herein, the Trustee hereby
appoints the Collateral Agent and the Collateral Agent hereby accepts such
appointment, as its agent to maintain, and to act on the Trustee's behalf with
respect to the Spread Account.
b. The Collateral Agent shall maintain records that accurately
reflect the funds on deposit in the Spread Account. On each Determination Date,
the Collateral Agent shall advise the Servicer as to the amount of funds on
deposit in the Spread Account.
Section 5. Covenants of Pledgor. The Pledgor covenants and agrees as
follows:
a. Maintenance of Pledgor Assets. The Pledgor shall not issue any
dividends, redeem any outstanding capital stock, grant any liens on its assets
(other than pursuant to this Agreement or similar agreements) or in any way
deplete corporate assets if, as a result of such issuance, redemption or
depletion, the total net assets of the Pledgor are less than the sum of the
Required Spread Account Amount and the Pledgor's obligations under other
agreements similar to this Agreement, plus any income taxes then payable by the
Pledgor and the Pledgor's foreseeable administrative and operating expenses for
the next year.
b. Limitation of Certain Actions. The Pledgor will not, without the
unanimous agreement of the Board of Directors and the written consent of the
Collateral Agent and the Trustee, take any of the following actions:
(i) engage in any business other than that of providing partial
guarantees on, or pledging assets to secure, pools of contracts serviced by
Green Tree, pledge assets for the benefit of any other Person (except to
secure
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<PAGE>
pools of contracts serviced by Green Tree), make any loans or advances to
any Person, guarantee or become obligated for the debts of any other Person
(except for providing partial guaranties of pools of contracts serviced by
Green Tree), or hold out its credit as being available to satisfy the
obligations of others;
(ii) voluntarily dissolve or liquidate;
(iii) commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or consent to
the entry of any order for relief in an involuntary case under any such
law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian or sequestrator (or other similar
official) of the Pledgor or for any substantial part of its property, or
make any general assignment for the benefit of its creditors, or admit in
writing its inability to pay its debts as they become due, or take any
corporate action in furtherance of the foregoing;
(iv) consolidate or merge with or into any other Person;
(v) delete or amend Articles 3, 5, 6 or 8 of its Articles of
Incorporation;
(vi) commingle assets with those of any other Person; or
(vii) acquire obligations or securities of Green Tree or any other
shareholder.
c. Required Actions. The Pledgor shall (unless excused by unanimous
agreement of the Board of Directors and the written consent of the Collateral
Agent and the Trustee) take the following actions:
(i) maintain books, records, accounts and financial statements
separate from any other Person;
(ii) conduct its own business in its own name, pay its own liabilities
out of its own funds (including paying the salaries of its own employees)
and maintain adequate capital in light of its contemplated business
operations;
(iii) observe all corporate formalities and maintain an arm's-length
relationship with its Affiliates (including allocating fairly and
reasonably any overhead for shared office space, using separate stationery,
invoices and checks and maintaining a sufficient number of employees in
light of its contemplated business operations); and
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<PAGE>
(iv) hold itself out as a separate entity and correct any known
misunderstanding regarding its separate identity.
d. Other Transactions. If the Pledgor provides any partial guaranty
or other form of credit enhancement with respect to any pool of contracts other
than pursuant to this Agreement, the Pledgor must obtain written confirmation,
from each of Moody's, Standard & Poor's and Fitch that is not providing a rating
with respect to the securities related to such other pool of contracts, that
providing such other credit enhancement will not cause a reduction or withdrawal
of such Person's ratings of any Class of Certificates.
e. Notices to Rating Agencies. The Pledgor shall provide prompt
written notice to each of Fitch, Moody's and Standard & Poor's of any amendment
to the Pledgor's Articles of Incorporation or this Agreement.
Section 6. Miscellaneous.
a. Merger or Consolidation of the Pledgor. The Pledgor shall keep
in full effect its existence, rights and franchises as a corporation and shall
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement.
Any person into which the Pledgor may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Pledgor shall be a party, or any Person succeeding to all or substantially
all of the business of the Pledgor, shall be the successor of the Pledgor
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
b. Amendment. This Agreement may be amended from time to time by
the Pledgor, the Collateral Agent and the Trustee, with notice to Fitch, Moody's
and Standard & Poor's, without the consent of any of the Certificateholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein, as the case may be, or to add any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel for the Pledgor,
adversely affect in any material respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Pledgor,
the Collateral Agent and the Trustee, with notice to Fitch, Moody's and Standard
& Poor's and with the consent of Holders of Certificates evidencing
10
<PAGE>
Certificate Percentage Interests aggregating 51% or more, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall (a) reduce
in any manner the amount of, or delay the timing of, payments required to be
made by the Pledgor under this Agreement, or (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all Certificates then outstanding.
c. Notices. All communications and notices pursuant hereto to the
Pledgor, the Collateral Agent and the Trustee shall be in writing and delivered
or mailed to it at the appropriate following address:
If to the Pledgor:
Green Tree RECS Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
First Bank National Association
c/o First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
First Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention:
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
11
<PAGE>
All communications and notices pursuant hereto to a Certificateholder
shall be in writing and delivered or mailed at the address shown in the
Certificate Register.
d. Merger and Integration. Except as specifically stated otherwise
herein, this Agreement, together with the Pooling and Servicing Agreement, sets
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement together with the Pooling and Servicing Agreement. This Agreement may
not be modified, amended, waived or supplemented except as provided herein.
e. Benefit of the Agreement. The Agreement shall be binding upon
the parties hereto and their permitted successors and shall be for the direct
benefit of each present and future Certificateholder without any further action
on the part of any such Certificateholder.
f. Headings. The headings herein are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.
g. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Minnesota.
h. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 26th day
of January, 1996.
FIRST TRUST NATIONAL
ASSOCIATION, as Trustee
By: /s/ Kathi Mohammadzadah
---------------------------
Name: Kathi Mohammadzadah
---------------------------
Title: Trust Officer
---------------------------
GREEN TREE RECS GUARANTY
CORPORATION, as Pledgor
By: /s/ John W. Brink
------------------------------
Name: John W. Brink
----------------------------
Title: Vice President and Treasurer
----------------------------
FIRST BANK NATIONAL
ASSOCIATION, as Collateral Agent
By: /s/ Kathi Mohammadzadah
---------------------------
Name: Kathi Mohammadzadah
---------------------------
Title: Trust Officer
---------------------------
13
<PAGE>
Exhibit 8.1
[LETTERHEAD OF DORSEY & WHITNEY P.L.L.P.]
First Trust National Association Moody's Investors Service, Inc.
180 East Fifth Street 99 Church Street
St. Paul, Minnesota 55101 New York, New York 10004
Lehman Brothers Inc. Standard & Poor's Ratings Services
Three World Financial Center 25 Broadway
New York, New York 10285 New York, New York 10004
Morgan Stanley & Co. Incorporated Fitch Investors Service, L.P.
1585 Broadway One State Street Plaza
New York, New York 10036 New York, New York 10004
Re: Green Tree Financial Corporation
Green Tree Recreational, Equipment & Consumer Trust 1996-A
Ladies and Gentlemen:
We have acted as counsel for Green Tree Financial Corporation, a
Delaware corporation ("Green Tree"), in connection with the establishment by
Green Tree of Green Tree Recreational, Equipment & Consumer Trust 1996-A (the
"Trust"), pursuant to a Pooling and Servicing Agreement dated as of January 1,
1996 (the "Pooling and Servicing Agreement"), between Green Tree and First Trust
National Association, as Trustee (the "Trustee"). Pursuant to the terms of the
Pooling and Servicing Agreement, Green Tree will transfer a pool of retail
installment sales contracts and promissory notes, having an aggregate unpaid
principal balance as of February 1, 1996 of $431,146,642.43 (the "Contracts"),
to the Trust. The certificates evidencing interests in the Trust are also
described in a Registration Statement on Form S-3 (File No 33-63575) (the
"Registration Statement"), and in the Prospectus dated January 19, 1996 (the
"Base Prospectus"), and Prospectus Supplement dated January 19, 1996 (the
"Prospectus Supplement") (the Base Prospectus and Prospectus Supplement are
referred to collectively as the "Prospectus"). Pursuant to the terms of the
Pooling and Servicing Agreement, Green Tree will transfer the Contracts to the
Trustee, and Green Tree will act as Servicer of the Contracts. This opinion is
being delivered pursuant to Section 2.02(c) of the Pooling and Servicing
Agreement and Section 4(b)(1) of the Underwriting Agreement relating to the
Certificates dated January 19, 1996 between Green Tree
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 2
and each of Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated (together
with the Terms Agreement dated January 19, 1996, the "Underwriting Agreement").
Pursuant to a Pledge Agreement, dated as of January 1, 1996 (the "Pledge
Agreement"), among Green Tree RECS Guaranty Corporation ("RGC"), First Bank
National Association, as Collateral Agent (the "Collateral Agent') and the
Trustee, RGC will pledge the Spread Account and all funds therein to the
Collateral Agent on behalf of the Trustee. The capitalized terms used herein and
not defined herein have the meanings set forth in the Pooling and Servicing
Agreement and the Underwriting Agreement.
We have examined such documents and reviewed such questions of law as
we have considered necessary and appropriate for the purposes of this opinion.
In particular, we have examined (i) a search report dated January 24, 1996 from
Heartland Corporate Services, LLC regarding financing statements on file with
the Secretary of State of Minnesota in which Green Tree is named as debtor as of
January 23, 1996 (the "Green Tree UCC Report"), (ii) a search report dated
January 25, 1996 from Heartland Corporate Services LLC regarding financing
statements on file with the Secretary of State of Minnesota in which RGC is
named as debtor as of January 24, 1996 (the "RGC UCC Report" and, together with
the Green Tree UCC Report, the "UCC Reports"), and (iii) acknowledgement copies
of UCC-1 financing statements filed with the Secretary of State of Minnesota
against Green Tree (the "Green Tree Financing Statement") and RGC (the "RGC
Financing Statement").
In rendering our opinions set forth below, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures and the conformity to authentic originals of all documents
submitted to us as copies. We have also assumed the legal capacity for all
purposes relevant hereto of all natural persons and, with respect to all parties
to agreements or instruments relevant hereto other than Green Tree or RGC, that
such parties had the requisite power and authority (corporate or otherwise) to
execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinion, we have relied
upon the representations made in the
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 3
Underwriting Agreement, the Pooling and Servicing Agreement or the Pledge
Agreement, and upon certificates of officers of Green Tree and of public
officials.
Our opinions expressed below as to certain factual matters are
qualified as being limited "to our knowledge" or by other words to the same or
similar effect. Such words, as used herein, mean the information known to the
attorneys in the Firm who are currently responsible for such matters with
respect to Green Tree. In rendering such opinions, we have conducted no review
of documents in our files relating to any other matters in which this Firm has
represented Green Tree. No inference as to our knowledge with respect to such
matters should be drawn from the fact of our representation of Green Tree.
Based on the foregoing, we are of the opinion that:
1. Green Tree is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, with corporate
power to execute, deliver and perform its obligations under the Underwriting
Agreement and the Pooling and Servicing Agreement (including the Limited
Guaranty contained therein).
2. The Underwriting Agreement, the Pooling and Servicing Agreement
(including the Limited Guaranty contained therein) and the Registration
Statement have been duly authorized by all requisite corporate action, executed
and delivered by Green Tree, and constitute the valid and binding obligations of
Green Tree enforceable in accordance with their terms.
3. No filing or registration with or consent, approval,
authorization or order of any Minnesota or federal court or governmental agency
or body is required to be made or obtained by Green Tree for the consummation of
the transactions contemplated by the Pooling and Servicing Agreement, except
such as have been made or as may be required under federal or state securities
laws in connection with the distribution of the Certificates.
4. Neither the transfer of the Contracts to the Trust and the
issuance and sale of the Certificates, nor the consummation of any of the
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 4
transactions contemplated by the Underwriting Agreement and the Pooling and
Servicing Agreement (including the Limited Guaranty contained therein) will
conflict with, result in a breach of, or constitute a default under the
Certificate of Incorporation or Bylaws of Green Tree or the terms of any
indenture or other agreement or instrument known to us to which Green Tree is a
party or bound, or any order or regulation known to us to be applicable to Green
Tree of any state or federal court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over Green Tree.
5. The Certificates have been duly authorized and, when executed as
specified in the Pooling and Servicing Agreement and delivered and paid for
pursuant to the Underwriting Agreement, will be duly issued and entitled to the
benefits of the Pooling and Servicing Agreement.
6. The Registration Statement is effective under the 1933 Act and no
stop order suspending the effectiveness of the Registration Statement has been
issued under the 1933 Act nor, to the best of our knowledge, have proceedings
therefor been initiated or threatened by the Commission.
7. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
8. The conditions to the use by Green Tree of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the Registration
Statement and the Prospectus. To the best of our knowledge, there are no
contracts or documents of Green Tree which are required to be filed as exhibits
to the Registration Statement pursuant to the 1933 Act or the Regulations
thereunder which have not been so filed or incorporated by reference.
9. The statements in the Prospectus Supplement under the headings
"Summary of the Terms of the Certificates--Tax Status" and "Certain Federal
Income Tax Consequences," and the statements in the Base Prospectus under the
heading "Certain Federal Income Tax Consequences," to the extent that they
constitute statements of law or legal conclusions as to the likely outcome of
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 5
material issues under the federal income tax laws, have been prepared or
reviewed by us and are correct in all material respects.
10. For federal income tax purposes, the Trust will not be classified
as an association taxable as a corporation, but rather will be classified as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended (the "Code"). Under Section 671 of the Code, each
holder of a Certificate will be treated as the owner of a pro rata undivided
interest in the ordinary income and corpus portions of the Trust and will be
considered the equitable owner of a pro rata undivided interest in each of the
Contracts included in the Trust.
11. For Minnesota income, franchise and excise tax purposes, the
Trust will not be classified as an association taxable as a corporation. For
Certificateholders who are not residents of, or otherwise subject to tax in,
Minnesota, ownership of a Certificate will not be a factor in determining
whether such Certificateholder is subject to Minnesota income, franchise or
excise taxes.
12. The Trust created by the Pooling and Servicing Agreement is not,
and will not as a result of the offer and sale of the Certificates as
contemplated in the Prospectus and in the Underwriting Agreement become, an
"investment company" or "under the control of an investment company" as such
terms are defined in the 1940 Act.
13. The statements in the Base Prospectus and the Prospectus
Supplement under the captions "Description of the Certificates," insofar as such
statements purport to summarize certain terms of the Certificates, the Pooling
and Servicing Agreement and the Pledge Agreement, constitute a fair summary of
such documents.
14. The Registration Statement and the Prospectus (other than the
financial statements and other financial, statistical and numerical information
included therein, as to which we express no opinion) as of their respective
effective or issue dates, complied as to form in all material respects with the
requirements of the 1933 Act and the Regulations thereunder.
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 6
15. We know of no pending or overtly threatened lawsuits or claims
against Green Tree or relating to the transactions contemplated by the
Underwriting Agreement and the Pooling and Servicing Agreement which, if
adversely determined, would have a material adverse effect on the transactions
contemplated by the Underwriting Agreement and the Pooling and Servicing
Agreement.
16. Because the Contracts constitute "chattel paper," as defined in
Section 9-105(1)(b) of the Uniform Commercial Code as in effect in Minnesota
(the "UCC"), the assignment of the Contracts by Green Tree to the Trust pursuant
to the Pooling and Servicing Agreement creates, in favor of the Trustee for the
benefit of the Certificateholders, a valid and perfected first priority security
interest (as such term is defined in Section 1-201(37) of the UCC) in the
Contracts, the related Collateral Security and the proceeds thereof, which
security interest, if characterized as a transfer for security, will secure the
"Secured Obligations" (as defined in Section 2.01(c) of the Pooling and
Servicing Agreement). We have separately rendered our opinion regarding
whether, in the event Green Tree became a debtor under the United States
Bankruptcy Code, the transfer of the Contracts by Green Tree to the Trust would
be characterized as a sale or as a transfer for security. The perfection and
the effect of perfection or non-perfection of the ownership or security
interests in the Contracts created pursuant to the Pooling and Servicing
Agreement will be governed by the laws of the State of Minnesota. The Green
Tree Financing Statement is in appropriate form for filing with the Secretary of
State of Minnesota. With respect to any security interest in a Product that is
perfected solely by the filing of a financing statement pursuant to the relevant
state's Uniform Commercial Code, such security interest will be transferred to
the Trustee as a result the assignment of the Contracts by Green Tree to the
Trust pursuant to the Pooling and Servicing Agreement.
17. While there is no authority directly on point, we are of the
opinion that the payment of interest on accrued but unpaid interest to the
Certificateholders is legally permissible, and would be enforceable, under
Minnesota law.
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 7
18. RGC is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Minnesota, with corporate power to
execute, deliver and perform its obligations under the Pledge Agreement.
19. The Pledge Agreement has been duly authorized by all requisite
corporate action, executed and delivered by RGC, and constitutes the valid and
binding obligation of RGC enforceable in accordance with its terms.
20. The provisions of the Pledge Agreement, if complied with, and the
RGC Financing Statement are effective to create a valid security interest in
favor of the Collateral Agent in the Spread Account. The security interest of
the Collateral Agent in the Spread Account will be perfected and of first
priority (i) with respect to money, upon physical delivery thereof to the
Collateral Agent in accordance with Section 8.03(a)(18) of the Pooling and
Servicing Agreement, and (ii) with respect to any investments therein complying
with the definition of Spread Account Eligible Investments, upon delivery
thereof to the Collateral Agent in accordance with Section 3(c) of the Pledge
Agreement.
21. No filing or registration with or consent, approval,
authorization or order of any Minnesota or federal court or governmental agency
or body is required to be made or obtained by RGC for the consummation of the
transactions contemplated by the Pledge Agreement, except such as have already
been made or as may be required under federal or state securities laws in
connection with the distribution of the Certificates.
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) Our opinions in paragraphs 2, 16, 19 and 20 above are subject, as
to enforceability, to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar law of general application
affecting creditors' or secured creditors' rights.
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 8
(b) Our opinions in paragraphs 2, 16, 19 and 20 above are subject, as
to enforceability, to the effect of general principles of equity, including
(without limitation) concepts of materiality, reasonableness, good faith
and fair dealing, and other similar doctrines affecting the enforceability
of agreements generally (regardless of whether considered in a proceeding
in equity or at law).
(c) Our opinion in paragraph 2 above, insofar as it relates to the
indemnification provisions of the Underwriting Agreement, is subject to the
effect of federal and state securities laws and public policy relating
thereto.
(d) Minnesota Statutes (S) 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota law
unless the corporation has filed a Notice of Business Activities Report and
provides that the use of the courts of the State of Minnesota for all
contracts executed and all causes of action that arose before the end of
any period for which a corporation failed to file a required report is
precluded. Insofar as our opinion may relate to the valid, binding and
enforceable character of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report or, if not exempt, has duly filed, and will continue to duly file,
all Notice of Business Activities Reports.
(e) Although the perfected security interests described in paragraphs
16 and 20 above are not subject to avoidance under Section 544(a) of the
Bankruptcy Code, 11 U.S.C. (S) 544(a), bankruptcy law may adversely affect
perfected security interests in a number of other ways, pertaining to all
security interests, including those that have been properly created and
perfected under the UCC.
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 9
(f) We express no opinion concerning Green Tree's title to any of the
Contracts.
(g) Our opinions on perfection of the security interests created
pursuant to the Pooling and Servicing Agreement or the Pledge Agreement in
proceeds are subject to the effect of Section 9-306 of the UCC.
(h) With respect to the priority of the ownership or security
interests created pursuant to the Pooling and Servicing Agreement or the
Pledge Agreement, we express no opinion concerning any financing statements
or statements of assignment listing Green Tree as debtor filed on or before
January 23, 1996 with the Secretary of State of Minnesota and not disclosed
in the Green Tree UCC Report, any such financing statements or statements
of assignment filed after January 24, 1996 with the Secretary of State of
Minnesota prior to the filing of the Green Tree Financing Statement, any
financing statements or statements of assignment listing RGC as debtor
filed on or before January 25, 1996 with the Secretary of State of
Minnesota and not disclosed in the RGC UCC Report, or any such financing
statements or statements of assignment filed after January 25, 1996 with
the Secretary of State of Minnesota prior to the filing of the RGC
Financing Statement.
(i) Our opinion in paragraphs 16 and 20 above with respect to the
priority of the ownership or security interest created pursuant to the
Pooling and Servicing Agreement or the Pledge Agreement is subject to the
effect of Section 9-308 of the UCC.
(j) We express no opinion with respect to the priority of any
ownership or security interest against any liens or interests arising or
perfected under any law other than the UCC, including, without limitation,
any claim or lien in favor of the United States or any agency or
instrumentality thereof (including, without limitation, federal tax liens
and liens under Title IV of the Employee Retirement Income
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 10
Security Act of 1974), or any liens or other interests which arise by
operation of law and do not require any filing with the Secretary of State
of Minnesota in the UCC records in order to take priority over perfected
security interests.
(k) We have assumed, without independent investigation, that none of
the Contracts or related Collateral Security is or will be subject to a
third party security interest which could be perfected without filing,
pursuant to Sections 9-304 and 9-305 of the UCC, and that no security
interest of third parties in the Contracts has priority by reason of
Section 9-312(3) or 9-312(4) of the UCC.
(l) We express no opinion as to the perfection of any security
interest purported to be granted in that portion of the Collateral Security
that constitutes an interest or claim in or under any policy of insurance
(except as provided in Section 9-306 of the UCC with respect to proceeds),
a right represented by a judgment, a right of setoff, a claim arising out
of tort, or an interest in any deposit account (except as provided in
Section 9-306 of the UCC with respect to proceeds).
(m) We express no opinion herein whether the transfer of Contracts and
the related Collateral Security from Green Tree to the Trust pursuant to
the Pooling and Agreement would ultimately be characterized as a sale or as
the grant of a security interest to secure borrowings. We have separately
rendered our opinion regarding whether, in the event Green Tree became a
debtor under the United States Bankruptcy Code, the transfer of the
Contracts by Green Tree to the Trust would be characterized as a sale or as
a transfer for security. If such transfer were characterized as the grant
of a security interest, (i) the rights of debtors, guarantors and other
secured parties to receive notices under Sections 9-504 and 9-505 of the
UCC may not be waived prior to default, the failure to comply with such
notice may not be waived prior to default, the failure to comply with such
notice requirements may bar or limit the recovery of any deficiency
remaining after the retention or sale of repossessed collateral, and a
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 11
secured party may be required to obtain, after appropriate notice and
hearing, a judgment or decree of a court of competent jurisdiction
permitting the secured party to enforce its rights to take possession and
dispose of any of its collateral; (ii) the rights of debtors, guarantors
and other secured parties to redeem collateral under Section 9-506 of the
UCC may not be waived prior to default; and (iii) the duties to exercise
reasonable care in the custody and preservation of collateral in a secured
party's possession and to deal with and dispose of collateral in a
commercially reasonable manner as required by the UCC or other applicable
law may not be disclaimed by agreement, waived or released prior to a
default.
(n) We have assumed that with respect to Spread Account Eligible
Investments in the possession of a Federal Reserve Bank or a clearing
corporation, or in the possession of or held through a financial
intermediary, the entries on the books of the Federal Reserve Bank,
clearing corporation and/or financial intermediary are complete and
accurate in all respects and that such Spread Account Eligible Investments
are free and clear of any claim in favor of any other person claiming
through such Federal Reserve Bank, clearing corporation or financial
intermediary. In addition, we have assumed that (i) all deposits in the
Spread Account are cash or Spread Account Eligible Investments as required
under Section 3(c) of the Pledge Agreement, and (ii) at the time of each
delivery of Spread Account Eligible Investments, the Collateral Agent is a
purchaser for value in good faith, and neither the Trustee nor the
Collateral Agent have notice of any adverse claims within the meaning of
Minn. Stat. (S) 336.8-302(1).
(o) With respect to deposits in the Spread Account consisting of
Spread Account Eligible Investments in the possession of a Federal Reserve
Bank or a clearing corporation, or in the possession of or held through a
financial intermediary, we express no opinion concerning the relative
priority of the Collateral Agent's security interest and any security
interest of such Federal Reserve Bank, clearing corporation or
<PAGE>
First Trust National Association
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated
Moody's Investors Service, Inc.
Standard & Poor's Ratings Services
Fitch Investors Service, L.P.
January 26, 1996
Page 12
financial intermediary for the performance of the obligations of the
participant institution to such Federal Reserve Bank, clearing corporation
or financial intermediary.
The opinions expressed herein are limited to the Delaware General
Corporation Law, the laws of the State of Minnesota and the federal laws of the
United States of America. The foregoing opinions are being furnished to you
solely for your benefit and may not be relied upon by, nor may copies be
delivered to, any other person without our prior written consent.
Dated: January 26, 1996
Very truly yours,
/s/Dorsey & Whitney P.L.L.P.
CFS
