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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------
AMENDMENT NO. 1
TO
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): March 31, 1998
GREEN TREE FINANCIAL CORPORATION
as originator of Green Tree Recreational,
Equipment & Consumer Trust 1998-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 March 31, 1998, the Registrant sold approximately $500,000,000
of Class A and Class B Certificates (the "Certificates") of Green
Tree Recreational, Equipment & Consumer Trust 1998-A, evidencing
beneficial ownership interests in a trust (the "Trust")
consisting primarily of two sub-pools, one of which is comprised
of retail installment sales contracts and promissory notes for
the purchase of a variety of consumer products and equipment, and
the other of which is comprised of closed-end home equity loans
and retail installment sales contracts and promissory notes
financing home improvements.
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 U.S. Bank Trust National
Association, as Trustee, dated as of March 1,
1998, relating to Green Tree Recreational,
Equipment & Consumer Trust 1998-A.
4.2 Reserve Account Pledge Agreement/Sub-Pool C
between Green Tree RECS II Guaranty
Corporation, as Pledgor, U.S. Bank National
Association, as Collateral Agent and U.S. Bank
Trust National Association, as Trustee, dated
as of March 1, 1998, relating to Sub-Pool C of
Green Tree Recreational, Equipment & Consumer
Trust 1998-A.
4.3 Reserve Account Pledge Agreement/Sub-Pool H
between Green Tree RECS II Guaranty
Corporation, as Pledgor, U.S. Bank National
Association, as Collateral Agent and U.S. Bank
Trust National Association, as Trustee, dated
as of March 1, 1998, relating to Sub-Pool H of
Green Tree Recreational, Equipment & Consumer
Trust 1998-A.
4.4 Spread Account Pledge Agreement/Sub-Pool C
between Green Tree RECS II Guaranty
Corporation, as Pledgor, U.S. Bank National
Association, as Collateral Agent and U.S. Bank
Trust National Association, as Trustee, dated
as of March 1, 1998, relating to Sub-Pool C of
Green Tree Recreational, Equipment & Consumer
Trust 1998-A.
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4.5 Spread Account Pledge Agreement/Sub-Pool H
between Green Tree RECS II Guaranty
Corporation, as Pledgor, U.S. Bank National
Association, as Collateral Agent and U.S. Bank
Trust National Association, as Trustee, dated
as of March 1, 1998, relating to Sub-Pool H of
Green Tree Recreational, Equipment & Consumer
Trust 1998-A.
5.1 Opinion of Dorsey & Whitney LLP with
respect to legality.
8.1 Opinion and Consent of Dorsey & Whitney
LLP 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: May 7, 1998 GREEN TREE FINANCIAL CORPORATION
as originator of Green Tree Recreational,
Equipment & Consumer Trust 1998-A
By: /s/ Scott T. Young
--------------------------------------
Scott T. Young
Senior Vice President and Comptroller
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Green Tree Recreational, Equipment & Consumer Trust 1998-A
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
and
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
Dated as of March 1, 1998
================================================================================
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TABLE OF CONTENTS
ARTICLE I
Definitions
-----------
Section 1.01. General............................................... 1-1
Section 1.02. Specific Terms........................................ 1-1
ARTICLE II
Establishment of Trust; Transfer of Contracts
---------------------------------------------
Section 2.01. Closing............................................... 2-1
Section 2.02. Conditions to the Closing............................. 2-3
Section 2.03. Acceptance by Trustee................................. 2-5
Section 2.04. Grantor Trust Provisions.............................. 2-5
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........................................ 3-7
Section 3.05. Repurchase of Contracts for Breach of Representations
and Warranties........................................ 3-7
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................................ 4-3
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........................................... 5-5
Section 5.07. Satisfaction of Contracts............................. 5-7
Section 5.08. Costs and Expenses.................................... 5-7
Section 5.09. Maintenance of Insurance.............................. 5-8
Section 5.10. Repossession.......................................... 5-9
Section 5.11. Commingling of Funds.................................. 5-9
Section 5.12. Retitling; Security Interests......................... 5-10
Section 5.13. Servicer Advances..................................... 5-10
Section 5.14. Maintenance of Security Interests in Products......... 5-11
Section 5.15. Covenants of Servicer 5-11
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...................................... 6-7
ARTICLE VII
Service Transfer
----------------
Section 7.01. Event of Termination.................................. 7-1
Section 7.02. Transfer.............................................. 7-2
Section 7.03. Trustee to Act; Appointment of Successor.............. 7-2
Section 7.04. Notification to Certificateholders.................... 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
Section 7.08. Waiver of Past Defaults............................... 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............. 8-14
Section 8.06. Sub-Pool C Spread Account and Sub-Pool C Reserve
Account and Withdrawals............................... 8-16
Section 8.07. Sub-Pool H Spread Account and Sub-Pool H Reserve
Account and Withdrawals............................... 8-16
Section 8.08. Excess Proceeds Account............................... 8-18
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ARTICLE IX
The Certificates
----------------
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........... 9-5
Section 9.04. Mutilated, Destroyed, Lost or Stolen Certificates..... 9-5
Section 9.05. Persons Deemed Owners................................. 9-5
Section 9.06. Access to List of Certificateholders' Names
and Addresses......................................... 9-5
Section 9.07. Authenticating Agents................................. 9-6
ARTICLE X
Indemnities
-----------
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............................ 11-4
Section 11.05. The Servicer to Pay Trustee's Fees and Expenses....... 11-4
Section 11.06. Eligibility Requirements for Trustee.................. 11-5
Section 11.07. Resignation or Removal of Trustee..................... 11-5
Section 11.08. Successor Trustee..................................... 11-6
Section 11.09. Merger or Consolidation of Trustee.................... 11-7
Section 11.10. Tax Returns........................................... 11-7
Section 11.11. Obligor Claims........................................ 11-7
Section 11.12. Appointment of Co-Trustee or Separate Trustee......... 11-8
Section 11.13. Agents of Trustee..................................... 11-9
Section 11.14. Trustee to Corporate.................................. 11-9
Section 11.15. Certain Matters Relating to FHA Insurance............. 11-10
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............................ 12-4
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Section 12.05. Calculations.......................................... 12-5
Section 12.06. Assignment or Delegation by Company................... 12-5
Section 12.07. Amendment............................................. 12-6
Section 12.08. Notices............................................... 12-7
Section 12.09. Merger and Integration................................ 12-8
Section 12.10. Headings.............................................. 12-9
Section 12.11. Governing Law......................................... 12-9
Testimonium........................................... 12-9
Exhibit A-1. Form of Class A-C Certificate......................... A-1
Exhibit A-2. Form of Class B-C Certificate......................... A-2
Exhibit B-1. Form of Class A-H Certificate......................... B-1
Exhibit B-2. Form of Class B-H Certificate......................... B-2
Exhibit C-1. Form of Assignment - Sub-Pool C....................... C-1
Exhibit C-2. Form of Assignment - Sub-Pool H....................... C-2
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-1. Form of Monthly Report- Sub-Pool C.................... I-1
Exhibit I-2. Form of Monthly Report- Sub-Pool H.................... I-2
Exhibit J-1. Form of Spread Account Pledge Agreement -Sub-Pool C... J-1
Exhibit J-2. Form of Spread Account Pledge Agreement -Sub-Pool H... J-2
Exhibit K-1. Form of Reserve Account Pledge Agreement-Sub-Pool C... K-1
Exhibit K-2. Form of Reserve Account Pledge Agreement-Sub-Pool H... K-2
Exhibit L-1. Spread Account Deficiency Notice - Sub-Pool C......... L-1
Exhibit L-2. Spread Account Deficiency Notice - Sub-Pool H......... L-2
Exhibit M-1. Reserve Account Deficiency Notice - Sub-Pool C........ M-1
Exhibit M-2. Reserve Account Deficiency Notice - Sub-Pool H........ M-2
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AGREEMENT, dated as of March 1, 1998, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Delaware, as Seller and Servicer (the "Company"), and U.S. Bank 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 and other 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. In the
regular course of its business, the Company also purchases and services retail
installment sales contracts and promissory notes financing home improvements and
closed-end home equity loans, each of which contracts and loans provides for
installment payments by or on behalf of an obligor, and in the case of all of
the home equity loans and certain home improvement contracts includes a mortgage
securing each such loan or contract; 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 this 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, as the same may be
amended or supplemented from time to time.
"Applicants" has the meaning assigned in Section 9.06.
"Authenticating Agent" means any authenticating agent appointed pursuant to
Section 9.07.
"Balloon Loan" means a Home Equity Contract or a Home Improvement
Contract that provides for the payment of the unamortized principal balance of
such Contract in a single payment at the maturity of such Contract that is
greater than the preceding monthly payment.
"Book-Entry Certificate" means any Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday, or
(b) another day on which banking institutions in the city in which a Person is
taking
1-1
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action hereunder are authorized or obligated by law, executive order or
governmental decree to be closed.
"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.
"Certificate Owner" means the person who is the beneficial owner of a Book-
Entry Certificate.
"Certificate Percentage Interest" means (i) as to any Sub-Pool C
Certificate, the percentage interest of that Certificate relative to all Sub-
Pool C Certificates equal to the percentage (carried to eight decimal places)
obtained by dividing the denomination of such Certificate by the sum of the
Original Sub-Pool C Principal Balances of all Classes of the Sub-Pool C
Certificates and (ii) as to any Sub-Pool H Certificate, the percentage interest
of that Certificate relative to all Sub-Pool H Certificates equal to the
percentage (carried to eight decimal places) obtained by dividing the
denomination of such Certificate by the sum of the Original Sub-Pool H Principal
Balances of all Classes of the Sub-Pool H Certificates.
"Certificate Register" means the register maintained pursuant to Section
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificates" means the Sub-Pool C Certificates and the Sub-Pool H
Certificates.
"Class" means pertaining to each Class of Sub-Pool C Certificates or Sub-
Pool H Certificates, as the case may be.
"Class A-1C Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-1C Certificates pursuant
to clauses (3) through (4) of Section 8.03(a).
"Class A-1C 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 April 15,
1998) at the Class A-1C Pass-Through Rate on the Class A-1C Principal Balance.
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"Class A-1C Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-1C
Certificates on such Distribution Date pursuant to Section 8.03(a)(3)(i) is less
than the Class A-1C Interest Amount for such Distribution Date.
"Class A-1C Pass-Through Rate" means 6.18% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-1C Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-1C Principal Balance by (ii) the
Cutoff Date Sub-Pool C Principal Balance.
"Class A-1C Principal Balance" means, as to any Distribution Date, the
Original Class A-1C Principal Balance less all amounts distributed to Holders of
Class A-1C Certificates on any prior Distribution Date on account of principal
pursuant to Section 8.03(a)(4).
"Class A-1C Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-1C
Certificates on such Distribution Date pursuant to Section 8.03(a)(4)(i) is less
than the Class A-1C Percentage of the Sub-Pool C Formula Principal Distribution
Amount for such Distribution Date.
"Class A-2C Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-2C Certificates pursuant
to clauses (5) through (7) of Section 8.03(a).
"Class A-2C 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 April 15,
1998) at the Class A-2C Pass-Through Rate on the Class A-2C Principal Balance.
"Class A-2C Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-2C
Certificates on such Distribution Date pursuant to Section 8.03(a)(5)(i) is less
than the Class A-2C Interest Amount for such Distribution Date.
"Class A-2C Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-2C Pass-Through
Rate on the Class A-2C Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class A-2C 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-2C Certificates on such Distribution Date pursuant to
Section 8.03(a)(7)(i) is less than the Class A-2C Liquidation Loss Interest
Amount for such Distribution Date.
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"Class A-2C Pass-Through Rate" means 6.39% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-2C Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-2C Principal Balance by (ii) the
Cutoff Date Sub-Pool C Principal Balance.
"Class A-2C Principal Balance" means, as to any Distribution Date, the
Original Class A-2C Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-2C Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(6); and (ii) the Class A-2C
Principal Liquidation Loss, if any, determined as of preceding Distribution
Date.
"Class A-2C Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool C Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2C Principal
Liquidation Loss, Class A-3C Principal Liquidation Loss, Class
A-4C Principal Liquidation Loss or Class B-C Principal
Liquidation Loss for such Distribution Date), minus (ii) the
aggregate amount distributed in respect of principal on the
Sub-Pool C Certificates on that Distribution Date, minus (iii)
the amount of any Class A-3C Principal Liquidation Loss, Class
A-4C Principal Liquidation Loss and Class B-C Principal
Liquidation Loss determined as of that Distribution Date, exceeds
(y) the Sub-Pool C Scheduled Principal Balance as of that
Distribution Date; or
(ii) the Class A-2C Principal Balance as of that Distribution Date
(after giving effect to distributions in respect of principal on
the Class A- 2C Certificates on that Distribution Date).
"Class A-2C Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-2C
Certificates on such Distribution Date pursuant to Section 8.03(a)(6)(i) is less
than the Class A-2C Percentage of the Sub-Pool C Formula Principal Distribution
Amount for such Distribution Date.
"Class A-2C Spread Subaccount" means the subaccount within the Sub-Pool C
Spread Account so named and described in Section 8.06(a).
"Class A-2C Subaccount Required Amount" means, as of any date of
determination, the lesser of: (i) $519,333; or (ii) 0.14% of the Sub-Pool C
Scheduled Principal Balance as of such date of determination.
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"Class A-3C Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-3C Certificates pursuant
to clauses (9) through (11) of Section 8.03(a).
"Class A-3C 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 April 15,
1998) at the Class A-3C Pass-Through Rate on the Class A-3C Principal Balance.
"Class A-3C Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-3C
Certificates on such Distribution Date pursuant to Section 8.03(a)(9)(i) is less
than the Class A-3C Interest Amount for such Distribution Date.
"Class A-3C Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-3C Pass-Through
Rate on the Class A-3C Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class A-3C 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-3C Certificates on such Distribution Date pursuant to
Section 8.03(a)(11)(i) is less than the Class A-3C Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-3C Pass-Through Rate" means 6.59% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-3C Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-3C Principal Balance by (ii) the
Cutoff Date Sub-Pool C Principal Balance.
"Class A-3C Principal Balance" means, as to any Distribution Date, the
Original Class A-3C Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-3C Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(10); and (ii) the Class A-3C
Principal Liquidation Loss, if any, determined as of the immediately preceding
Distribution Date.
"Class A-3C Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool C Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2C Principal
Liquidation Loss, Class A-3C Principal Liquidation Loss, Class
A-4C Principal Liquidation Loss or Class B-H Principal
Liquidation Loss for such Distribution Date), minus (ii) the sum
of the aggregate amount distributed in respect of principal on
the Sub-Pool C Certificates on that Distribution Date, minus
(iii) the amount of any Class A-
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4C Principal Liquidation Loss and Class B-C Principal Liquidation
Loss determined as of that Distribution Date, exceeds (y) the
Sub-Pool C Scheduled Principal Balance as of that Distribution
Date; or
(ii) the Class A-3C Principal Balance as of that Distribution Date
(after giving effect to distributions in respect of principal on
the Class A- 3C Certificates on that Distribution Date).
"Class A-3C Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-3C
Certificates on such Distribution Date pursuant to Section 8.03(a)(10)(i) is
less than the Class A-3C Percentage of the Sub-Pool C Formula Principal
Distribution Amount for such Distribution Date.
"Class A-3C Spread Subaccount" means the subaccount within the Sub-Pool C
Spread Account so named and described in Section 8.06(a).
"Class A-3C Subaccount Required Amount" means, as of any date of
determination, the lesser of: (i) $222,571; or (ii) 0.06% of the Sub-Pool C
Scheduled Principal Balance as of such date of determination.
"Class A-4C Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-4C Certificates pursuant
to clauses (13) through (15) of Section 8.03(a).
"Class A-4C 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 April 15,
1998) at the Class A-4C Pass-Through Rate on the Class A-4C Principal Balance.
"Class A-4C Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-4C
Certificates on such Distribution Date pursuant to Section 8.03(a)(13)(i) is
less than the Class A-4C Interest Amount for such Distribution Date.
"Class A-4C Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-4C Pass-Through
Rate on the Class A-4C Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class A-4C 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-4C Certificates on such Distribution Date pursuant to
Section 8.03(a)(15)(i) is less than the Class A-4C Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-4C Pass-Through Rate" means 7.02% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
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<PAGE>
"Class A-4C Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-4C Principal Balance by (ii) the
Cutoff Date Sub-Pool C Principal Balance.
"Class A-4C Principal Balance" means, as to any Distribution Date, the
Original Class A-4C Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-4C Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(14); and (ii) the Class A-4C
Principal Liquidation Loss, if any, determined as of the immediately preceding
Distribution Date.
"Class A-4C Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool C Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2C Principal
Liquidation Loss, Class A-3C Principal Liquidation Loss, Class
A-4C Principal Liquidation Loss or Class B-C Principal
Liquidation Loss for such Distribution Date), minus (ii) the
aggregate amount distributed in respect of principal on the
Sub-Pool C Certificates on that Distribution Date, minus (iii)
the amount of any Class B-C Principal Liquidation Loss determined
as of that Distribution Date, exceeds (y) the Sub-Pool C
Scheduled Principal Balance as of that Distribution Date; or
(ii) the Class A-4C Principal Balance as of that Distribution Date
(after giving effect to distributions in respect of principal on
the Class A- 4C Certificates on that Distribution Date).
"Class A-4C Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-4C
Certificates on such Distribution Date pursuant to Section 8.03(a)(14)(i) is
less than the Class A-4C Percentage of the Sub-Pool C Formula Principal
Distribution Amount for such Distribution Date.
"Class A-4C Spread Subaccount" means the subaccount within the Sub-Pool C
Spread Account so named described in Section 8.06(a).
"Class A-4C Subaccount Required Amount" means, as of any date of
determination, the lesser of: (i) $148,381; or (ii) 0.04% of the Sub-Pool C
Scheduled Principal Balance, as of such date of determination.
"Class B-C Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class B-C Certificates pursuant
to clauses (17) through (19) of Section 8.03(a).
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<PAGE>
"Class B-C Guaranty Payment" means, as of any Distribution Date, an amount
equal to the sum of: (i) any Class B-C 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-C Certificates all amounts described in
clauses (17) through (19) of Section 8.03(a) on such Distribution Date exceeds
(B) the remainder of (x) the sum of the Sub-Pool C Collected Funds as of that
Distribution Date plus any amounts on deposit in the Sub-Pool C Collection
Account pursuant to Sections 8.05, 8.06 or 8.08 minus (y) the amounts to be
distributed from the Sub-Pool C Collection Account on that Distribution Date
pursuant to clauses (1) through (16) of Section 8.03(a); provided that the
aggregate of all amounts distributed in respect of principal shall not exceed
the Original Class B-C Principal Balance.
"Class B-C 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 April 15,
1998) at the Class B-C Pass-Through Rate on the Class B-C Principal Balance.
"Class B-C Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class B-C
Certificates on such Distribution Date pursuant to Section 8.03(a)(17)(i) is
less than the Class B-C Interest Amount for such Distribution Date.
"Class B-C Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class B-C Pass-Through Rate
on the Class B-C Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class B-C 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-4C Certificates on such Distribution Date pursuant to
Section 8.03(a)(19)(i) is less than the Class B-C Liquidation Loss Interest
Amount for such Distribution Date.
"Class B-C Pass-Through Rate" means 7.65% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class B-C Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class B Principal Balance by (ii) the
Cutoff Date Sub-Pool C Principal Balance.
"Class B-C Principal Balance" means, as to any Distribution Date, the
Original Class B-C Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class B-C Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(a)(18); and (ii) the Class B-C
Principal Liquidation Loss determined as of the immediately preceding
Distribution Date (whether or not the amount of such Class B-C Principal
Liquidation Loss was included in any Class B-C Guaranty Payment made by the
Company).
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<PAGE>
"Class B-C Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool C Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2C Principal
Liquidation Loss, Class A-3C Principal Liquidation Loss, Class
A-4C Principal Liquidation Loss or Class B-C Principal
Liquidation Loss for such Distribution Date), minus (ii) the
aggregate amount distributed in respect of principal on the
Sub-Pool C Certificates on that Distribution Date, exceeds (y)
the Sub-Pool C Scheduled Principal Balance as of such
Distribution Date; or
(ii) the Class B-C Principal Balance (after giving effect to
distributions in respect of principal on the Class B-C
Certificates on that Distribution Date).
"Class B-C Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class B-C
Certificates on such Distribution Date pursuant to Section 8.03(a)(18)(i) is
less than the Class B-C Percentage of the Sub-Pool C Formula Principal
Distribution Amount for such Distribution Date.
"Class A-1H Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-1H Certificates pursuant
to clauses (3) through (4) of Section 8.03(d).
"Class A-1H 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 April 15,
1998) at the Class A-1H Pass-Through Rate on the Class A-1H Principal Balance.
"Class A-1H Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-1H
Certificates on such Distribution Date pursuant to Section 8.03(d)(3)(i) is less
than the Class A-1 Interest Amount for such Distribution Date.
"Class A-1H Pass-Through Rate" means 6.71% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-1H Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-1H Principal Balance by (ii) the
Cutoff Date Sub-Pool H Principal Balance.
"Class A-1H Principal Balance" means, as to any Distribution Date, the
Original Class A-1H Principal Balance less all amounts distributed to Holders of
Class A-1H Certificates on any prior Distribution Date on account of principal
pursuant to Section 8.03(d)(4).
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<PAGE>
"Class A-1H Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-1H
Certificates on such Distribution Date pursuant to Section 8.03(d)(4)(i) is less
than the Class A-1H Percentage of the Sub-Pool H Formula Principal Distribution
Amount for such Distribution Date.
"Class A-2H Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-2H Certificates pursuant
to clauses (5) through (7) of Section 8.03(d).
"Class A-2H 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 April 15,
1998) at the Class A-2H Pass-Through Rate on the Class A-2H Principal Balance.
"Class A-2H Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-2H
Certificates on such Distribution Date pursuant to Section 8.03(d)(5)(i) is less
than the Class A-2H Interest Amount for such Distribution Date.
"Class A-2H Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-2H Pass-Through
Rate on the Class A-2H Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class A-2H 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-2H Certificates on such Distribution Date pursuant to
Section 8.03(d)(7)(i) is less than the Class A-2H Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-2H Pass-Through Rate" means 7.07% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-2H Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-2H Principal Balance by (ii) the
Cutoff Date Sub-Pool H Principal Balance.
"Class A-2H Principal Balance" means, as to any Distribution Date, the
Original Class A-2H Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-2H Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(d)(6); and (ii) the Class A-2H
Principal Liquidation Loss determined as of the immediately preceding
Distribution Date.
"Class A-2H Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
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<PAGE>
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool H Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2H Principal
Liquidation Loss, Class A-3H Principal Liquidation Loss, Class
A-4H Principal Liquidation Loss or Class B-H Principal
Liquidation Loss for such Distribution Date), minus (ii) the
aggregate amount distributed in respect of principal on the
Sub-Pool H Certificates on that Distribution Date, minus (iii)
the amount of any Class A-3H Principal Liquidation Loss, Class
A-4H Principal Liquidation Loss and Class B-H Principal
Liquidation Loss determined as of that Distribution Date, exceeds
(y) the Sub-Pool H Scheduled Principal Balance as of that
Distribution Date; or
(ii) the Class A-2H Principal Balance as of that Distribution Date
(after giving effect to distributions in respect of principal on
the Class A- 2H Certificates on that Distribution Date).
"Class A-2H Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-2H
Certificates on such Distribution Date pursuant to Section 8.03(d)(6)(i) is less
than the Class A-2H Percentage of the Sub-Pool H Formula Principal Distribution
Amount for such Distribution Date.
"Class A-2H Spread Subaccount" means the subaccount within the Sub-Pool H
Spread Account so named and described in Section 8.07(a).
"Class A-2H Subaccount Required Amount" means, as of any date of
determination, the lesser of: (i) $632,335; or (ii) 0.49% of the Sub-Pool H
Scheduled Principal Balance as of such date of determination.
"Class A-3H Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-3H Certificates pursuant
to clauses (9) through (11) of Section 8.03(d).
"Class A-3H 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 April 15,
1998) at the Class A-3H Pass-Through Rate on the Class A-3H Principal Balance.
"Class A-3H Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-3H
Certificates on such Distribution Date pursuant to Section 8.03(d)(9)(i) is less
than the Class A-3H Interest Amount for such Distribution Date.
"Class A-3H Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-3H Pass-Through
Rate on the Class A-3H Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
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<PAGE>
"Class A-3H 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-3H Certificates on such Distribution Date pursuant to
Section 8.03(d)(11)(i) is less than the Class A-3H Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-3H Pass-Through Rate" means 8.26% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-3H Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-3H Principal Balance by (ii) the
Cutoff Date Sub-Pool H Principal Balance.
"Class A-3H Principal Balance" means, as to any Distribution Date, the
Original Class A-3H Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-3H Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(d)(10); and (ii) the Class A-3H
Principal Liquidation Loss determined as of the immediately preceding
Distribution Date.
"Class A-3H Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool H Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2H Principal
Liquidation Loss, Class A-3H Principal Liquidation Loss, Class
A-4H Principal Liquidation Loss or Class B-H Principal
Liquidation Loss for such Distribution Date), minus (ii) the
aggregate amount distributed in respect of principal on the
Sub-Pool H Certificates on that Distribution Date, minus (iii)
the amount of any Class A-4H Principal Liquidation Loss and Class
B-H Principal Liquidation Loss determined as of that Distribution
Date, exceeds (y) the Sub-Pool H Scheduled Principal Balance as
of that Distribution Date; or
(ii) the Class A-3H Principal Balance as of that Distribution Date
(after giving effect to distributions in respect of principal on
the Class A- 3H Certificates on that Distribution Date).
"Class A-3H Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-3H
Certificates on such Distribution Date pursuant to Section 8.03(d)(10)(i) is
less than the Class A-3H Percentage of the Sub-Pool H Formula Principal
Distribution Amount for such Distribution Date.
"Class A-3H Spread Subaccount" means the subaccount within the Sub-Pool H
Spread Account so named and described in Section 8.07(a).
1-12
<PAGE>
"Class A-3H Subaccount Required Amount" means, as of any date of
determination, the lesser of: (i) $348,430; or (ii) 0.27% of the Sub-Pool H
Scheduled Principal Balance as of such date of determination.
"Class A-4H Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class A-4H Certificates pursuant
to clauses (13) through (15) of Section 8.03(d).
"Class A-4H 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 April 15,
1998) at the Class A-4H Pass-Through Rate on the Class A-4H Principal Balance.
"Class A-4H Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class A-4H
Certificates on such Distribution Date pursuant to Section 8.03(d)(13)(i) is
less than the Class A-4H Interest Amount for such Distribution Date.
"Class A-4H Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class A-4H Pass-Through
Rate on the Class A-4H Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class A-4H 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-4H Certificates on such Distribution Date pursuant to
Section 8.03(d)(15)(i) is less than the Class A-4H Liquidation Loss Interest
Amount for such Distribution Date.
"Class A-4H Pass-Through Rate" means 8.26% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class A-4H Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class A-4H Principal Balance by (ii) the
Cutoff Date Sub-Pool H Principal Balance.
"Class A-4H Principal Balance" means, as to any Distribution Date, the
Original Class A-4H Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-4H Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(d)(14); and (ii) the Class A-4H
Principal Liquidation Loss determined as of the immediately preceding
Distribution Date.
"Class A-4H Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool H Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2H Principal
Liquidation Loss, Class A-3H Principal Liquidation Loss, Class
A-4H Principal
1-13
<PAGE>
Liquidation Loss or Class B-H Principal Liquidation Loss for such
Distribution Date), minus (ii) the aggregate amount distributed
in respect of principal on the Sub-Pool H Certificates on that
Distribution Date, minus (iii) the amount of any Class B-H
Principal Liquidation Loss determined as of that Distribution
Date, exceeds (y) the Sub-Pool H Scheduled Principal Balance as
of that Distribution Date; or
(ii) the Class A-4H Principal Balance as of that Distribution Date
(after giving effect to distributions in respect of principal on
the Class A- 4H Certificates on that Distribution Date).
"Class A-4H Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-4H
Certificates on such Distribution Date pursuant to Section 8.03(d)(14)(i) is
less than the Class A-4H Percentage of the Sub-Pool H Formula Principal
Distribution Amount for such Distribution Date.
"Class A-4H Spread Subaccount" means the subaccount within the Sub-Pool H
Spread Account so named described in Section 8.07(a).
"Class A-4H Subaccount Required Amount" means, as of any date of
determination, the lesser of: (i) $322,620; or (ii) 0.25% of the Sub-Pool H
Scheduled Principal Balance, as of such date of determination.
"Class B-H Distribution Amount" means, as to any Distribution Date, the
aggregate amount distributed to Holders of the Class B-H Certificates pursuant
to clauses (17) through (19) of Section 8.03(d).
"Class B-H Guaranty Payment" means, as of any Distribution Date, an amount
equal to the sum of: (i) any Class B-H 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-H Certificates all amounts described in
clauses (17) through (19) of Section 8.03(d) on such Distribution Date exceeds
(B) the remainder of (x) the sum of the Sub-Pool H Collected Funds as of that
Distribution Date plus any amounts on deposit in the Sub-Pool H Collection
Account pursuant to Sections 8.05 or 8.07 minus (y) the amounts to be
distributed from the Sub-Pool H Collection Account on that Distribution Date
pursuant to clauses (1) through (16) of Section 8.03(d); provided that the
aggregate of all amounts distributed in respect of principal shall not exceed
the Original Class B-H Principal Balance.
"Class B-H 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 April 15,
1998) at the Class B-H Pass-Through Rate on the Class B-H Principal Balance.
"Class B-H Interest Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of the Class B-H
Certificates on
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<PAGE>
such Distribution Date pursuant to Section 8.03(d)(17)(i) is less than the Class
B-H Interest Amount for such Distribution Date.
"Class B-H Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to one month's interest at the Class B-H Pass-Through Rate
on the Class B-H Principal Liquidation Loss, if any, determined as of the
immediately preceding Distribution Date.
"Class B-H 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-4H Certificates on such Distribution Date pursuant to
Section 8.03(d)(19)(i) is less than the Class B-H Liquidation Loss Interest
Amount for such Distribution Date.
"Class B-H Pass-Through Rate" means 8.41% per annum, computed on the basis
of a 360-day year of twelve 30-day months.
"Class B-H Percentage" means the result, expressed as a percentage,
obtained by dividing: (i) the Original Class B-H Principal Balance by (ii) the
Cutoff Date Sub-Pool H Principal Balance.
"Class B-H Principal Balance" means, as to any Distribution Date, the
Original Class B-H Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class B-H Certificates on prior Distribution Dates on
account of principal pursuant to Section 8.03(d)(18); and (ii) the Class B-H
Principal Liquidation Loss determined as of the immediately preceding
Distribution Date (whether or not the amount of such Class B-H Principal
Liquidation Loss was included in any Class B-H Guaranty Payment made by the
Company).
"Class B-H Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(i) the amount, if any, by which (x) the remainder of (i) the
Sub-Pool H Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2H Principal
Liquidation Loss, Class A-3H Principal Liquidation Loss, Class
A-4H Principal Liquidation Loss or Class B-H Principal
Liquidation Loss for such Distribution Date) minus (ii) the
aggregate amount distributed in respect of principal on the
Sub-Pool H Certificates on that Distribution Date, or exceeds (y)
the Sub-Pool H Scheduled Principal Balance as of such
Distribution Date, or
(ii) the Class B-H Principal Balance (after giving effect to
distributions in respect of principal on the Class B-H
Certificate on that Distribution Date).
"Class B-H Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class B-H
Certificates on such Distribution Date pursuant to Section 8.03(d)(18)(i) is
less than the Class B-H
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<PAGE>
Percentage of the Sub-Pool H Formula Principal Distribution Amount for such
Distribution Date.
"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-1C Principal Balance in the case of a Class A-1C Certificate, the
Original Class A-2C Principal Balance in the case of a Class A-2C Certificate,
the Original Class A-3C Principal Balance in the case of a Class A-3C
Certificate, the Original Class A-4C Principal Balance in the case of a Class
A-4C Certificate, the Original Class B-C Principal Balance in the case of a
Class B-C Certificate, the Original Class A-1H Principal Balance in the case of
a Class A-1H Certificate, the Original Class A-2H Principal Balance in the case
of a Class A-2H Certificate, the Original Class A-3H Principal Balance in the
case of a Class A-3H Certificate, the Original Class A-4C Principal Balance in
the case of a Class A-4H Certificate or the Original Class B-H Principal Balance
in the case of a Class B-H Certificate). The aggregate Class Percentage
Interests for each Class of Certificates shall equal 100%.
"Closing Date" means March 31, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means U.S. Bank National Association, a national banking
association, and its successors as collateral agent under the Spread Account
Pledge Agreements and the Reserve Account Pledge Agreements.
"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 (in the case of a Consumer Product Contract), (ii) the mortgage, deed of
trust or security deed granted by or on behalf of the related Obligor with
respect thereto, including the lien on the related property (in the case of a
Home Equity Loan or a Secured Home Improvement Contract), (iii) 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, (iv) all rights the Company may have against the originator of the
Contract if other than the Company, (v) all rights under FHA Insurance as such
insurance relates to an FHA-Insured Contract, (vi) all rights under hazard
insurance, if applicable on the property described in the Contract, (vii) all
rights in any title insurance policy with respect to a Home Equity Contract or a
Secured Home Improvement Contract, (viii) 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 (ix) all records in respect of such Contract.
1-16
<PAGE>
"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.
"Consumer Product 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 (if required to perfect a security
interest in the related Product under the UCC as in force in the relevant
state), (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 (and an assignment in recordable form of the related mortgage, deed of
trust or securit deed if a Home Equity Contract or a Secured Home Improvement
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.
"Consumer Product Contracts" means the retail installment sales contracts
and promissory notes described in the List of Consumer Product Contracts and
constituting part of the corpus of Sub-Pool C, which Contracts are to be
assigned and conveyed by the Company to Sub-Pool C, and includes, without
limitation, all related security interests and all rights to receive payments
which are due pursuant thereto on or after the Cutoff Date, but excluding any
rights to receive payments which are due pursuant thereto prior to the Cutoff
Date.
"Contract 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, collectively, the Consumer Product Contracts, the Home
Equity Contracts and the Home Improvement Contracts.
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"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.08.
"Counsel for the Company" means Dorsey & Whitney LLP or other legal counsel
for the Company.
"Custodian" means at any time the Trustee or a financial institution
organized under the laws of the United States or any State, which is subject to
supervision and examination by Federal or State authorities and which is not the
Company or an Affiliate of the Company, that is acting at such time as Custodian
of the Home Equity and Home Improvement Contract Files pursuant to Section 4.01.
"Cutoff Date" means (i) March 1, 1998 with respect to all Home Equity and
Home Improvement Contracts that had a first scheduled payment date prior to
April 1, 1998, (ii) March 1, 1998 with respect to those Initial Consumer Product
Contracts that have a first scheduled payment date prior to April 1, 1998, (iii)
April 1, 1998 with respect to those Initial Consumer Product Contracts and those
Home Equity and Home Improvement Contracts that had a first scheduled payment
due in April, 1998, and (iv) April 1, 1998 with respect to the Subsequent
Consumer Product 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.
"Cutoff Date Sub-Pool C Principal Balance" means the aggregate of the
Cutoff Date Principal Balances of the Consumer Product Contracts.
"Cutoff Date Sub-Pool H Principal Balance" means the aggregate of the
Cutoff Date Principal Balances of the Home Equity Contracts and Home Improvement
Contracts.
"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, in the
case of any FHA-Insured Contract, submitted a claim to FHA, 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, provided, however, that with
respect to any Liquidated Contract which is a Home Equity Contract or
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Home Improvement Contract, the payment scheduled to be made in the Monthly
Period in which such Contract became a Liquidated Contract shall not be deemed a
Delinquent Payment.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is CEDE & CO., as the registered Holder of:
(i) one Certificate evidencing $200,000,000 in initial aggregate
principal balance of the Class A-1C Certificates,
(ii) one Certificate evidencing $120,870,000 in initial aggregate
principal balance of the Class A-1C Certificates,
(iii) one Certificate evidencing $16,695,000 in initial aggregate
principal balance of the Class A-2C Certificates,
(iv) one Certificate evidencing $12,980,000 in initial aggregate
principal balance of the Class A-3C Certificates,
(v) one Certificate evidencing $7,420,000 in initial aggregate
principal balance of the Class A-4C Certificates,
(vi) one Certificate evidencing $12,986,947 in initial aggregate
principal balance of the Class B-C Certificates,
(vii) one Certificate evidencing $87,750,000 in initial aggregate
principal balance of the Class A-1H Certificates,
(viii) one Certificate evidencing $18,070,000 in initial aggregate
principal balance of the Class A-2H Certificates,
(ix) one Certificate evidencing $9,680,000 in initial aggregate
principal balance of the Class A-3H Certificates,
(x) one Certificate evidencing $7,740,000 in initial aggregate
principal balance of the Class A-4H Certificates, and
(xi) one Certificate evidencing $5,808,053 in initial aggregate
principal balance of the Class B-H Certificates,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in the Uniform Commercial Code of the State of
New York.
"Depository Participant" means a broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
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"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 April, 1998.
"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)__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 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 (iii) an account
that will not cause Standard & Poor's and Fitch to downgrade or withdraw its
then-current rating assigned to the Certificates, as confirmed in writing by
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 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 Standard & Poor's and Fitch (if rated by Fitch) in the case of
unsecured long-term debt.
"Eligible Investments" has the meaning assigned in Section 5.05(c).
"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 is a Title I approved lender under FHA regulations,
and services not
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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.
"FHA" means the Federal Housing Administration, or any successor thereto.
"FHA Insurance" means the credit insurance provided by FHA pursuant to
Title I of the National Housing Act, as evidenced by the Company's FHA contract
of insurance.
"FHA-Insured Contracts" means those Home Improvement Contracts that have
been or are being reported to FHA as eligible for FHA Insurance.
"FHA Regulations" means the regulations promulgated by HUD relating to
Title I home improvement loans, currently found at 24 C.F.R. (S)201.
"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 Sub-Pool C Certificates or Sub-Pool H
Certificates, as applicable, will be made pursuant to Section 12.03.
"Fitch" means Fitch IBCA Inc., or any successor thereto; provided that if
Fitch no longer has a rating outstanding on any Certificate, 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.
"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.
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"Home Equity Contract File" means, as to each Home Equity Contract, (a) the
original copy of the Contract which is comprised of the related contract and/or
promissory note, (b) the original or a copy of the mortgage, deed of trust or
security deed or similar evidence of a lien on the related improved property and
evidence of due recording of such mortgage, deed of trust or security deed, if
available, (c) evidence of title insurance, if any, (d) a credit application
signed by the Obligor, or a copy thereof, (e) 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 and (f) if such Contract was
originated by a lender other than the Company, the original or a copy of an
assignment of the mortgage, deed of trust or security deed by the lender to the
Company.
"Home Improvement Contract File" means, as to each Home Improvement
Contract, (a) the original copy of the Contract which is comprised of the
related contract and/or promissory note, (b) the original or a copy of the
mortgage, deed of trust or security deed or similar evidence of a lien on the
related improved property and evidence of due recording of such mortgage, deed
of trust or security deed, if available, (c) evidence of title insurance, if
any, (d) a credit application signed by the Obligor, or a copy thereof, (e) 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 and (f) if such Contract was originated by a contractor other than the
Company, the original or a copy of an assignment of the mortgage, deed of trust
or security deed by the contractor to the Company.
"Home Equity Contracts" means the closed-end home equity loans described in
the List of Home Equity Contracts and constituting part of the corpus of Sub-
Pool H, which Home Equity Contracts are to be assigned and conveyed by the
Company to Sub-Pool H, and includes, without limitation, any and all rights to
receive payments which are due pursuant thereto on or after the Cutoff Date, but
excluding any payments which were due pursuant thereto prior to the Cutoff Date.
"Home Improvement Contracts" means the retail installment sales contracts
and promissory notes financing home improvements described in the List of Home
Improvement Contracts and constituting part of the corpus of Sub-Pool H, which
Home Improvement Contracts are to be assigned and conveyed by the Company to
Sub-Pool H, and includes, without limitation, any and all rights to receive
payments which are due pursuant thereto on or after the Cutoff Date, but
excluding any payments which were due pursuant thereto prior to the Cutoff Date.
"HUD" means the United States Department of Housing and Urban Development,
or any successor thereto.
"Independent" means, when used with respect to any specified Person,
Dorsey & Whitney LLP 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
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functions. Whenever it is provided herein that any Independent Person's opinion
or certificate shall be furnished to the Trustee, such opinion or certificate
shall state that the signatory has read this definition and is Independent
within the meaning set forth herein.
"Initial Consumer Product Contracts" means certain Consumer Product
Contracts in the List of Consumer Product Contracts, all of which were
originated on or before March 4, 1998, and which total $268,501,402.07 of
aggregate principal balance as of the Cutoff Date.
"Insurance Policy" means, with respect to each Contract, the policy of
insurance (if any) required to be maintained for the related Product or real
property 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.
"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 Class B-C
Guaranty Payments and Class B-H Guaranty Payments pursuant to Section 8.04.
"Liquidated Contract" means any Defaulted Contract (1) 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
or real property (if any), as applicable, has been recovered; provided that any
Defaulted Contract in respect of which the related Product or real property have
been realized upon and disposed of and the proceeds of such disposition have
been received shall be deemed to be a Liquidated Contract, or (2) as to which in
the case of an FHA-Insured Contract, either (a) FHA has paid the claim, or (b)
the Servicer has determined in good faith that FHA will not pay the claim or (3)
with respect to any Monthly Period beginning on or after May 15, 2028, any FHA-
Insured Contract as to which the Servicer has submitted a claim to FHA.
"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 or real property (if any), as applicable, 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 or
real property, as applicable.
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"List of Consumer Product Contracts" means the list identifying each
Consumer Product Contract constituting part of the corpus of Sub-Pool C, which
list (a) identifies each Consumer Product Contract and (b) sets forth as to each
Consumer Product 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
Consumer Product Contract (substantially in the form of Exhibit C-1.
"List of Home Equity Contracts" means the list identifying each Home Equity
Contract constituting part of the corpus of Sub-Pool H, which list
(a) identifies each Home Equity Contract and (b) sets forth as to each Home
Equity 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 Home
Equity Contract (substantially in the form of Exhibit C-2).
"List of Home Improvement Contracts" means the list identifying each Home
Improvement Contract constituting part of the corpus of Sub-Pool H, which list
(a) identifies each Home Improvement Contract and (b) sets forth as to each Home
Improvement 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 Home
Improvement Contract (substantially in the form of Exhibit C-2).
"Lists of Contracts" means, collectively, the List of Consumer Product
Contracts, the List of Home Equity Contracts and the List of Home Improvement
Contracts.
"Monthly Period" means a calendar month during the term of this Agreement.
With respect to any Distribution Date, "related Monthly Period" means the
calendar month immediately preceding the month in which such Distribution Date
occurs.
"Monthly Report" has the meaning assigned in Section 6.01.
"Monthly Sub-Pool C 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 Sub-Pool C Scheduled Principal Balance as of that Distribution
Date.
"Monthly Sub-Pool H 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 Sub-Pool H Scheduled Principal Balance as of that Distribution
Date.
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"Monthly Sub-Pool C Servicing and Guaranty Fee" means, as to any
Distribution Date, the Sub-Pool C Amount Available in the Sub-Pool C Collection
Account on that Distribution Date after payment in full of all amounts specified
in clauses (1) through (23) of Section 8.03(a).
"Monthly Sub-Pool H Servicing and Guaranty Fee" means, as to any
Distribution Date, the Sub-Pool H Amount Available in the Sub-Pool H Collection
Account on that Distribution Date after payment in full of all amounts specified
in clauses (1) through (25) of Section 8.03(d).
"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.
"N.Y.U.C.C." means the Uniform Commercial Code as in effect in the State of
New York.
"Obligor" means a buyer of a Product or a home improvement or a borrower of
a Home Equity Loan 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-1C Principal Balance" means $320,870,000.
"Original Class A-2C Principal Balance" means $16,695,000.
"Original Class A-3C Principal Balance" means $12,980,000.
"Original Class A-4C Principal Balance" means $7,420,000.
"Original Class B-C Principal Balance" means $12,986,947.
"Original Class A-1H Principal Balance" means $87,750,000.
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"Original Class A-2H Principal Balance" means $18,070,000.
"Original Class A-3H Principal Balance" means $9,680,000.
"Original Class A-4H Principal Balance" means $7,740,000.
"Original Class B-H Principal Balance" means $5,808,053.
"Original Sub-Pool C Principal Balance" means, with respect to any Class of
Sub-Pool C Certificates, the Original Class A-1C Principal Balance, the Original
Class A-2C Principal Balance, the Original Class A-3C Principal Balance, the
Original Class A-4C Principal Balance, or the Original Class B-C Principal
Balance, as appropriate.
"Original Sub-Pool H Principal Balance" means, with respect to any Class of
Sub-Pool H Certificates, the Original Class A-1H Principal Balance, the Original
Class A-2H Principal Balance, the Original Class A-3H Principal Balance, the
Original Class A-4H Principal Balance, or the Original Class B-H Principal
Balance, as appropriate.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
applicable 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,
limited liability company, 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).
"Pledgor" means Green Tree RECS II 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.
"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.
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"Principal Prepayment in Full" means any Principal Prepayment of the entire
principal balance of a Contract.
"Products" means the goods financed by and pledged to secure Consumer
Product Contracts which goods are of the following types: 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.
"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 Sub-Pool C Reserve Account Amount" means, as of any date of
determination, the lesser of: (i) 1.5% of the sum of the Original Class A-1C
Principal Balance, the Original Class A-2C Principal Balance, the Original Class
A-3C Principal Balance, the Original Class A-4C Principal Balance and the
Original Class B-C Principal Balance; or (ii) the Sub-Pool C Certificate
Principal Balance plus the Class A-2C Principal Liquidation Loss, the Class A-3C
Principal Liquidation Loss, the Class A-4C Principal Liquidation Loss and the
Class B-C Principal Liquidation Loss, if any, as of such date of determination.
"Required Sub-Pool H Reserve Account Amount" means, as of any date of
determination, the lesser of: (i) 1.5% of the sum of the Original Class A-1H
Principal Balance, the Original Class A-2H Principal Balance, the Original Class
A-3H Principal Balance, the Original Class A-4H Principal Balance and the
Original Class B-H Principal Balance; or (ii) the Sub-Pool H Certificate
Principal Balance plus the Class A-2H Principal Liquidation Loss, the Class A-3H
Principal Liquidation Loss, the Class A-4C Principal Liquidation Loss and the
Class B-H Principal Liquidation Loss, if any, 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.
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"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 applicable 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.
"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 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.
"Sub-Pool C" means the trust created pursuant to Section 2.01(a), the
corpus of which consists of all the rights, benefits, and obligations arising
from and in connection with each Consumer Product Contract, including any
liquidation proceeds therefrom, all rights under any hazard or other Insurance
Policy on a Product securing a Consumer Product Contract for the benefit of the
creditor of such Consumer Product Contract and all blanket policies to the
extent they related to the Consumer Product Contracts, 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-C
Certificateholders, and the remittances, deposits and payments made into the
Sub-Pool C Collection Account and amounts in the Sub-Pool C Collection Account
(including all proceeds of investments thereof), and a security interest in the
funds in the Sub-Pool C Spread Account and the Sub-Pool C Reserve Account, all
as provided herein.
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"Sub-Pool C Amount Available" means, as to any Distribution Date, an amount
equal to the Sub-Pool C Collected Funds for that Distribution Date plus any
amounts required to be deposited in the Sub-Pool C Collection Account on or
before such Distribution Date pursuant to Section 8.04, 8.05, 8.06 or 8.08.
"Sub-Pool C Amount Held for Future Distribution" means, as to any
Distribution Date, the total of the amounts held in the Sub-Pool C Collection
Account on the last day of the related Monthly Period on account of Advance
Payments on Consumer Product Contracts in respect of such Monthly Period.
"Sub-Pool C Certificate" means any one of the Class A-1C, Class A-2C, Class
A-3C, Class A-4C and Class B-C Certificates executed and delivered by the
Trustee and authenticated by the Certificate Registrar substantially in the form
set forth in Exhibit A-1 and Exhibit B-1 and evidencing a fractional undivided
interest in Sub-Pool C.
"Sub-Pool C Certificate Principal Balance" means, as of any Distribution
Date, the sum of the Class A-1C Principal Balance, the Class A-2C Principal
Balance, the Class A-3C Principal Balance, the Class A-4C Principal Balance and
the Class B-C Principal Balance as of that Distribution Date.
"Sub-Pool C Collected Funds" means, as to any Distribution Date, an amount
equal to (a) the sum of (i) the amount on deposit in the Sub-Pool C Collection
Account as of the close of business on the last day of the related Monthly
Period (exclusive of any amounts deposited therein pursuant to Sections 8.04,
8.05, 8.06 or 8.08), and (ii) any amounts required to be deposited in the Sub-
Pool C Collection Account on or before the Business Day immediately preceding
such Distribution Date pursuant to Section 5.09 or 5.13, and (iii) any amount
deposited in the Sub-Pool C Collection Account in respect of principal on the
Consumer Product Contracts (exclusive of any amounts deposited therein pursuant
to Sections 8.04, 8.05, 8.06 or 8.08) after the last day of the related Monthly
Period through and including the third Business Day prior to the Distribution
Date, but in no event later than the 10th day of the month in which such
Distribution Date occurs, reduced by (b) the sum as of the close of business on
the last day of the related Monthly Period of (i) the Sub-Pool C Amount Held for
Future Distribution, and (ii) amounts permitted to be withdrawn by the Trustee
from the Sub-Pool C Collection Account pursuant to clauses (b) through (e),
inclusive, of Section 8.02 and (iii) with respect to all Distribution Dates
other than the Distribution Date in April, 1998, any amount deposited in the
Sub-Pool C Collection Account in respect of principal on the Contracts
(exclusive of any amounts deposited therein pursuant to Sections 8.04, 8.05,
8.06 or 8.08) on or after the first day of the related Monthly Period and
through and including the third Business Day prior to the preceding Distribution
Date, but in no event later than the 10th day of the related Monthly Period.
"Sub-Pool C Collection Account" means the account designated as such
established and maintained pursuant to Section 5.05(a).
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<PAGE>
"Sub-Pool C Excess Proceeds" means an amount equal to the excess, if any,
of (a) the sum of the Original Sub-Pool C Principal Balances over (b) the Cutoff
Date Sub-Pool C Principal Balance.
"Sub-Pool C Excess Proceeds Account" means the account established and
maintained pursuant to Section 8.08.
"Sub-Pool C 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 Consumer
Product Contract:
(i) all scheduled payments of principal due on each outstanding
Consumer Product Contract during the related Monthly Period as
specified in the amortization schedule at the time applicable
thereto (after adjustments for previous Partial Principal
Prepayments and after any adjustment to such amortization
schedule by reason of any bankruptcy of an Obligor or similar
proceeding or any moratorium or similar waiver or grace period);
plus
(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 Consumer Product
Contracts that became Liquidated Contracts during the related
Monthly Period, plus the amount of any reduction on the
outstanding principal balance of a Consumer Product Contract
during the related Monthly Period ordered as a result of a
bankruptcy or similar proceeding involving the related Obligor;
plus
(iv) the aggregate Scheduled Principal Balance of all Consumer Product
Contracts repurchased during the prior Monthly Period pursuant to
Section 3.05; plus
(v) any amount deposited in the Sub-Pool C Collection Account in
respect of principal on the Consumer Product Contracts (exclusive
of any amounts deposited therein pursuant to Section 8.04, 8.05,
8.06 or 8.08) after the last day of the related Monthly Period
and up to and including the third Business Day prior to the
Distribution Date, but in no event later than the 10th day of the
month in which such Distribution Date occurs; minus
(vi) with respect to all Distribution Dates other than the
Distribution Date in April, 1998, any amount deposited in the
Sub-Pool C
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<PAGE>
Collection Account in respect of principal on the Consumer
Product Contracts (exclusive of any amounts deposited therein
pursuant to Section 8.04, 8.05, 8.06 or 8.08) on or after the
first day of the related Monthly Period and up to and including
the third Business Day prior to the preceding Distribution Date,
but in no event later than the 10th day of the related Monthly
Period; plus
(vii)with respect to the Distribution Date in April 15, 1998, an
amount equal to the Excess Proceeds.
The Sub-Pool C Formula Principal Distribution Amount for the Distribution Date
in May 2019 shall be the Sub-Pool C Certificate Principal Balance.
"Sub-Pool C Principal Balance" means, as to any date, the Class A-1C
Principal Balance, the Class A-2C Principal Balance, the Class A-3C Principal
Balance, the Class A-4C Principal Balance or the Class B-C Principal Balance, as
appropriate.
"Sub-Pool C Reserve Account" means a segregated trust account established
with the Collateral Agent, and pledged by the Pledgor to the Trustee for the
benefit of the Holders of the Sub-Pool C Certificates pursuant to the Sub-Pool C
Reserve Account Pledge Agreement.
"Sub-Pool C Reserve Account Deficiency Notice" shall have the meaning given
thereto pursuant to Section 8.06(c).
"Sub-Pool C Reserve Account Pledge Agreement" means that certain Reserve
Account Pledge Agreement dated as of March 1, 1998 among the Pledgor, the
Collateral Agent, and the Trustee, in the form of Exhibit K-1 attached hereto.
"Sub-Pool C Scheduled Principal Balance" means, as of any Distribution
Date, the aggregate Scheduled Principal Balance of all Consumer Product
Contracts that were outstanding during the immediately preceding Monthly Period.
"Sub-Pool C Spread Account" means the segregated trust accounts established
with the Collateral Agent, and pledged by the Pledgor to the Trustee for the
benefit of the Holders of the Class A-2C Certificates, the Class A-3C
Certificates, and the Class A-4C Certificates pursuant to the Sub-Pool C Spread
Account Pledge Agreement.
"Sub-Pool C Spread Account Deficiency Notice" shall have the meaning given
thereto pursuant to Section 8.06(b).
"Sub-Pool C Spread Account Pledge Agreement" means that certain Spread
Account Pledge Agreement dated as of March 1, 1998 among the Pledgor, the
Collateral Agent, and the Trustee, in the form of Exhibit J-1 attached hereto.
"Sub-Pool H" means the trust created pursuant to Section 2.01(d), the
corpus of which consists of all the rights, benefits, and obligations arising
from and in
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<PAGE>
connection with each Home Equity Contract and each Home Improvement Contract,
including any liquidation proceeds therefrom, all rights under any hazard, title
or other Insurance Policy on the real estate (if any) securing a Home Equity
Contract or Home Improvement Contract for the benefit of the creditor of such
Home Equity Contract or Home Improvement Contract and all blanket policies to
the extent they related to the Home Equity Contracts or Home Improvement
Contracts, all mortgages, deeds of trust and security deeds on the real estate
(if any), and rights under the Errors and Omissions Protection Policy, benefits
under the Limited Guaranty for the benefit of the Class B-H Certificateholders,
and the remittances, deposits and payments made into the Sub-Pool H Collection
Account and amounts in the Sub-Pool H Collection Account (including all proceeds
of investments thereof), and a security interest in the funds in the Sub-Pool H
Spread Account and the Sub-Pool H Reserve Account, all as provided herein.
"Sub-Pool H Amount Available" means, as to any Distribution Date, an amount
equal to the Sub-Pool H Collected Funds for that Distribution Date plus any
amounts required to be deposited in the Sub-Pool H Collection Account on or
before such Distribution Date pursuant to Section 8.04, 8.05 or 8.07.
"Sub-Pool H Amount Held for Future Distribution" means, as to any
Distribution Date, the total of the amounts held in the Sub-Pool H Collection
Account on the last day of the related Monthly Period on account of Advance
Payments on the Home Equity Contracts or Home Improvement Contracts in respect
of such Monthly Period.
"Sub-Pool H Certificate" means any one of the Class A-1H, Class A-2H, Class
A-3H, Class A-4H and Class B-H Certificates executed and delivered by the
Trustee and authenticated by the Certificate Registrar substantially in the form
set forth in Exhibit A-2 and Exhibit B-2 and evidencing a fractional undivided
interest in Sub-Pool H.
"Sub-Pool H Certificate Principal Balance" means, as of any Distribution
Date, the sum of the Class A-1H Principal Balance, the Class A-2H Principal
Balance, the Class A-3H Principal Balance, the Class A-4H Principal Balance and
the Class B-H Principal Balance as of that Distribution Date.
"Sub-Pool H Collected Funds" means, as to any Distribution Date, an amount
equal to (a) the sum of (i) the amount on deposit in the Sub-Pool H Collection
Account as of the close of business on the last day of the related Monthly
Period (exclusive of any amounts deposited therein pursuant to Sections 8.04,
8.05 or 8.07), and (ii) any amounts required to be deposited in the Sub-Pool H
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 related Monthly Period of (i) the
Sub-Pool H Amount Held for Future Distribution, and (ii) amounts permitted to be
withdrawn by the Trustee from the Sub-Pool H Collection Account pursuant to
clauses (b) through (e), inclusive, of Section 8.02.
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<PAGE>
"Sub-Pool H Collection Account" means the account designated as such
established and maintained pursuant to Section 5.05(b).
"Sub-Pool H 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 Home
Equity Contract or Home Improvement Contract:
(i) all scheduled payments of principal due on each outstanding Home
Equity Contract or Home Improvement Contract during the related
Monthly Period as specified in the amortization schedule at the
time applicable thereto (after adjustments for previous Partial
Principal Prepayments and after any adjustment to such
amortization schedule by reason of any bankruptcy of an Obligor
or similar proceeding or any moratorium or similar waiver or
grace period); plus
(ii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full on the Home Equity Contracts and Home
Improvement Contracts received during the related Monthly Period;
plus
(iii)the aggregate Scheduled Principal Balance of all Home Equity
Contracts and Home Improvement Contracts that became Liquidated
Contracts during the related Monthly Period, plus the amount of
any reduction on the outstanding principal balance of a Home
Equity Contract or Home Improvement Contract during the related
Monthly Period ordered as a result of a bankruptcy or similar
proceeding involving the related Obligor; plus
(iv) the aggregate Scheduled Principal Balance of all Home Equity
Contracts and Home Improvement Contracts repurchased during the
prior Monthly Period pursuant to Section 3.05.
The Sub-Pool H Formula Principal Distribution Amount for the Distribution Date
in May 2029 shall be the Sub-Pool H Certificate Principal Balance.
"Sub-Pool H Principal Balance" means, as to any date, the Class A-1H
Principal Balance, the Class A-2H Principal Balance, the Class A-3H Principal
Balance, the Class A-4H Principal Balance or the Class B-H Principal Balance, as
appropriate.
"Sub-Pool H Reserve Account" means a segregated trust account established
with the Collateral Agent, and pledged by the Pledgor to the Trustee for the
benefit of the Holders of the Sub-Pool H Certificates pursuant to the Sub-Pool H
Reserve Account Pledge Agreement.
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<PAGE>
"Sub-Pool H Reserve Account Deficiency Notice" shall have the meaning given
thereto pursuant to Section 8.07(c).
"Sub-Pool H Reserve Account Pledge Agreement" means that certain Reserve
Account Pledge Agreement dated as of March 1, 1998 among the Pledgor, the
Collateral Agent, and the Trustee, in the form of Exhibit K-2 attached hereto.
"Sub-Pool H Scheduled Principal Balance" means, as of any Distribution
Date, the aggregate Scheduled Principal Balance of all Home Equity Contracts and
Home Improvement Contracts that were outstanding during the immediately
preceding Monthly Period.
"Sub-Pool H Spread Account" means the segregated trust accounts established
with the Collateral Agent, and pledged by the Pledgor to the Trustee for the
benefit of the Holders of the Class A-2H Certificates, the Class A-3H
Certificates, and the
1-34
<PAGE>
Class A-4H Certificates pursuant to the Sub-Pool H Spread Account Pledge
Agreement.
"Sub-Pool H Spread Account Deficiency Notice" shall have the meaning given
thereto pursuant to Section 8.07(b).
"Sub-Pool H Spread Account Pledge Agreement" means that certain Spread
Account Pledge Agreement dated as of March 1, 1998 among the Pledgor, the
Collateral Agent, and the Trustee, in the form of Exhibit J-2 attached hereto.
"Subsequent Consumer Product Contracts" means those Consumer Product
Contracts described in the List of Consumer Product Contracts that are not
Initial Consumer Product Contracts.
"Uncollectible Advance" means, with respect to any Determination Date, the
portion of any Servicer Advances which the Servicer has determined in good faith
will not be ultimately recoverable by the Servicer from Insurance Policies on
the related Product, from 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.
"Undelivered Contract Account" means the account so designated and
established and maintained pursuant to Section 3.05(c).
"Unpaid Class A-1C Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-1C Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-1C Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-1C
Certificates on account of any Unpaid Class A-1C Interest Shortfall 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-
1C Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-1C Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-1C Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-1C Certificates
pursuant to Section 8.03(a)(4)(ii).
"Unpaid Class A-2C Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-2C Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-2C Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-2C
Certificates on account of any Class A-2C Interest Shortfall 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-
2C Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
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<PAGE>
"Unpaid Class A-2C Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-2C
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-2C Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-2C Certificates on account of
any Unpaid Class A-2C Liquidation Loss Interest Shortfall pursuant to Section
8.03(a)(7)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
2C Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-2C Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-2C Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-2C Certificates
pursuant to Section 8.03(a)(6)(ii).
"Unpaid Class A-3C Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-3C Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-3C Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-3C
Certificates on account of any Unpaid Class A-3C 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-
3C Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-3C Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-3C
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-3C Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-3C Certificates on account of
any Unpaid Class A-3C 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-
3C Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-3C Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-3C Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior
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<PAGE>
Distribution Dates to Holders of Class A-3C Certificates pursuant to Section
8.03(a)(10)(ii).
"Unpaid Class A-4C Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-4C Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-4C Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-4C
Certificates on account of any Unpaid Class A-4C Interest Shortfall pursuant to
Section 8.03(a)(13)(ii) on such immediately prior Distribution Date, plus
accrued interest (to the extent payment thereof is legally permissible) at the
Class A-4C Pass-Through Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-4C Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-4C
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-4C Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-4C Certificates on account of
any Unpaid Class A-4C Liquidation Loss 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 A-
4C Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-4C Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-4C Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-4C Certificates
pursuant to Section 8.03(a)(14)(ii).
"Unpaid Class B-C Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class B-C Interest Shortfall, if
any, for the immediately prior Distribution Date, plus (y) the Unpaid Class B-C
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class B-C Certificates on
account of any Unpaid Class B-C 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-C
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class B-C Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class B-C
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class B-C Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class B-C Certificates on account of
any Unpaid Class B-C Liquidation
1-37
<PAGE>
Loss Interest Shortfall pursuant to Section 8.03(a)(19)(ii) on such immediately
prior Distribution Date, plus accrued interest (to the extent payment thereof is
legally permissible) at the Class B-C Pass-Through Rate on such remainder from
such immediately prior Distribution Date to the current Distribution Date.
"Unpaid Class B-C Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class B-C Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class B-C Certificates pursuant to
Section 8.03(a)(18)(ii).
"Unpaid Class A-1H Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-1H Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-1H Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-1H
Certificates on account of any Unpaid Class A-1H Interest Shortfall pursuant to
Section 8.03(d)(3)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
1H Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-1H Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-1H Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-1H Certificates
pursuant to Section 8.03(d)(4)(ii).
"Unpaid Class A-2H Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-2H Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-2H Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-2H
Certificates on account of any Class A-2H Interest Shortfall pursuant to Section
8.03(d)(5)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
2H Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-2H Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-2H
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-2H Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-2H Certificates on account of
any Unpaid Class A-2H Liquidation Loss Interest Shortfall pursuant to Section
8.03(d)(7)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
2H Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
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<PAGE>
"Unpaid Class A-2H Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-2H Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-2H Certificates
pursuant to Section 8.03(d)(6)(ii).
"Unpaid Class A-3H Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-3H Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-3H Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-3H
Certificates on account of any Unpaid Class A-3H Interest Shortfall pursuant to
Section 8.03(d)(9)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
3H Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-3H Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-3H
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-3H Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-3H Certificates on account of
any Unpaid Class A-3H Liquidation Loss Interest Shortfall pursuant to Section
8.03(d)(11)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
3H Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-3H Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-3H Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-3H Certificates
pursuant to Section 8.03(d)(10)(ii).
"Unpaid Class A-4H Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-4H Interest Shortfall,
if any, for the immediately prior Distribution Date, plus (y) the Unpaid Class
A-4H Interest Shortfall determined as of such immediately prior Distribution
Date, minus (z) all amounts distributed to the Holders of Class A-4H
Certificates on account of any Unpaid Class A-4H Interest Shortfall pursuant to
Section 8.03(d)(13)(ii) on such immediately prior Distribution Date, plus
accrued interest (to the extent payment thereof is legally permissible) at the
Class A-4H Pass-Through Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
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<PAGE>
"Unpaid Class A-4H Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-4H
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-4H Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-4H Certificates on account of
any Unpaid Class A-4H Liquidation Loss Interest Shortfall pursuant to Section
8.03(d)(15)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-
4H Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class A-4H Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-4H Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-4H Certificates
pursuant to Section 8.03(d)(14)(ii).
"Unpaid Class B-H Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class B-H Interest Shortfall, if
any, for the immediately prior Distribution Date, plus (y) the Unpaid Class B-H
Interest Shortfall determined as of such immediately prior Distribution Date,
minus (z) all amounts distributed to the Holders of Class B-H Certificates on
account of any Unpaid Class B-H Interest Shortfall pursuant to Section
8.03(d)(17)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class B-H
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
"Unpaid Class B-H Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class B-H
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class B-H Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class B-H Certificates on account of
any Unpaid Class B-H Liquidation Loss Interest Shortfall pursuant to Section
8.03(d)(19)(ii) on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class B-H
Pass-Through Rate on such remainder from such immediately prior Distribution
Date to the current Distribution Date.
" Unpaid Class B-H Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class B-H Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class B-H Certificates pursuant to
Section 8.03(d)(18)(ii).
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<PAGE>
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 Sub-Pool C of Green Tree Recreational, Equipment &
Consumer Trust 1998-A. Sub-Pool C shall be administered pursuant to the
provisions of this Agreement for the benefit of the Sub-Pool C
Certificateholders, and as a separate Grantor Trust for all tax purposes. The
Trustee is hereby specifically empowered to conduct any business dealings with
the Company on behalf of Sub-Pool C.
b. On the Closing Date, the Company shall transfer, assign, set over and
otherwise convey to Sub-Pool C by execution of an assignment substantially in
the form of Exhibit C-1 hereto all the right, title and interest of the Company
in and to (1) the Consumer Product Contracts (including but not limited to all
right, title and interest in and to the related Collateral Security) and any and
all rights to receive payments on or with respect to the Consumer Product
Contracts, excluding with respect to all Consumer Product Contracts, any rights
to receive payments which were due pursuant thereto prior to the Cut-off Date,
(2) the Insurance Policies on any Products securing a Consumer Product Contract
for the benefit of the creditor of such Consumer Product Contract and all
blanket insurance policies to the extent they relate to the Consumer Product
Contracts, (3) all rights the Company may have against the originating dealer
with respect to the Consumer Product Contracts not originated by the Company,
(4) the Errors and Omissions Protection Policy as such policy relates to the
Consumer Product Contracts, (5) all documents contained in the Consumer Product
Contract Files, and (6) 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 Sub-Pool C Spread Account and all investments thereof, for the
benefit of the Holders of the Sub-Pool C Certificates, by executing and
delivering the Sub-Pool C Spread Account Pledge Agreement and shall grant the
Trustee a security interest in the funds in the Sub-Pool C Reserve Account and
all investments thereof, for the benefit of the Holders of the Sub-Pool C
Certificates, by executing and delivering the Sub-Pool C Reserve Account Pledge
Agreement.
c. Although the parties intend that the conveyance of the Company's right,
title and interest in and to the Consumer Product Contracts and the related
Collateral Security pursuant to this Agreement shall constitute a purchase and
sale and not a pledge of security for loans from the Sub-Pool C
Certificateholders, if such conveyances are deemed to be a pledge of security
for loans from the Sub-Pool C Certificateholders or any other Persons (the "Sub-
Pool C Secured Obligations"), the parties intend that (1) the rights and
obligations of the parties to the Sub-Pool C Secured Obligations shall be
established pursuant to the terms of this Agreement; (2) 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)(6) above, and all proceeds
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thereof, to secure the Sub-Pool C Secured Obligations; and (3) 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 Sub-Pool C Certificates or the Sub-Pool C 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.
d. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Sub-Pool H of Green Tree Recreational, Equipment &
Consumer Trust 1998-A. Sub-Pool H shall be administered pursuant to the
provisions of this Agreement for the benefit of the Sub-Pool H
Certificateholders, and as a separate Grantor Trust for all tax purposes. The
Trustee is hereby specifically empowered to conduct any business dealings with
the Company on behalf of Sub-Pool H.
e. On the Closing Date, the Company shall transfer, assign, set over and
otherwise convey to Sub-Pool H by execution of an assignment substantially in
the form of Exhibit C-2 hereto all the right, title and interest of the Company
in and to (1) the Home Equity Contracts and Home Improvement Contracts
(including but not limited to all right, title and interest in and to the
related Collateral Security) and any and all rights to receive payments on or
with respect to the Home Equity Contracts and Home Improvement Contracts,
excluding with respect to all Home Equity Contracts and Home Improvement
Contracts, any rights to receive payments which were due pursuant thereto prior
to the Cut-off Date, (2) the Insurance Policies on any real estate securing a
Home Equity Contract or Home Improvement Contract for the benefit of the
creditor of such Home Equity Contract or Home Improvement Contract and all
blanket insurance policies to the extent they relate to the Home Equity
Contracts and Home Improvement Contracts, (3) all rights the Company may have
against the originating lender or contractor with respect to the Home Equity
Contracts and Home Improvement Contracts not originated by the Company, (4) the
Errors and Omissions Protection Policy as such policy relates to the Home Equity
Contracts and Home Improvement Contracts, (5) all documents contained in the
Home Equity Contract and Home Improvement Contract Files, and (6) 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 Sub-Pool H Spread Account and
all investments thereof, for the benefit of the Holders of the Sub-Pool H
Certificates, by executing and delivering the Sub-Pool H Spread Account Pledge
Agreement and shall grant the Trustee a security interest in the funds in the
Sub-Pool H Reserve Account and all investments thereof, for the benefit of the
Holders of the Sub-Pool H Certificates, by executing and delivering the Sub-Pool
H Reserve Account Pledge Agreement.
f. Although the parties intend that the conveyance of the Company's right,
title and interest in and to the Home Equity Contracts and Home Improvement
Contracts and the related Collateral Security pursuant to this Agreement shall
constitute a purchase and sale and not a pledge of security for loans from the
Sub-Pool H Certificateholders, if such conveyances are deemed to be a pledge of
security for loans from the Sub-Pool H Certificateholders or any other
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Persons (the "Sub-Pool H Secured Obligations"), the parties intend that (1) the
rights and obligations of the parties to the Sub-Pool H Secured Obligations
shall be established pursuant to the terms of this Agreement; (2) 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(e)(1) through 2.01(e)(6) above, and all proceeds
thereof, to secure the Sub-Pool H Secured Obligations; and (3) 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 Sub-Pool H Certificates or the Sub-Pool H 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.
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 Consumer Product Contracts, the List of Home Equity
Contracts and the List of Home Improvement Contracts, each 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 (other than
the Subsequent Consumer Product Contracts) on a statistical sampling basis and,
based on such sampling, concluding that, except with respect to those Contracts
(other than the Subsequent Consumer Product Contracts) so specified in the
letter, the Contracts conform in all material respects to the Lists of
Contracts, to a confidence level of 97.5%, with an error rate generally not in
excess of 1.8%.
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 Sub-Pool
C and Sub-Pool H 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.
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h. An executed copy of the Assignments substantially in the form of
Exhibits C-1 and C-2 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 Sub-Pool C Collection Account and the Sub-
Pool H Collection Account, as applicable, 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.
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 Lists of Contracts and that each Contract File is complete in
all material respects and that each Product or real estate securing a Contract
is covered by an Insurance Policy as required by Section 3.02(f).
m. A letter from Standard & Poor's confirming that the Class A-1C and Class
A-1H Certificates have been assigned a rating of AAA by Standard & Poor's, and a
letter from Fitch confirming that the Class A-1C and Class A-1H Certificates
have been assigned a rating of AAA by Fitch.
n. A letter from Standard & Poor's confirming that the Class A-2C and Class
A-2H Certificates have been assigned a rating of AA by Standard & Poor's, and a
letter from Fitch confirming that the Class A-2C and Class A-2H Certificates
have been assigned a rating of AA by Fitch.
o. A letter from Standard & Poor's confirming that the Class A-3C and Class
A-3H Certificates have been assigned a rating of A by Standard & Poor's, and a
letter from Fitch confirming that the Class A-3C Certificates have been assigned
a rating of A+ by Fitch and that the Class A-3H Certificates have been assigned
a rating of A by Fitch.
p. A letter from Standard & Poor's confirming that the Class A-4C and Class
A-4H Certificates have been assigned a rating of BBB by Standard & Poor's, and a
letter from Fitch confirming that the Class A-4C Certificates have been assigned
a rating of BBB+ by Fitch and that the Class A-4H Certificates have been
assigned a rating of BBB by Fitch.
q. A letter from Standard & Poor's confirming that the Class B-C and Class
B-H Certificates have been assigned a rating of BBB- by Standard & Poor's, and a
letter from Fitch confirming that the Class B-C and Class B-H Certificates have
been assigned a rating of BBB by Fitch.
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r. The Sub-Pool C Spread Account Pledge Agreement, the Sub-Pool C Reserve
Account Pledge Agreement, the Sub-Pool H Spread Account Pledge Agreement, and
the Sub-Pool H Reserve Account Pledge Agreement, each duly executed by the
Pledgor, the Collateral Agent, and the Trustee.
s. Evidence of the deposit in the Excess Proceeds Account of an amount
equal to the Excess Proceeds.
t. Any other documents or certificates that the Trustee may reasonably
request.
u. Evidence of deposit in the Undelivered Contract Account of an amount
equal the aggregate Cut-off Date Principal Balance of all Home Improvement
Contracts and Home Equity Contracts whose related Contract File was not
delivered to the Trustee on or before the Closing Date.
v. Any other documents or certificates that the Trustee may reasonably
request.
SECTION 2.03. Acceptance by Trustee.
a. On the Closing Date, if the conditions set forth in Section 2.02 have
been satisfied, the Trustee shall deliver a certificate to the Company
substantially in the form of Exhibit F hereto acknowledging conveyance of the
Contracts and Contract Files to the Trustee and declaring that the Trustee,
directly or through the Servicer, as agent for the Trustee (with respect to the
Consumer Product Contract Files) and through the Custodian (with respect to the
Home Improvement Contract Files and the Home Equity Contract Files) 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 Sub-Pool C Certificates representing ownership of
a beneficial interest in 100% of Sub-Pool C and Sub-Pool H Certificates
representing ownership of a beneficial interest in 100% of Sub-Pool H.
b. The Trustee or the Custodian shall review each Home Equity Contract File
and each Home Improvement Contract File within 60 days of the Closing Date or
the receipt by it of the Contract File, whichever is later. If, in its review of
the Contract Files, the Trustee or the Custodian discovers a breach of the
representations or warranties set forth in Sections 3.02, 3.03 or 3.04 of this
Agreement, or in the Officer's Certificate delivered pursuant to Section 2.02(l)
of this Agreement, the Trustee or the Custodian, as the case may be, shall
notify the Company shall cure such breach or repurchase such Contract pursuant
to Section 3.05.
SECTION 2.04. Grantor Trust Provisions.
The Company, as Servicer, the Trustee and the Certificateholders and the
Certificate Owners, by acceptance of the Certificates or an interest therein,
each agree that each of Sub-Pool C and Sub-Pool H is intended to be treated as a
separate
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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 each of Sub-Pool C and Sub-Pool H as a Grantor Trust.
After the Closing Date, neither the Trustee, the Company nor any Servicer shall
(i) accept any contribution of assets to either Sub-Pool C or Sub-Pool H 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
Accounts and the Reserve Accounts pursuant to Sections 8.06 and 8.07, (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 either Sub-Pool C or Sub-Pool H 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 or 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 the 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 Lists 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.
f. Insurance Coverage. The Product or real estate, if any, securing the
Contract is covered by an Insurance Policy to the extent (if any) required by
Section
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5.09. All premiums due as of the Closing Date on such insurance have been paid
in full. The Company has been named as an additional insured party under any
hazard insurance on the property described in the Contract to the extent
required by the Company's underwriting guidelines. If the Contract is an
FHA-Insured Contract, such Contract was originated in compliance with FHA
Regulations and is insured, without setoff, surcharge or defense, by FHA
Insurance. Following the assignment of such FHA-Insured Contract to the Trustee,
the Trustee on behalf of the Trust will be entitled to the full benefits of the
FHA Insurance.
g. Origination. Each Consumer Product 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. Each Home
Equity Contract was originated by a home equity lender, or by the Company, in
the ordinary course of its business and, if originated by a lender, was
purchased by the Company, in the ordinary course of its business. Each Home
Improvement Contract was originated by a home improvement contractor, or by the
Company, in the ordinary course of its business and, if originated by a
contractor, was purchased by the Company, in the ordinary 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 (and, if such Contract is a FHA-Insured Contract, the
FHA Regulations), have been complied with, and the Company shall for at least
the period of this Agreement, maintain in its possession, available for the
Trustee's inspection, and shall deliver to the Trustee upon demand, evidence of
compliance with all such requirements. 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 or real estate, if any,
securing the Contract has not been released from the lien of the Contract in
whole or in part.
k. Valid Security Interest. As to each Consumer Product Contract: (a) 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; (b) 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; and (c)
the Trustee has and will have a valid and perfected and enforceable first
priority security interest in such Contract and Product. As to each Home Equity
Contract and Secured Home Improvement
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Contract, the Contract has been duly executed and delivered by the Obligor, and
the lien created thereby has been duly recorded, or has been delivered to the
appropriate governmental authority for recording and will be duly recorded
within 30 days and constitutes a valid and perfected first, second, third or
fourth lien on the real estate described in such Contract.
l. Capacity of Parties. The signature(s) of the Obligor(s) on the Contract
are genuine and all parties to the Contract had full legal capacity to execute
the Contract.
m. Good Title. In the case of a Contract purchased from a dealer or home
improvement contractor or home equity lender, 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 any 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.
If such Contract is an FHA-Insured Contract, because the Trustee is a lender
approved by HUD to originate and purchase Title I loans under a valid Title I
contract of insurance, the Company has the authority to sell, transfer and
assign such Contract to the Trustee. No financing statement 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, contractor or lender) 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 with respect
to the Consumer Product Contracts, 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
or real property, if any, as applicable, 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 substantially level monthly payments (except, in the case of a Balloon Loan,
for the final monthly payment of such loan, and except for a small number of
Contracts that provide for fewer than 12 level payments per year) which fully
amortize the loan over its term.
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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 original Contract
is in the possession of the Company or the Custodian. Each Consumer Product
Contract has been stamped to reflect the assignment of such Contract to the
Trustee. Each Home Equity Contract and Home Improvement Contract has been
delivered to the Trustee or to the Custodian on or before the Closing Date.
s. Notation of Security Interest. With respect to each Consumer Product
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
applicable Uniform Commercial Code 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 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
Consumer Product Contracts, plus the Excess Proceeds, if any, as of the Cutoff
Date equal the Cutoff Date Sub-Pool C Principal Balance. The aggregate principal
amounts payable by Obligors under the Home Equity Contracts and Home Improvement
Contracts as of the Cutoff Date equal the Cutoff Date Sub-Pool H Principal
Balance.
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b. Characteristics. The Initial Consumer Product Contracts have the
following characteristics as of the Cutoff Date: (i) the Obligors on not more
than 25% of the Contracts by Cutoff Date Sub-Pool C Principal Balance are
located in any one state; (ii) no Contract has a remaining maturity of fewer
than 10 months or more than 240 months; (iii) the final scheduled payment date
on the Contract with the latest maturity is in March 2018; (iv) each Contract
had an original principal balance of at least $1,500.00 and not more than
$4,723,075.90 and a remaining principal balance as of the Cutoff Date of at
least $1,055.82 and not more than $4,604,258.51; and (v) each Contract had a
contractual rate of interest of at least 6.70% and not more than 21.50% per
annum.
The Subsequent Consumer Product Contracts have the following
characteristics as of the Cutoff Date: (i) the Obligors on not more than 25% of
the Contracts by Cutoff Date Sub-Pool C Principal Balance are located in any one
state; (ii) no Contract has a remaining maturity of fewer than 7 months or more
than 240 months; (iii) the final scheduled payment date on the Contract with the
latest maturity is in April 2018; (iv) each Contract had an original principal
balance of at least $1,508.65 and not more than $1,421,298.68 and a Cutoff Date
Principal Balance of at least $1,061.07 and not more than $1,421,298.68 and (v)
each Contract has a contractual rate of interest of at least 7.35% and not more
than 19.99% per annum.
The Home Equity Contracts and Home Improvement Contracts have the following
characteristics as of the Cutoff Date: (i) the Obligors on not more than 25% of
the Contracts by Cutoff Date Sub-Pool H Principal Balance are located in any one
state; (ii) no Contract has a remaining maturity of fewer than 10 months or more
than 360 months; (iii) the final scheduled payment date on the Contract with the
latest maturity is in March 2028; (iv) each Contract had an original principal
balance of at least $1,200.00 and not more than $230,500,000 and a remaining
principal balance as of the Cutoff Date of at least $348.29 and not more than
$230,500,000; and (v) each Contract had a contractual rate of interest of at
least 8.50% and not more than 21.24% per annum.
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 Lists 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 Trustee 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.
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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 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 Section 3.02, 3.03 or
3.04 of this Agreement or in the Officer's Certificate delivered pursuant to
Section 2.02(l) 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 Lists 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 related 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.
b. Upon receipt by the Trust by deposit in the applicable 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,
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except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Trustee.
c. Notwithstanding subsection (a) above, the Company shall repurchase any
Home Improvement Contract or Home Equity Contract, at such Contract's Repurchase
Price, if the Company has failed to deliver the related Contract File to the
Trustee or its custodian within 30 days of the Closing Date. If the Company
fails to deliver any Home Improvement Contract File or Home Equity Contract File
to the Trustee or its custodian on or before the Closing Date, an amount equal
to the Cut-off Date Principal Balance of the related Home Improvement Contract
or Home Equity Contract will, pursuant to Section 2.02(u), be deposited in the
Undelivered Contract Account, which must be an Eligible Account. Funds in the
Undelivered Contract Account shall, at the direction of the Servicer, be
invested in Eligible Investments of the kind described in clauses (i) and
(ii)(A) of the definition of "Eligible Investments" and that mature no later
than the Business Day prior to the next succeeding Distribution Date. All
investment earnings on funds in the Undelivered Contract Account shall be
withdrawn by the Trustee from the Undelivered Contract Account on the Business
Day preceding the next Payment Date and deposited in the Sub-Pool H Collection
Account and shall constitute part of the Sub-Pool H Amount Available on such
Distribution Date.
Amounts on deposit in the Undelivered Contract Account shall be
withdrawn by the Trustee as follows:
(i) If the Trustee delivers the related Contract File to the Trustee
within 30 days of the Closing Date, the Trustee shall withdraw an amount
equal to 100% of the Cut-off Date Principal Balance of such Contract and
pay such amount to or upon the order of the Company.
(ii) The Company shall give the Trustee telephonic notice of its
intended delivery of Contract Files. The Trustee will use reasonable
efforts to process Contract Files and remit any amount payable for them to
the Company in a timely manner.
(iii) On the first Business Day that is more than 30 days after the
Closing Date, the Trustee shall deposit in the Sub-Pool H Collection
Account any amount remaining in the Undelivered Contract Account (other
than amounts relating to Contracts for the which the related Contract File
has been delivered to the Trustee but not yet processed by the Trustee) and
any investment earnings thereon not previously distributed.
d. 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 third-party action arising out of any breach of any representation
set forth in Section 3.02, 3.03 or 3.04 of this Agreement or in the Officer's
Certificate delivered pursuant to Section 2.02(1).
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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 Consumer Product Contract Files, for the
benefit of the Sub-Pool C Certificateholders and the Trustee, and the Servicer
shall maintain custody of such Contract Files, for the benefit of the Sub-Pool C
Certificateholders and the Trustee and shall act as custodian therefor. On or
prior to the Closing Date, the Company shall deliver to the Trustee the Home
Equity Contract Files and the Home Improvement Contract Files. The Trustee shall
maintain such Home Equity Contract Files and the Home Improvement Contract Files
at its office or with a duly appointed Custodian.
b. The Servicer agrees to maintain the Consumer Product 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
Consumer Product 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 with respect to the Consumer Product Contract Files:
(i) hold such Contract Files on behalf of the Sub-Pool C
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 such 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 such 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
such Contract Files on behalf of the Sub-Pool C
Certificateholders and the Trustee.
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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 Consumer Product
Contract Files as herein provided and shall promptly take appropriate action to
remedy any such failure. In acting as custodian of the Consumer Product Contract
Files, the Servicer agrees further not to assert any beneficial ownership
interests in such Contract Files or the Consumer Product Contracts under this
Section 4.01. The Servicer agrees to indemnify the Sub-Pool C Certificateholders
and the Trustee for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever which may be imposed on,
incurred or asserted against the Sub-Pool C Certificateholders and the Trustee
as the result of any act or omission by the Servicer relating to the maintenance
and custody of such 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 Sub-Pool C 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(g) 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 including the
Collateral Security and their proceeds and the Products, if applicable, 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 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,
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such amendments or financing statements as may be required to preserve, perfect
and protect the Certificateholders' interests in the Contracts including the
Collateral Security and all proceeds thereof.
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.
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 Collateral Security and all
proceeds thereof).
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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 and foreclosing on real property liens
through subcontractors who are in the business of providing such services. The
Servicer may also perform other specific duties through subcontractors; provided
that the Servicer gives notice to the Trustee and each of 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 required by FHA (in the case of FHA-Insured Contracts) and
otherwise consistent with the highest degree of skill and care that the Servicer
exercises with respect to similar contracts 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
Trustee, 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
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otherwise limiting the scope of the examination the Trustee may make, the
Trustee may, using generally accepted audit procedures, verify the status of
each Contract and review the Electronic Ledger and records relating thereto for
conformity to Monthly Reports prepared pursuant to Article VI and compliance
with the standards represented to exist as to each Contract in this Agreement.
The Servicer shall provide to any Certificateholder such access to the
records relating to the Contracts only in such cases where the Servicer is
required by applicable statutes or regulations, whether applicable to the
Servicer or to such Certificateholder to permit Certificateholder to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section. Any
Certificateholder by its acceptance of a Certificate (or by acquisition of its
beneficial interest therein), as applicable, shall be deemed to have agreed to
keep confidential and not to use for its own benefit any information obtained by
it pursuant to this Section, except as may be required by applicable law.
b. At all times during the term hereof, the Servicer shall keep available a
copy of the List of 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 Accounts.
a. On or before the Closing Date, the Trustee shall establish the Sub-Pool
C Collection Account, on behalf of the Trust, which must be an Eligible Account.
The Sub-Pool C Collection Account shall be entitled "U.S. Bank Trust National
Association, as Trustee for the benefit of holders of Sub-Pool C Certificates
Issued by Green Tree Recreational, Consumer & Equipment Trust 1998-A (Green Tree
Financial Corporation, Servicer)." The Servicer shall pay into the Sub-Pool C
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 Consumer Product Contracts, and any payments that
were due prior to the Cutoff Date, which shall be remitted to the Company) on
the Consumer Product Contracts; and (ii) on the Business Day immediately prior
to each Distribution Date, all Servicer Advances required to be made with
respect to the Consumer Product Contracts for such Distribution Date pursuant to
Section 5.13. The Company shall deposit into the Sub-Pool C Collection Account
all Class B-C Guaranty Payments required by Section 8.04, on the date on which
such Guaranty Payments are due.
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The Pledgor or the Collateral Agent shall transfer into the Sub-Pool C
Collection Account all amounts to be transferred from the Sub-Pool C Spread
Account and from the Sub-Pool C Reserve Account pursuant to Section 8.06, on the
date such transfers are due. The Trustee shall transfer into the Sub-Pool C
Collection Account all amounts, if any, to be transferred from the Sub-Pool C
Excess Proceeds Account pursuant to Section 8.08, on the Distribution Date in
April, 1998. All amounts paid into the Sub- Pool C Collection Account under this
Agreement shall be held in trust for the Trustee and the Sub-Pool C
Certificateholders until payment of any such amounts is authorized under this
Agreement. Only the Trustee may withdraw funds from the Sub-Pool C Collection
Account.
b. On or before the Closing Date, the Trustee shall establish the Sub- Pool
H Collection Account, on behalf of the Trust, which must be an Eligible Account.
The Sub-Pool H Collection Account shall be entitled "U.S. Bank Trust National
Association, as Trustee for the benefit of holders of Sub-Pool H Certificates
Issued by Green Tree Recreational, Consumer & Equipment Trust 1998- A (Green
Tree Financial Corporation, Servicer)." The Servicer shall pay into the Sub-Pool
H 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) on the Home Equity
Contracts and Home Improvement Contracts, and all proceeds of all FHA Insurance
claims received by the Servicer with respect to the Home Improvement Contracts;
and (ii) on the Business Day immediately prior to each Distribution Date, all
Servicer Advances required to be made with respect to the Home Equity Contracts
and Home Improvement Contracts for such Distribution Date pursuant to Section
5.13. The Trustee shall pay into the Sub-Pool H Collection Account as promptly
as practicable all proceeds of all FHA Insurance claims received by the Trustee
with respect to FHA-Insured Contracts. The Company shall deposit into the Sub-
Pool H Collection Account all Class B-H 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 Sub-Pool H Collection Account all
amounts to be transferred from the Sub-Pool H Spread Account and from the Sub-
Pool H Reserve Account pursuant to Section 8.07, on the date such transfers are
due. All amounts paid into the Sub-Pool H Collection Account under this
Agreement shall be held in trust for the Trustee and the Sub-Pool H
Certificateholders until payment of any such amounts is authorized under this
Agreement. Only the Trustee may withdraw funds from the Sub-Pool H Collection
Account.
c. If the Servicer so directs, the institution maintaining the Collection
Accounts shall, in the name of the Trustee in its capacity as such, invest the
amounts in the Collection Accounts 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
appropriate Collection Account and distributed on such Distribution Date
pursuant to Section
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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 Accounts not so invested must be insured to the extent permitted
by law by the Federal Deposit Insurance Corporation. "Eligible Investments" are
any of the following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any
agency or instrumentality of the United States of America the
obligations of which are backed by the full faith and credit of
the United States of America 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 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 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 AAA
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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
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 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.
d. If at any time the Trustee receives notice (from any of Standard &
Poor's and Fitch, the Servicer or otherwise) that a 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 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. The Servicer shall
pay all FHA Insurance premiums required by FHA Regulations in respect of FHA-
Insured Contracts; if the Company is no longer the Servicer and fails to pay
such FHA Insurance premiums, the successor Servicer shall pay such premiums and
shall be entitled to reimbursement therefor in accordance with Section
8.03(a)(20). The Servicer shall comply with FHA Regulations in servicing FHA-
Insured Contracts so that the related FHA Insurance remains in full force and
effect, except for good-faith disputes relating to FHA Regulations or such FHA
Insurance.
b. In accordance with the standard of care specified in Section 5.02, the
Servicer may, in its own name, if possible, or as agent for the Trustee,
commence proceedings for the foreclosure of any subject real estate, and may
(with respect to an FHA-Insured Contract) submit a claim to FHA in lieu of
commencing foreclosure proceedings, or may take such other steps that in the
Servicer's reasonable judgment
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will maximize Liquidation Proceeds with respect to the Contract, including, for
example, the sale of the Contract to a third party for foreclosure or
enforcement and, in the case of any default on a related prior mortgage loan,
the advancing of funds to correct such default and the advancing of funds to pay
off a related prior mortgage loan, which advances are Liquidation Expenses that
will be reimbursed to the Servicer out of related Liquidation Proceeds before
the related Net Liquidation Proceeds are deposited in the appropriate Collection
Account. The Servicer shall also deposit in the appropriate Collection Account
any Net Liquidation Proceeds received in connection with any Contract which
became a Liquidated Contract in a prior Monthly Period.
c. The Servicer may sue to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Contract, the act of commencement shall be
deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Trustee on behalf of the Trust shall, at the Servicer's expense,
take such steps as the Servicer deems necessary to enforce the Contract,
including bringing suit in its name or the names of the Certificateholders.
d. 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.
e. 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 a 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.
f. 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 March
2018 in respect of a Consumer Product Contract or March 2028 in respect of a
Home Equity Contract or a Home Improvement Contract.
g. The Servicer shall enforce any due-on-sale clause in a Contract if such
enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related real property
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or Product the Servicer shall use its best efforts to obtain an assumption
agreement in connection therewith.
h. If, following the Termination Date, HUD demands reimbursement of an FHA
Insurance claim paid on an FHA-Insured Contract prior to the Termination Date,
the Servicer agrees that it will not seek to recover any such amount from the
Trustee or the Certificateholders.
i. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract, if such modification or waiver would be treated as a taxable exchange
under Section 1001 of the Code or any regulations issued thereunder.
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 appropriate
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 (including FHA Insurance Proceeds) 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.
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:
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(i) with respect to each Consumer Product 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 Consumer Product Contract financing the
purchase of a truck, one or more physical damage insurance policies;
(iii) with respect to each Consumer Product 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;
(iv) with respect to each FHA-Insured Contract, such hazard insurance
and flood insurance as may be required by FHA Regulations, it being
understood that at the Closing Date hazard insurance was not required to be
maintained under the FHA Regulations; and
(v) with respect to each Contract, other than an FHA-Insured Contract,
secured by a mortgage, deed of trust or Security deed on real property,
hazard insurance (excluding flood insurance coverage) if the initial
balance of such Contract exceeds $30,000;
in each case, issued by a company authorized to issue such policies in the state
in which the related Product or real property is located and in an amount which
is not less than the maximum insurable value of such Product or real property 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) (i), (ii) and (iii) 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 Sub-Pool C 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
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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.
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 contracts and home equity loans 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 real
property 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 applicable
Collection Account be held in bank accounts entitled substantially as follows:
"[name of depository], as agent for U.S. Bank 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
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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.
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.
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.
c. If at any time during the term of this Agreement the Trustee receives
written notice from the Company or the Servicer that the Company does not have a
long-term senior debt rating from Standard & Poor's of BBB- or higher and from
Fitch of BBB or higher, or if the Trustee otherwise becomes aware of the same,
the Trustee and the Servicer, at the Company's expense, shall take such action
as may, in the opinion of counsel to the Trustee, be necessary to perfect the
security interests in the Products securing the Contracts in the name of the
Trustee by amending the title documents of such Products or by such other
reasonable means as may, in the opinion of counsel to the Trustee, be necessary
or prudent; provided, however, that such action shall not be required if the
Trustee received written confirmation from both Standard & Poor's and Fitch that
the ratings of the Certificates would not be reduced or withdrawn by the failure
to execute and file such assignments. The Company agrees to pay all expenses
related to such perfection and to take all action necessary therefor.
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 appropriate 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.
SECTION 5.14. Maintenance of Security Interests in Products.
a. Consistent with the policies and procedures required by this Agreement,
the Servicer shall take such steps as are necessary to maintain perfection of
the security interest created by each Consumer Product Contract in the related
Product on behalf of the Trustee, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements
and continuation statements as are necessary to maintain the security interest
granted by the Obligors under the respective Contracts. The Trustee hereby
authorizes the
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Servicer, and the Servicer agrees, to take any and all steps necessary to
re-perfect such security interest on behalf of the Trustee as necessary because
of the relocation of a Product or for any other reason. In the event that the
assignment of a Consumer Product Contract to the Trustee is insufficient,
without a notation on the related Product's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Product is located, to perfect a security interest in the
related Product in favor of the Trustee, the Servicer hereby agrees that the
Servicer's designation as the secured party on the certificate of title is in
its capacity as agent of the Trustee.
b. Upon the occurrence of an Event of Termination, the Trustee and the
Servicer shall take or cause to be taken such action as may, in the opinion of
counsel to the Trustee, be necessary to perfect or re-perfect the security
interests in the Products securing the Consumer Product Contracts in the name of
the Trustee by amending the title documents of such Products or by such other
reasonable means as may, in the opinion of counsel to the Trustee, be necessary
or prudent. The Servicer hereby agrees to pay all expenses related to such
perfection or re-perfection and to take all action necessary therefor.
SECTION 5.15. Covenants of Servicer. By its execution and delivery of this
Agreement, the Servicer makes the following covenants on which the Trustee
relies in accepting the Contracts and issuing the Certificates.
a. Liens in Force. The Product or real property securing a Contract shall
not be released in whole or in part from the security interest or lien granted
by the Contract, mortgage, deed of trust or other security deed, except upon
payment in full of the Contract or as otherwise contemplated herein;
b. No Impairment. The Servicer shall do nothing to impair the rights of the
Trustee, or the Certificateholders in the Contracts, the Insurance Policies or
the other Collateral Security; and
c. No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Contract, except in accordance with Section 5.06.
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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), 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, Standard & Poor's, Fitch or a
Certificateholder, furnish the Trustee, Standard & Poor's, Fitch or such
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, 1999, 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, 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 and home equity loans, 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 Sub-Pool C
Certificates 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
Sub-Pool C 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
Sub- Pool C Certificates allocable to interest, separately
identifying any Unpaid Class A-1C Interest Shortfall, Unpaid
Class A-2C Interest Shortfall, Unpaid Class A-3C Interest
Shortfall, Unpaid Class A-4C Interest Shortfall and any
Unpaid Class B-C Interest Shortfall included in such
distribution and any remaining Unpaid Class A-1C Interest
Shortfall, Unpaid Class A-2C Interest Shortfall, Unpaid
Class A-3C Interest Shortfall, Unpaid Class A- 4C Interest
Shortfall and any Unpaid Class B-C Interest Shortfall after
giving effect to such distribution;
(ii) the Class A-1C Interest Shortfall, the Class A-2C Interest
Shortfall, the Class A-3C Interest Shortfall, the Class A-4C
Interest Shortfall and the Class B-C Interest Shortfall, if
any, for such Distribution Date;
(iii) the amount of such distribution to Holders of each Class of
Sub-Pool C Certificates allocable to principal, separately
identifying the aggregate amount of any Principal
Prepayments and Unpaid Class A-1C Principal Shortfall,
Unpaid Class A-2C Principal Shortfall, Unpaid Class A-3C
Principal Shortfall, Unpaid Class A-4C Principal Shortfall
and any Unpaid Class B-C Principal Shortfall included
therein, and any remaining Unpaid Class A-1C Principal
Shortfall, Unpaid Class A-2C Principal Shortfall, Unpaid
Class A-3C Principal Shortfall, Unpaid Class A- 4C Principal
Shortfall and any Unpaid Class B-C Principal Shortfall after
giving effect to such distribution;
(iv) the Class A-1C Principal Shortfall, the Class A-2C Principal
Shortfall, the Class A-3C Principal Shortfall, the Class
A-4C Principal Shortfall and the Class B-C Principal
Shortfall, if any, for such Distribution Date;
(v) the Class A-1C Principal Balance, the Class A-2C Principal
Balance, the Class A-3C Principal Balance, the Class A-4C
Principal Balance and the Class B-C Principal Balance after
giving effect to the distribution of principal on such
Distribution Date;
(vi) the amount of any Class A-2C Principal Liquidation Loss,
Class A- 3C Principal Liquidation Loss, Class A-4C Principal
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Liquidation Loss, and Class B-C 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 Class A-2C Liquidation Loss Interest Amount,
the Class A-3C Liquidation Loss Interest Amount, the Class
A-4C Liquidation Loss Interest Amount, the Class B-C
Liquidation Loss Interest Amount and any Unpaid Class A-2C
Liquidation Loss Interest Shortfall, Unpaid Class A-3C
Liquidation Loss Interest Shortfall, Unpaid Class A-4C
Liquidation Loss Interest Shortfall and Unpaid Class B-C
Liquidation Loss Interest Shortfall included therein, and
any remaining Unpaid Class A-2C Liquidation Loss Interest
Shortfall, Unpaid Class A-3C Liquidation Loss Interest
Shortfall, Unpaid Class A-4C Liquidation Loss Interest
Shortfall and Unpaid Class B-C Liquidation Loss Interest
Shortfall after giving effect to such distribution;
(viii) the Class A-2C Liquidation Loss Interest Shortfall, the
Class A-3C Liquidation Loss Interest Shortfall, the Class
A-4C Liquidation Loss Interest Shortfall and the Class B-C
Liquidation Loss Interest Shortfall, if any, for such
Distribution Date;
(ix) the amounts, if any, deposited in or withdrawn from the
Sub-Pool C Spread Account and Sub-Pool C Reserve Account on
such Distribution Date;
(x) the amount, if any, on deposit in the Sub-Pool C Spread
Account after giving effect to all withdrawals and deposits
on such Distribution Date;
(xi) the amount, if any, of the Class B-C Guaranty Payment on
such Distribution Date;
(xii) the amount of the Sub-Pool C 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 Sub-Pool C Monthly
Servicing Fee paid to the Servicer with respect to such
Monthly Period;
(xiii) the Sub-Pool C Scheduled Principal Balance for such
Distribution Date;
(xiv) the Pool Factor for each Class of Sub-Pool C Certificates
after giving effect to the distribution of principal on such
Distribution Date;
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(xv) the number and aggregate principal balances of Consumer
Product 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 by type of Product;
(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 Consumer Product 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 the Consumer Product Contracts and
such Distribution Date, and the aggregate amount paid to the
Servicer as reimbursement of Servicer Advances made on prior
Distribution Dates.
c. Concurrently with each distribution to Holders of Sub-Pool H
Certificates 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
Sub-Pool H 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
Sub- Pool H Certificates allocable to interest, separately
identifying any Unpaid Class A-1H Interest Shortfall, Unpaid
Class A-2H Interest Shortfall, Unpaid Class A-3H Interest
Shortfall, Unpaid Class A-4H Interest Shortfall and any
Unpaid Class B-H Interest Shortfall included in such
distribution and any remaining Unpaid Class A-1H Interest
Shortfall, Unpaid Class A-2H Interest Shortfall, Unpaid
Class A-3H Interest Shortfall, Unpaid Class A- 4H Interest
Shortfall and any Unpaid Class B-H Interest Shortfall after
giving effect to such distribution;
(ii) the Class A-1H Interest Shortfall, the Class A-2H Interest
Shortfall, the Class A-3H Interest Shortfall, the Class A-4H
Interest Shortfall and the Class B-H Interest Shortfall, if
any, for such Distribution Date;
(iii) the amount of such distribution to Holders of each Class of
Sub-Pool H Certificates allocable to principal, separately
identifying the aggregate amount of any Principal
Prepayments and Unpaid Class A-1H Principal Shortfall,
Unpaid Class A-2H Principal
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Shortfall, Unpaid Class A-3H Principal Shortfall, Unpaid
Class A-4H Principal Shortfall and any Unpaid Class B-H
Principal Shortfall included therein, and any remaining
Unpaid Class A-1H Principal Shortfall, Unpaid Class A-2H
Principal Shortfall, Unpaid Class A-3H Principal Shortfall,
Unpaid Class A- 4H Principal Shortfall and any Unpaid Class
B-H Principal Shortfall after giving effect to such
distribution;
(iv) the Class A-1H Principal Shortfall, the Class A-2H Principal
Shortfall, the Class A-3H Principal Shortfall, the Class
A-4H Principal Shortfall and the Class B-H Principal
Shortfall, if any, for such Distribution Date;
(v) the Class A-1H Principal Balance, the Class A-2H Principal
Balance, the Class A-3H Principal Balance, the Class A-4H
Principal Balance and the Class B-H Principal Balance after
giving effect to the distribution of principal on such
Distribution Date;
(vi) the amount, if any, of any Class A-2H Principal Liquidation
Loss, Class A-3H Principal Liquidation Loss, Class A-4H
Principal Liquidation Loss, and Class B-H 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 Class A-2H Liquidation Loss Interest Amount,
the Class A-3H Liquidation Loss Interest Amount, the Class
A-4H Liquidation Loss Interest Amount, the Class B-H
Liquidation Loss Interest Amount and any Unpaid Class A-2H
Liquidation Loss Interest Shortfall, Unpaid Class A-3H
Liquidation Loss Interest Shortfall, Unpaid Class A-4H
Liquidation Loss Interest Shortfall, and Unpaid Class B-H
Liquidation Loss Interest Shortfall included therein, and
any remaining Unpaid Class A-2H Liquidation Loss Interest
Shortfall, Unpaid Class A-3H Liquidation Loss Interest
Shortfall, Unpaid Class A-4H Liquidation Loss Interest
Shortfall, and Unpaid Class B-H Liquidation Loss Interest
Shortfall after giving effect to such distribution;
(viii) the Class A-2H Liquidation Loss Interest Shortfall, the
Class A-3H Liquidation Loss Interest Shortfall, the Class
A-4H Liquidation Loss Interest Shortfall and the Class B-H
Liquidation Loss Interest Shortfall, if any, for such
Distribution Date;
(ix) the amounts, if any, deposited in or withdrawn from the
Sub-Pool H Spread Account and Sub-Pool H Reserve Account on
such Distribution Date;
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(x) the amount, if any, on deposit in the Sub-Pool H Spread
Account after giving effect to all withdrawals and deposits
on such Distribution Date;
(xi) the amount, if any, of the Class B-H Guaranty Payment on
such Distribution Date;
(xii) the amount of the Sub-Pool H 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 Sub-Pool H Monthly
Servicing Fee paid to the Servicer with respect to such
Monthly Period;
(xiii) the Sub-Pool H Scheduled Principal Balance for such
Distribution Date;
(xiv) the Pool Factor for each Class of Sub-Pool H Certificates
after giving effect to the distribution of principal on such
Distribution Date;
(xv) the number and aggregate principal balances of Home Equity
Contracts and Home Improvement Contracts delinquent (a)
30-59 days and (b) 60 or more days;
(xvi) the number of Home Equity Contracts and Home Improvement
Contracts that were declared in default during the Monthly
Period ending immediately prior to such Distribution Date;
(xvii) the number of Home Equity Contracts and Home Improvement
Contracts that were declared in default but not yet
liquidated as of the last day of the Monthly Period ending
immediately prior to such Distribution Date;
(xviii) the number of Home Equity Contracts and Home Improvement
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.
d. The Trustee and the Servicer shall inform any of the Certificateholders,
Lehman Brothers Inc. or Merrill Lynch, Pierce, Fenner & Smith Incorporated, that
inquires by telephone of the information contained in the most recent Monthly
Report.
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In the case of information furnished pursuant to clauses (b)(i) through
(b)(vi) above, the amounts shall be expressed as a dollar amount per Sub-Pool C
Certificate with a 1% Class Percentage Interest in its Class or per $1,000
denomination of Sub-Pool C Certificates.
In the case of information furnished pursuant to clauses (c)(i) through
(c)(vi) above, the amounts shall be expressed as a dollar amount per Sub-Pool H
Certificate with a 1% Class Percentage Interest in its Class or per $1,000
denomination of Sub-Pool H Certificates.
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.
e. Copies of all reports provided to the Trustee for the Certificateholders
shall also be provided to 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, and each of Sub-Pool C and Sub-Pool H as
separate Grantor Trusts, pursuant to the Code and other applicable tax laws and
regulations. Each such return, statement and document shall, to the extent
required by the Code or other applicable law and at the request of the Servicer,
be signed on behalf of the Trust by the Trustee. The Trustee shall have no
responsibility whatsoever for the accuracy or completeness of any such return,
statement or document. The Servicer agrees to indemnify the Trustee and hold it
harmless for, from, against and in respect to any and all liability, loss,
damage and expense which may be incurred by the Trustee based upon or as a
result of the Trustee's execution of any and all such tax returns, statements
and documents. 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 and to treat each of Sub-
Pool C and Sub-Pool H as
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separate Grantor Trusts. 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
failure shall (i) materially and adversely affect the rights of the Trust, the
Trustee, or the Certificateholders and (ii) continue 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 a Certificate
Percentage Interest aggregating not less than 25% of either the Sub-Pool C
Certificates or the Sub-Pool H Certificates;
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.
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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% or more of each of the Sub-Pool C Certificates and the Sub-
Pool H Certificates, 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 Accounts, 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 appropriate 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 this 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
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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 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 Sub-Pool C
Certificateholders, exceed the Sub-Pool C Monthly Servicing Fee or, without the
consent of 100% of the Sub-Pool H Certificateholders, exceed the Sub-Pool H
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, 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 Standard & Poor's, Fitch and the Certificateholders at their
respective addresses appearing on the Certificate Register.
c. The Trustee shall give written notice to 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
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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.
SECTION 7.06. Transfer of Collection Accounts.
Notwithstanding the provisions of Section 7.02, if a 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.
SECTION 7.08. Waiver of Past Defaults. Holders of Certificates evidencing
Certificate Percentage Interests aggregating more than 50% of each of the Sub-
Pool C Certificates and the Sub-Pool H Certificates may, on behalf of all
Holders of Certificates, waive any default by the Servicer in the performance of
its obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
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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% of
either the Sub-Pool C Certificates or the Sub-Pool H Certificates 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- 1C Distribution
Amount, the Class A-2C Distribution Amount, the Class A-3C Distribution Amount,
the Class A-4C Distribution Amount, the Class B-C Distribution Amount, the Class
A-1H Distribution Amount, the Class A-2H Distribution Amount, the Class A-3H
Distribution Amount, the Class A-4H Distribution Amount, or the Class B-H
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 Sub-Pool C Certificate and Sub- Pool H 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
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make funds available to the Paying Agent for the payment of amounts due on the
Certificates.
SECTION 8.02. Permitted Withdrawals from the Collection Accounts.
The Trustee may, from time to time as provided herein, make withdrawals
from the Sub-Pool C or Sub-Pool H Collection Accounts as appropriate of amounts
deposited in said accounts 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 a Collection Account that was not
required to be deposited therein; or
e. to make any rebates or adjustments deemed necessary by the Servicer
pursuant to Section 5.06(e).
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 appropriate Collection Account pursuant to
such clauses.
SECTION 8.03. Payments.
a. On each Distribution Date the Trustee shall withdraw from the Sub-Pool C
Collection Account the Sub-Pool C Amount Available (as determined on the
immediately preceding Determination Date) including the amounts withdrawn by
the Collateral Agent from the Sub-Pool C Spread Account Subaccounts and from the
Sub-Pool C Reserve Account under Sections 8.06(b) and 8.06(c) respectively, and,
with respect to the Distribution Date occurring in April, 1998, the amounts
withdrawn by the Trustee from the Excess Proceeds Account under Section 8.08,
and apply such funds to make payment in the following order of priority (subject
to the limitations contained in Subsection 8.03(c) below):
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1. Monthly Servicing Fee. If neither the Company nor a wholly owned
subsidiary of the Company is the Servicer, to pay the Sub-Pool C 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 on
Consumer Product Contracts that were recovered during the prior Monthly Period;
3. Class A-1C Interest. After payment of the amounts specified in clauses
(1) and (2) above, to pay the Holders of the Class A-1C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-1C Interest Amount; and
(ii) any Unpaid Class A-1C Interest Shortfall;
4. Class A-1C Principal. After payment of the amounts specified in clauses
(1) through (3) above, to pay the Holders of the Class A-1C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-1C Percentage of the Sub-Pool C Formula Principal
Distribution Amount, to be applied to the Class A-1C Principal
Balance, but in no event more than the outstanding Class A-1C
Principal Balance; and
(ii) any Unpaid Class A-1C Principal Shortfall;
5. Class A-2C Interest. After payment of the amounts specified in clauses
(1) through (4) above, to pay the Holders of the Class A-2C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-2C Interest Amount; and
(ii) any Unpaid Class A-2C Interest Shortfall;
6. Class A-2C Principal. After payment of the amounts specified in clauses
(1) through (5) above, to pay the Holders of the Class A-2C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-2C Percentage of the Sub-Pool C Formula Principal
Distribution Amount, to be applied to the Class A-2C Principal
Balance, but in no event more than the outstanding Class A-2C
Principal Balance; and
(ii) any Unpaid Class A-2C Principal Shortfall;
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7. Class A-2C Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (6) above, to pay the Holders of the Class A-2C
Certificates the amounts, and in the priority, set forth below:
(i) any Class A-2C Liquidation Loss Interest Amount; and
(ii) any Unpaid Class A-2C Liquidation Loss Interest Shortfall;
8. Class A-2C Spread Subaccount. After payment of the amounts specified in
clauses (1) through (7) above, if any amount has been withdrawn from the Class
A-2C Spread Subaccount pursuant to Section 8.06(b), to pay to the Collateral
Agent for deposit in the Class A-2C Spread Subaccount, for the benefit of the
Pledgor, the difference, if any, between the aggregate amount of such
withdrawals and the aggregate amounts deposited in the Class A-2C Spread
Subaccount pursuant to this Section 8.03(a)(8) prior to such Distribution Date
(but in no event more than the amount necessary to cause the amount on deposit
in the Class A-2C Spread Subaccount to equal the Class A-2C Subaccount Required
Amount).
9. Class A-3C Interest. After payment of the amounts specified in clauses
(1) through (8) above, to pay the Holders of the Class A-3C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-3C Interest Amount; and
(ii) any Unpaid Class A-3C Interest Shortfall;
10. Class A-3C Principal. After payment of the amounts specified in clauses
(1) through (9) above, to pay the Holders of the Class A-3C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-3C Percentage of the Sub-Pool C Formula Principal
Distribution Amount, to be applied to the Class A-3C Principal
Balance, but in no event more than the outstanding Class A-3C
Principal Balance; and
(ii) any Unpaid Class A-3C Principal Shortfall;
11. Class A-3C Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (10) above, to pay the Holders of the Class
A-3C Certificates the amounts, and in the priority, set forth below:
(i) any Class A-3C Liquidation Loss Interest Amount; and
(ii) any Unpaid Class A-3C Liquidation Loss Interest Shortfall;
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12. Class A-3C Spread Subaccount. After payment of the amounts specified in
clauses (1) through (11) above, if any amount has been withdrawn from the Class
A-3C Spread Subaccount pursuant to Section 8.06(b), to pay to the Collateral
Agent for deposit in the Class A-3C Spread Subaccount, for the benefit of the
Pledgor, the difference, if any, between the aggregate amount of such
withdrawals and the aggregate amounts deposited in the Class A-3C Spread
Subaccount pursuant to this Section 8.03(a)(12) prior to such Distribution Date
(but in no event more than the amount necessary to cause the amount on deposit
in the Class A-3C Spread Subaccount to equal the Class A-3C Subaccount Required
Amount).
13. Class A-4C Interest. After payment of the amounts specified in clauses
(1) through (12) above, to pay the Holders of the Class A-4C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-4C Interest Amount; and
(ii) any Unpaid Class A-4C Interest Shortfall;
14. Class A-4C Principal. After payment of the amounts specified in clauses
(1) through (13) above, to pay the Holders of the Class A-4C Certificates the
amounts, and in the priority, set forth below:
(i) the Class A-4C Percentage of the Sub-Pool C Formula Principal
Distribution Amount, to be applied to the Class A-4 Principal Balance,
but in no event more than the outstanding Class A-4C Principal
Balance; and
(ii) any Unpaid Class A-4C Principal Shortfall;
15. Class A-4C Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (14) above, to pay the Holders of the Class
A-4C Certificates the amounts, and in the priority, set forth below:
(i) any Class A-4C Liquidation Loss Interest Amount; and
(ii) any Unpaid Class A-4C Liquidation Loss Interest Shortfall;
16. Class A-4C Spread Subaccount. After payment of the amounts specified in
clauses (1) through (15) above, if any amount has been withdrawn from the Class
A-4C Spread Subaccount pursuant to Section 8.06(b), to pay to Collateral Agent
for deposit in the Class A-4C Spread Subaccount, for the benefit of the Pledgor,
the difference, if any, between the aggregate amount of such withdrawals and the
aggregate amounts deposited in the Class A-4C Spread Subaccount pursuant to this
Section 8.03(a)(16) prior to such Distribution Date (but in no event more than
the amount necessary to cause the amount on deposit in the Class A-4C Spread
Subaccount to equal the Class A-4C Subaccount Required Amount).
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17. Class B-C Interest. After payment of the amounts specified in clauses
(1) through (16) above, to pay the Holders of the Class B-C Certificates the
amounts, and in the priority, set forth below:
(i) the Class B-C Interest Amount; and
(ii) any Unpaid Class B-C Interest Shortfall;
18. Class B-C Principal. After payment of the amounts specified in clauses
(1) through (17) above, to pay the Holders of the Class B-C Certificates the
amounts, and in the priority, set forth below:
(i) the Class B-C Percentage of the Sub-Pool C Formula Principal
Distribution Amount, to be applied to the Class B-C Principal Balance,
but in no event more than the outstanding Class B-C Principal Balance;
and
(ii) any Unpaid Class B-C Principal Shortfall;
19. Class B-C Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (18) above, to pay the Holders of the Class B
Certificates the amounts, and in the priority, set forth below:
(i) any Class B-C Liquidation Loss Interest Amount; and
(ii) any Unpaid Class B-C Liquidation Loss Interest Shortfall;
20. Sub-Pool C Spread Account. After payment of the amounts specified in
clauses (1) through (19) above, to pay the lesser of (i) the amount, if any, by
which the amount on deposit in the Sub-Pool C Spread Account as of the
Distribution Date is less than the Required Sub-Pool C Spread Account Amount, or
(ii) the remaining Sub-Pool C Amount Available, to the Collateral Agent for
deposit in the Sub-Pool C Spread Account, for the benefit of the Pledgor.
21. Sub-Pool C Reserve Account. After payment of the amounts specified in
clauses (1) through (20) above, to pay the lesser of (i) the amount, if any, by
which the amount on deposit in the Sub-Pool C Reserve Account as of the
Distribution Date is less than the Required Sub-Pool C Reserve Account Amount,
or (ii) the remaining Sub-Pool C Amount Available, to the Collateral Agent for
deposit in the Sub-Pool C Reserve Account, for the benefit of the Pledgor.
22. Sub-Pool H Spread Account. After payment of the amounts specified in
clauses (1) through (21) above, to pay the lesser of (i) the amount, if any, by
which the amount on deposit in the Sub-Pool H Spread Account as of the
Distribution Date is less than the Required Sub-Pool H Spread Account
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Amount, or (ii) the remaining Sub-Pool C Amount Available, to the Collateral
Agent for deposit in the Sub-Pool H Spread Account, for the benefit of the
Pledgor.
23. Sub-Pool H Reserve Account. After payment of the amounts specified in
clauses (1) through (22) above, to pay the lesser of (i) the amount, if any, by
which the amount on deposit in the Sub-Pool H Reserve Account as of the
Distribution Date is less than the Required Sub-Pool H Reserve Account Amount,
or (ii) the remaining Sub-Pool C Amount Available, to the Collateral Agent for
deposit in the Sub-Pool H Reserve Account, for the benefit of the Pledgor.
24. Monthly Servicing and Guaranty Fee. After payment of the amounts
specified in clauses (1) through (23) above, to pay the remaining Sub-Pool C
Amount Available to the Company, as compensation for its providing the Limited
Guaranty and acting as initial Servicer, as the Sub-Pool C 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. The Company
acknowledges that all amounts distributed pursuant to clauses (22) through (23)
above shall be taxable to the Company as part of the Sub-Pool C Monthly
Servicing and Guaranty Fee.
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
Sub-Pool C Collection Account to Sub-Pool C 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 Section
8.03(a): (i) amounts transferred to the Sub-Pool C Collection Account from the
Class A-2C Spread Subaccount may only be used to pay the amounts specified in
clause (5) of Section 8.03(a); amounts transferred to the Sub-Pool C Collection
Account from the Class A-3C Spread Subaccount may only be used to pay the
amounts specified in clause (9) of Section 8.03(a); amounts transferred to the
Class A-4C Spread Subaccount may only be used to pay the amounts specified in
clause (13) of Section 8.03(a); (ii) amounts transferred to the Sub-Pool C
Collection Account from the Sub-Pool C Reserve Account may only be used to pay
the amounts specified in clauses (3) through (7), (9) through (11), and (13)
through (15) of Section 8.03(a); and (iii) the amount of any Guaranty Payment
may only be used to pay the amounts specified in clauses (17) through (19) of
Section 8.03(a). Since certain Certificateholders' entitlement to amounts
withdrawn from the Sub-Pool C Collection Account may be limited by the preceding
sentence, depending on the source of such amounts in the Sub-Pool C Collection
Account, the Trustee shall keep and maintain a separate accounting of amounts
deposited in the Sub-Pool C Collection Account from the Sub-Pool C Reserve
Account, the Sub-Pool C Spread Account, the Class A-2C Spread Subaccount, the
Class A-3C Spread Subaccount, the Class A-4C Spread Subaccount or any Class B-C
Guaranty Payment, for the purpose of justifying any withdrawal of such amounts
from the Sub-Pool C Collection Account.
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d. On each Distribution Date the Trustee shall withdraw from the Sub-Pool H
Collection Account the Sub-Pool H Amount Available (as determined on the
immediately preceding Determination Date) including the amounts withdrawn by
the Collateral Agent from the Sub-Pool H Spread Account Subaccounts and from the
Sub-Pool H Reserve Account under Sections 8.07(b) and 8.07(c) respectively, and
apply such funds to make payment in the following order of priority (subject to
the limitations contained in Subsection 8.03(f) below):
1. Monthly Servicing Fee. If neither the Company nor a wholly owned
subsidiary of the Company is the Servicer, to pay the Sub-Pool H 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
on Home Equity Contracts and Home Improvement Contracts that were recovered
during the prior Monthly Period;
3. Class A-1H Interest. After payment of the amounts specified in
clauses (1) and (2) above, to pay the Holders of the Class A-1H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-1H Interest Amount; and
(ii) any Unpaid Class A-1H Interest Shortfall;
4. Class A-1H Principal. After payment of the amounts specified in
clauses (1) through (3) above, to pay the Holders of the Class A-1H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-1H Percentage of the Sub-Pool H Formula Principal
Distribution Amount, to be applied to the Class A-1H Principal
Balance, but in no event more than the outstanding Class A-1H
Principal Balance; and
(ii) any Unpaid Class A-1H Principal Shortfall;
5. Class A-2H Interest. After payment of the amounts specified in
clauses (1) through (4) above, to pay the Holders of the Class A-2H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-2H Interest Amount; and
(ii) any Unpaid Class A-2H Interest Shortfall;
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6. Class A-2H Principal. After payment of the amounts specified in
clauses (1) through (5) above, to pay the Holders of the Class A-2H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-2H Percentage of the Sub-Pool H Formula Principal
Distribution Amount, to be applied to the Class A-2H Principal
Balance, but in no event more than the outstanding Class A-2H
Principal Balance; and
(ii) any Unpaid Class A-2H Principal Shortfall;
7. Class A-2H Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (6) above, to pay the Holders of the Class
A-2H Certificates the amounts, and in the priority, set forth below:
(i) any Class A-2H Liquidation Loss Interest Amount; and
(ii) any Unpaid Class A-2H Liquidation Loss Interest Shortfall;
8. Class A-2H Spread Subaccount. After payment of the amounts
specified in clauses (1) through (7) above, if any amount has been
withdrawn from the Class A-2H Spread Subaccount pursuant to Section
8.07(b), to pay to the Collateral Agent for deposit in the Class A-2H
Spread Subaccount, for the benefit of the Pledgor, the difference, if any,
between the aggregate amount of such withdrawals and the aggregate amounts
deposited in the Class A-2H Spread Subaccount pursuant to this Section
8.03(d)(8) prior to such Distribution Date (but in no event more than the
amount necessary to cause the amount on deposit in the Class A-2H Spread
Subaccount to equal the Class A-2H Subaccount Required Amount).
9. Class A-3H Interest. After payment of the amounts specified in
clauses (1) through (8) above, to pay the Holders of the Class A-3H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-3H Interest Amount; and
(ii) any Unpaid Class A-3H Interest Shortfall;
10. Class A-3H Principal. After payment of the amounts specified in
clauses (1) through (9) above, to pay the Holders of the Class A-3H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-3H Percentage of the Sub-Pool H Formula Principal
Distribution Amount, to be applied to the Class A-3H Principal
Balance, but in no event more than the outstanding Class A-3H
Principal Balance; and
(ii) any Unpaid Class A-3H Principal Shortfall;
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11. Class A-3H Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (10) above, to pay the Holders of the
Class A-3H Certificates the amounts, and in the priority, set forth below:
(i) any Class A-3H Liquidation Loss Interest Amount; and
(ii) any Unpaid Class A-3H Liquidation Loss Interest Shortfall;
12. Class A-3H Spread Subaccount. After payment of the amounts
specified in clauses (1) through (11) above, if any amount has been
withdrawn from the Class A-3H Spread Subaccount pursuant to Section
8.07(b), to pay to the Collateral Agent for deposit in the Class A-3H
Spread Subaccount, for the benefit of the Pledgor, the difference, if any,
between the aggregate amount of such withdrawals and the aggregate amounts
deposited in the Class A-3H Spread Subaccount pursuant to this Section
8.03(d)(12) prior to such Distribution Date (but in no event more than the
amount necessary to cause the amount on deposit in the Class A-3H Spread
Subaccount to equal the Class A-3H Subaccount Required Amount).
13. Class A-4H Interest. After payment of the amounts specified in
clauses (1) through (12) above, to pay the Holders of the Class A-4H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-4H Interest Amount; and
(ii) any Unpaid Class A-4H Interest Shortfall;
14. Class A-4H Principal. After payment of the amounts specified in
clauses (1) through (13) above, to pay the Holders of the Class A-4H
Certificates the amounts, and in the priority, set forth below:
(i) the Class A-4H 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-4H Principal Balance;
and
(ii) any Unpaid Class A-4H Principal Shortfall;
15. Class A-4H Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (14) above, to pay the Holders of the
Class A-4H Certificates the amounts, and in the priority, set forth below:
(i) any Class A-4H Liquidation Loss Interest Amount; and
(ii) any Unpaid Class A-4H Liquidation Loss Interest Shortfall;
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16. Class A-4H Spread Subaccount. After payment of the amounts
specified in clauses (1) through (15) above, if any amount has been
withdrawn from the Class A-4H Spread Subaccount pursuant to Section
8.07(b), to pay to Collateral Agent for deposit in the Class A-4H Spread
Subaccount, for the benefit of the Pledgor, the difference, if any, between
the aggregate amount of such withdrawals and the aggregate amounts
deposited in the Class A-4H Spread Subaccount pursuant to this Section
8.03(d)(16) prior to such Distribution Date (but in no event more than the
amount necessary to cause the amount on deposit in the Class A-4H Spread
Subaccount to equal the Class A-4H Subaccount Required Amount).
17. Class B-H Interest. After payment of the amounts specified in
clauses (1) through (16) above, to pay the Holders of the Class B-H
Certificates the amounts, and in the priority, set forth below:
(i) the Class B-H Interest Amount; and
(ii) any Unpaid Class B-H Interest Shortfall;
18. Class B-H Principal. After payment of the amounts specified in
clauses (1) through (17) above, to pay the Holders of the Class B-H
Certificates the amounts, and in the priority, set forth below:
(i) the Class B-H Percentage of the Sub-Pool H Formula Principal
Distribution Amount, to be applied to the Class B-H Principal
Balance, but in no event more than the outstanding Class B-H
Principal Balance; and
(ii) any Unpaid Class B-H Principal Shortfall;
19. Class B-H Liquidation Loss Interest. After payment of the amounts
specified in clauses (1) through (18) above, to pay the Holders of the
Class B Certificates the amounts, and in the priority, set forth below:
(i) any Class B-H Liquidation Loss Interest Amount; and
(ii) any Unpaid Class B-H Liquidation Loss Interest Shortfall;
20. FHA Insurance Premiums. After payment of the amounts specified in
clauses (1) through (19) above, to pay to the Trustee or the Servicer, if
other than the Company or an Affiliate of the Company, the amount, if any,
of unreimbursed FHA Insurance premiums paid by the Trustee or the Servicer.
21. Sub-Pool H Spread Account. After payment of the amounts specified
in clauses (1) through (20) above, to pay the lesser of (i) the amount, if
any, by which the amount on deposit in the Sub-Pool H Spread Account as of
the Distribution Date is less than the Required Sub-Pool H Spread Account
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Amount, or (ii) the remaining Sub-Pool H Amount Available, to the
Collateral Agent for deposit in the Sub-Pool H Spread Account, for the
benefit of the Pledgor.
22. Sub-Pool H Reserve Account. After payment of the amounts specified
in clauses (1) through (21) above, to pay the lesser of (i) the amount, if
any, by which the amount on deposit in the Sub-Pool H Reserve Account as of
the Distribution Date is less than the Required Sub-Pool H Reserve Account
Amount, or (ii) the remaining Sub-Pool H Amount Available, to the
Collateral Agent for deposit in the Sub-Pool H Reserve Account, for the
benefit of the Pledgor.
23. Sub-Pool C Spread Account. After payment of the amounts specified
in clauses (1) through (22) above, to pay the lesser of (i) the amount, if
any, by which the amount on deposit in the Sub-Pool C Spread Account as of
the Distribution Date is less than the Required Sub-Pool C Spread Account
Amount, or (ii) the remaining Sub-Pool H Amount Available, to the
Collateral Agent for deposit in the Sub-Pool C Spread Account, for the
benefit of the Pledgor.
24. Sub-Pool C Reserve Account. After payment of the amounts specified
in clauses (1) through (23) above, to pay the lesser of (i) the amount, if
any, by which the amount on deposit in the Sub-Pool C Reserve Account as of
the Distribution Date is less than the Required Sub-Pool C Reserve Account
Amount, or (ii) the remaining Sub-Pool H Amount Available, to the
Collateral Agent for deposit in the Sub-Pool C Reserve Account, for the
benefit of the Pledgor.
25. Monthly Servicing and Guaranty Fee. After payment of the amounts
specified in clauses (1) through (24) above, to pay the remaining Sub-Pool
H Amount Available to the Company, as compensation for its providing the
Limited Guaranty and acting as initial Servicer, as the Sub-Pool H 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. The Company acknowledges that all amounts distributed pursuant to
clauses (22) through (24) above shall be taxable to the Company as part of
the Sub-Pool C Monthly Servicing and Guaranty Fee.
e. If the Trustee shall not have received the applicable Monthly Report by
any Distribution Date, the Trustee shall distribute all funds then in the
Sub-Pool H Collection Account to Sub-Pool H Certificateholders in accordance
with Section 8.03(d), to the extent of such funds, on such Distribution Date.
f. Notwithstanding the order of priority of payment set out in Section
8.03(d): (i) amounts transferred to the Sub-Pool H Collection Account from the
Class A-2H Spread Subaccount may only be used to pay the amounts specified in
clause (5) of Section 8.03(d); amounts transferred to the Sub-Pool H Collection
Account from
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the Class A-3H Spread Subaccount may only be used to pay the amounts specified
in clause (9) of Section 8.03(d); amounts transferred to the Class A-4H Spread
Subaccount may only be used to pay the amounts specified in clause (13) of
Section 8.03(d); (ii) amounts transferred to the Sub-Pool H Collection Account
from the Sub-Pool H Reserve Account may only be used to pay the amounts
specified in clauses (3) through (7), (9) through (11), and (13) through (15) of
Section 8.03(d); and (iii) the amount of any Guaranty Payment may only be used
to pay the amounts specified in clauses (17) through (19) of Section 8.03(d).
Since certain Certificateholders' entitlement to amounts withdrawn from the
Sub-Pool H Collection Account may be limited by the preceding sentence,
depending on the source of such amounts in the Sub-Pool H Collection Account,
the Trustee shall keep and maintain a separate accounting of amounts deposited
in the Sub-Pool H Collection Account from the Sub-Pool H Reserve Account, the
Sub-Pool H Spread Account, the Class A-2H Spread Subaccount, the Class A-3H
Spread Subaccount, the Class A-4H Spread Subaccount or any Class B-H Guaranty
Payment, for the purpose of justifying any withdrawal of such amounts from the
Sub-Pool H 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 Class B-C Guaranty Payment (if any) and the Class B-H Guaranty Payment
(if any) for such Distribution Date. Not later than the Business Day preceding
each Distribution Date, the Company shall deposit the Class B-C Guaranty
Payment, if any, for such Distribution Date into the Sub-Pool C Collection
Account, and the Class B-H Guaranty Payment, if any, into the Sub-Pool H
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.
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-C Certificateholders and the Class B-H 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
Standard & Poor's and Fitch.
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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 Consumer Product Contracts and all Products
acquired in respect of any Consumer Product 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 Consumer
Product Contract (other than any Consumer Product 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 Sub-Pool C Certificate Principal
Balance plus any unpaid fees and expenses of the Trustee),
plus, in either case, any Unpaid Class A-1C Interest Shortfall, Unpaid Class A-
2C Interest Shortfall, Unpaid Class A-3C Interest Shortfall, Unpaid Class A-4C
Interest Shortfall, Unpaid Class B-C Interest Shortfall, Class A-2C Principal
Liquidation Loss, Class A-3C Principal Liquidation Loss, Class A-4C Principal
Liquidation Loss, Class B-C Principal Liquidation Loss, Unpaid Class A-2C
Liquidation Loss Interest Shortfall, Unpaid Class A-3C Liquidation Loss Interest
Shortfall, Unpaid Class A-4C Liquidation Loss Interest Shortfall, Unpaid Class
B-C Liquidation Loss Interest Shortfall, as well as one month's interest at the
applicable Contract Rate on the Scheduled Principal Balance of each Consumer
Product Contract (including any Consumer Product Contract as to which the
related Product has been repossessed).
b. The purchase by the Company or the Servicer of all of the Consumer
Product 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 Sub-
Pool C Scheduled Principal Balance, as of the end of the Monthly Period
immediately preceding such Distribution Date, aggregating less than 10% of the
Cutoff Date Sub-Pool C Principal 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 Sub-Pool C 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 Consumer Product
Contracts, the Company shall deposit in the Sub-Pool C Collection Account on the
relevant Distribution Date in immediately available funds an amount equal to the
above-described purchase price and upon
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such deposit Sub-Pool C 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 Consumer Contracts, and the Trustee shall execute all
assignments, endorsements and other instruments necessary to effectuate such
transfer.
c. Subject to the conditions in subsection (d) below, the Company or the
Servicer may repurchase all of the Home Equity Contracts and Home Improvement
Contracts and all real estate acquired in respect of any Home Equity Contract or
Home Improvement 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 Home Equity
Contract and Home Improvement Contract (other than any Home Equity Contract
and Home Improvement Contract as to which title to the underlying real
estate has been acquired and whose fair market value is included pursuant
to clause (y) below), plus (y) the fair market value of such acquired real
estate (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 Sub-Pool H Certificate Principal
Balance plus any unpaid fees and expenses of the Trustee),
plus, in either case, any Unpaid Class A-1H Interest Shortfall, Unpaid Class A-
2H Interest Shortfall, Unpaid Class A-3H Interest Shortfall, Unpaid Class A-4H
Interest Shortfall, Unpaid Class B-H Interest Shortfall, Class A-2H Principal
Liquidation Loss, Class A-3H Principal Liquidation Loss, Class A-4H Principal
Liquidation Loss, Class B-H Principal Liquidation Loss, Unpaid Class A-2H
Liquidation Loss Interest Shortfall, Unpaid Class A-3H Liquidation Loss Interest
Shortfall, Unpaid Class A-4H Liquidation Loss Interest Shortfall, Unpaid Class
B-H Liquidation Loss Interest Shortfall, as well as one month's interest at the
applicable Contract Rate on the Scheduled Principal Balance of each Home Equity
Contract and Home Improvement Contract (including any Home Equity Contract and
Home Improvement Contract as to which the related real estate has been
foreclosed upon).
d. The purchase by the Company or the Servicer of all of the Home Equity
Contracts and Home Improvement Contracts pursuant to Section 8.05(c) above shall
be at the option of the Company on any Distribution Date, but shall be
conditioned upon (1) the Sub-Pool H Scheduled Principal Balance, as of the end
of the Monthly Period immediately preceding such Distribution Date, aggregating
less than 10% of the Cutoff Date Sub-Pool H Principal 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
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delivered to the Trustee an unqualified Opinion of Counsel stating that payment
of the purchase price to the Sub-Pool H 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 Home Equity Contracts and
Home Improvement Contracts, the Company shall deposit in the Sub-Pool H
Collection Account on the relevant Distribution Date in immediately available
funds an amount equal to the above-described purchase price and upon such
deposit Sub-Pool H 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 Home Equity Contracts and Home Improvement Contracts, and the
Trustee shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer.
SECTION 8.06. Sub-Pool C Spread Account and Sub-Pool C Reserve Account and
Withdrawals.
a. All amounts deposited in the Sub-Pool C Spread Account shall be deemed
to be deposited first in the Class A-2C Spread Subaccount until the Class A-2C
Spread Subaccount equals the Class A-2C Subaccount Required Amount, second in
the Class A-3C Spread Subaccount until the Class A-3C Spread Subaccount equals
the Class A-3C Subaccount Required Amount, third, in the Class A-4C Spread
Subaccount until the Class A-4C Spread Subaccount equals the Class A-4C
Subaccount Required Amount. All amounts held in the Sub-Pool C Reserve Account
and the Sub-Pool C Spread Account shall be invested as provided in the Sub-Pool
C Reserve Account Pledge Agreement and Sub-Pool C Spread Account Pledge
Agreement, respectively. The Sub-Pool C Reserve Account and the Sub-Pool C
Spread Account are not, and shall not under any circumstances be deemed to be,
included in the Trust.
b. Not later than the Business Day prior to each Distribution Date, based
on the information set forth in the related Monthly Report, and to the extent
there are insufficient funds to make the distributions in respect of interest on
the Class A-2C, A-3C and A-4C Certificates in the amounts described in Sections
8.03(a)(5), 8.03(a)(9) and 8.03(a)(13), respectively, the Servicer shall deliver
to the Trustee and the Collateral Agent, by hand delivery, telex or facsimile
transmission, a written notice in the form attached hereto as Exhibit L (a "Sub-
Pool C Spread Account Deficiency Notice") specifying the amount of the
insufficiency, if any, for each such Class, for such Distribution Date. Such
Sub-Pool C Spread Account Deficiency Notice shall direct the Collateral Agent to
remit such amount (to the extent of funds then on deposit) from the related Sub-
Pool C Spread Account Subaccount for deposit in the Sub-Pool C Collection
Account on the Distribution Date.
c. Not later than the Business Day prior to each Distribution Date, based
on the information set forth in the related Monthly Report, and to the extent,
after giving effect to any deposit in the Sub-Pool C Collection Account made
pursuant to
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Section 8.06(b), there are insufficient funds to make the distributions in the
amounts described in clauses (3) through (7), (9) through (11), and (13) through
(15) of Section 8.03(a), the Servicer shall deliver to the Trustee and the
Collateral Agent, by hand delivery, telex or facsimile transmission, a written
notice in the form attached hereto as Exhibit M (a "Sub- Pool C Reserve Account
Deficiency Notice") specifying the amount of the insufficiency, if any, for such
Distribution Date. Such Sub-Pool C Reserve Account Deficiency Notice shall
direct the Collateral Agent to remit such amount (to the extent of funds on
deposit) from the Sub-Pool C Reserve Account for deposit in the Sub-Pool C
Collection Account on the Distribution Date.
d. In the event that the sum of the amounts on deposit in the Sub-Pool C
Reserve Account exceeds the Required Sub-Pool C Reserve Account Amount, or any
of the amounts on deposit in the subaccounts of the Sub-Pool C Spread Account
exceeds the Class A-2C Subaccount Required Amount, the Class A-3C Subaccount
Required Amount, or the Class A-4C Subaccount Required Amount, respectively, the
excess, to the extent not otherwise required to be transferred to the Sub-Pool H
Spread Account or the Sub-Pool H Reserve Account pursuant to Section 8.03(a)(22)
or (23) shall be released to the Pledgor.
SECTION 8.07. Sub-Pool H Spread Account and Sub-Pool H Reserve Account and
Withdrawals.
a. All amounts deposited in the Sub-Pool H Spread Account shall be deemed
to be deposited first in the Class A-2H Spread Subaccount until the Class A-2H
Spread Subaccount equals the Class A-2H Subaccount Required Amount, second in
the Class A-3H Spread Subaccount until the Class A-3H Spread Subaccount equals
the Class A-3H Subaccount Required Amount, third, in the Class A-4H Spread
Subaccount until the Class A-4H Spread Subaccount equals the Class A-4H
Subaccount Required Amount. All amounts held in the Sub-Pool H Reserve Account
and the Sub-Pool H Spread Account shall be invested as provided in the Sub-Pool
H Reserve Account Pledge Agreement and Sub-Pool H Spread Account Pledge
Agreement, respectively. The Sub-Pool H Reserve Account and the Sub-Pool H
Spread Account are not, and shall not under any circumstances be deemed to be,
included in the Trust.
b. Not later than the Business Day prior to each Distribution Date, based
on the information set forth in the related Monthly Report, and to the extent
there are insufficient funds to make the distributions in respect of interest on
the Class A-2H, A-3H and A-4H Certificates in the amounts described in Sections
8.03(a)(5), 8.03(d)(9) and 8.03(d)(13), respectively, the Servicer shall deliver
to the Trustee and the Collateral Agent, by hand delivery, telex or facsimile
transmission, a written notice in the form attached hereto as Exhibit L (a "Sub-
Pool H Spread Account Deficiency Notice") specifying the amount of the
insufficiency, if any, for each such Class, for such Distribution Date. Such
Sub-Pool H Spread Account Deficiency Notice shall direct the Collateral Agent to
remit such amount (to the extent of funds then on deposit) from the related Sub-
Pool H Spread Account Subaccount for deposit in the Sub-Pool H Collection
Account on the Distribution Date.
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c. Not later than the Business Day prior to each Distribution Date, based
on the information set forth in the related Monthly Report, and to the extent,
after giving effect to any deposit in the Sub-Pool H Collection Account made
pursuant to Section 8.07(b), there are insufficient funds to make the
distributions in the amounts described in clauses (3) through (7), (9) through
(11), and (13) through (15) of Section 8.03(d), the Servicer shall deliver to
the Trustee and the Collateral Agent, by hand delivery, telex or facsimile
transmission, a written notice in the form attached hereto as Exhibit M (a "Sub-
Pool H Reserve Account Deficiency Notice") specifying the amount of the
insufficiency, if any, for such Distribution Date. Such Sub-Pool H Reserve
Account Deficiency Notice shall direct the Collateral Agent to remit such amount
(to the extent of funds on deposit) from the Sub-Pool H Reserve Account for
deposit in the Sub-Pool H Collection Account on the Distribution Date.
d. In the event that the sum of the amounts on deposit in the Sub-Pool H
Reserve Account exceeds the Required Sub-Pool H Reserve Account Amount, or any
of the amounts on deposit in the subaccounts of the Sub-Pool H Spread Account
exceeds the Class A-2H Subaccount Required Amount, the Class A-3H Subaccount
Required Amount, or the Class A-4H Subaccount Required Amount, respectively, the
excess, to the extent not otherwise required to be transferred to the Sub-Pool C
Spread Account or the Sub-Pool C Reserve Account pursuant to Section 8.03(d)(23)
or (24) shall be released to the Pledgor.
SECTION 8.08. Sub-Pool C Excess Proceeds Account. On or before the Closing
Date the Trustee shall establish the Sub-Pool C Excess Proceeds Account on
behalf of the Trust, which must be an Eligible Account, and shall deposit
therein an amount equal to the Excess Proceeds received from the Company under
Section 2.02(s). The Sub-Pool C Excess Proceeds Account shall be entitled "U.S.
Bank Trust National Association as Trustee for the benefit of holders of Sub-
Pool C Certificates, Green Tree Recreational, Equipment and Consumer Trust 1998-
A." On the Distribution Date occurring in April, 1998 the Trustee shall withdraw
the amount of funds in the Sub-Pool C Excess Proceeds Account and deposit the
same in the Sub-Pool C Collection Account for distribution on such Distribution
Date in accordance with Section 8.03(a). The Trustee on behalf of the Trust
shall be the legal owner of the Sub-Pool C Excess Proceeds Account. Green Tree
Finance Corp.--Two shall be the beneficial owner of the Sub-Pool C Excess
Proceeds Account, subject to the foregoing power of the Trustee to transfer
amounts in the Sub-Pool C Excess Proceeds Account to the Sub-Pool C Collection
Account. Funds in the Sub-Pool C Excess Proceeds Account shall, at the direction
of the Servicer, be invested in Eligible Investments that mature no later than
the Business Day prior to the Distribution Date occurring in April, 1998. All
amounts earned on deposits in the Excess Proceeds Account shall be taxable to
Green Tree Finance Corp.--Two. Any losses on such investment shall be deposited
in the Sub-Pool C Excess Proceeds Account by Green Tree Finance Corp.--Two out
of its own funds immediately as realized.
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ARTICLE IX
THE CERTIFICATES
----------------
SECTION 9.01. The Certificates.
The Sub-Pool C Certificates shall be substantially in the forms set forth
in Exhibits A-1 and B-1, 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
Sub-Pool C Certificates shall include (i) one or more Class A-1C Certificates
representing $320,870,000 initial aggregate principal balance, (ii) one or more
Class A-2C Certificates representing $16,695,000 initial aggregate principal
balance, (iii) one or more Class A-3C Certificates representing $12,980,000
initial aggregate principal balance, (iv) one or more Class A-4C Certificates
representing $7,420,000 initial aggregate principal balance, and (v) one or more
Class B-C Certificates representing $12,986,947 initial aggregate principal
balance, beneficial ownership of such Classes of Sub-Pool C 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-C Certificate with a denomination representing the remainder of the Original
Class B-C Principal Balance.
The Sub-Pool H Certificates shall be substantially in the forms set forth
in Exhibits A-2 and B-2, 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
Sub-Pool H Certificates shall include (i) one or more Class A-1H Certificates
representing $87,750,000 initial aggregate principal balance, (ii) one or more
Class A-2H Certificates representing $18,070,000 initial aggregate principal
balance, (iii) one or more Class A-3H Certificates representing $9,680,000
initial aggregate principal balance, (iv) one or more Class A-4H Certificates
representing $7,740,000 initial aggregate principal balance, and (v) one or more
Class B-H Certificates representing $5,808,053 initial aggregate principal
balance, beneficial ownership of such Classes of Sub-Pool H 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-H Certificate with a denomination representing the remainder of the Original
Class B-H 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
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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-2C, A-3C, A-4C, B-C, A-1H, A-2H, A-3H, A-4H
or B-H Certificate or any interest therein shall be made to any employee
benefit plan, trust or account that is 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-C or B-H 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 Certificate presented or surrendered
for transfer or exchange shall be duly endorsed by, or shall be accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing.
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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 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 Interests of
each of the Sub-Pool C Certificates and the Sub-Pool H Certificates 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 Sub-Pool C Certificates or Sub-Pool
H Certificates (the "Definitive Certificates") to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Sub-Pool C Certificates or Sub-
Pool H 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
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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 two Class A-1C Certificates, one Class A-2C Certificate, one Class A-
3C Certificate, one Class A-4C Certificate, one Class B-C Certificate, one Class
A-1H Certificates, one Class A-2H Certificate, one Class A-3H Certificate, one
Class A-4H Certificate, and one Class B-H 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-1C Principal Balance,
the Original Class A-2C Principal Balance, the Original Class A-3C Principal
Balance, the Original Class A-4C Principal Balance, the Original Class B-C
Principal Balance, the Original Class A-1H Principal Balance, the Original Class
A-2H Principal Balance, the Original Class A-3H Principal Balance, the Original
Class A-4H Principal Balance and the Original Class B-H Principal Balance
respectively. If, however, the aggregate principal amount of a Class of
Certificates exceeds $200,000,000, one 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 Certificate registered in the name of the Depositary's nominee shall
bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to 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
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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.
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 of either the Sub-Pool C Certificates or the Sub-Pool H
Certificates (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.
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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, the
Custodian and the Certificateholders and the Servicer (if not the Company)
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, the
Custodian, 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, including, without
limitation, any failure to comply with FHA Regulations in enforcing or obtaining
insurance proceeds for an FHA-Insured 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 each of the Sub-Pool C Certificates and
the Sub-Pool H Certificates 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 a Certificate Percentage Interest aggregating not less than 25% of
the Sub-Pool C Certificates or the Sub-Pool H Certificates, as applicable.
e. The Trustee shall maintain the Home Equity Contract Files and Home
Improvement Contract Files at its office or with a duly appointed Custodian, who
shall act as the agent of the Trustee on behalf of the Sub-Pool H
Certificateholders. The Trustee may release a Home Equity Contract File or Home
Improvement Contract File pursuant to Section 11.14.
f. The Trustee may rely and shall be protected in acting or refraining from
taking any action in reliance on the advice of the Servicer in all matters with
respect to FHA Insurance. The Trustee shall not be liable for any actions taken
by the Servicer with respect to FHA Insurance, including but not limited to the
maintenance of such insurance and the submission of claims to FHA.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. The Trustee shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or refraining from
acting upon any resolution, Officer's Certificate, certificate of a Servicing
Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
b. The Trustee may consult with counsel and any opinion of any counsel for
the Company or the Servicer shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance with such Opinion of Counsel;
c. The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct or defend any
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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, 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 a
Certificate Percentage Interest representing 25% or more of either the Sub-
Pool C Certificates or the Sub-Pool H Certificates; 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 Spread Account Pledge Agreements or in the Reserve Account
Pledge Agreements. The Trustee makes no representations as to the validity or
sufficiency of this Agreement, of the Spread Account Pledge Agreements, the
Reserve Account Pledge Agreements, or 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 Accounts by the Servicer.
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SECTION 11.04. Rights of Certificateholders to Direct Trustee and to Waive
Event of Termination.
Holders of Certificates evidencing a Certificate Percentage Interest
representing 25% or more of either the Sub-Pool C Certificates or the Sub-Pool H
Certificates 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 provided further
that the Trustee shall instead follow the directions of Holders of Certificates
evidencing Certificate Percentage Interests aggregating 51% of each of the Sub-
Pool C Certificates or the Sub-Pool H Certificates or more whenever it receives
conflicting directions from Certificateholders. Holders of each Class of Sub-
Pool C Certificates or Sub-Pool H 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
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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 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 Standard & Poor's of at least BBB 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. The Trustee shall at all
times to be a Title I approved lender pursuant to FHA Regulations.
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 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
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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.
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
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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 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 Sub-Pool C and Sub-Pool H as separate Grantor
Trusts and the Trustee shall execute such returns.
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
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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 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.
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<PAGE>
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.
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.
SECTION 11.14. Trustee to Cooperate.
a. Upon payment in full on any Contract, the Servicer will notify the
Trustee and the Company (if the Company is not the Servicer) on the next
succeeding 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) and shall
request delivery of the Contract and Contract File to the Servicer. Upon receipt
of such delivery and request, the Trustee shall promptly release or cause to be
released such Contract and Contract File to the Servicer. Upon receipt of such
Contract and Contract File, each of the Company (if different from the Servicer)
and the Servicer is authorized to execute an instrument in satisfaction of such
Contract and to do such other acts and execute such other documents as the
Servicer deems necessary to discharge the Obligor thereunder and eliminate any
lien on the related real estate. The Servicer shall determine when a Contract
has been paid in full; provided that, 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,
without any right of reimbursement therefor (except from additional amounts
recovered from the related Obligor or otherwise in respect of such Contract),
and deposited in the Collection Accounts.
b. If the Servicer elects to submit a claim to FHA under the FHA Insurance
in respect of an FHA-Insured Contract and payment is received from FHA, the
Servicer shall notify the Trustee and the Company (if the Company is not the
Servicer) on the next succeeding 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 appropriate Collection Account pursuant to Section 5.05 have
been so deposited) and shall request delivery of the Contract and Contract File
to the Servicer. Upon
11-9
<PAGE>
receipt of such delivery and request, the Trustee shall promptly release or
cause to be released such Contract and Contract File to the Servicer.
c. From time to time as appropriate for servicing, foreclosing, and making
a claim for FHA Insurance coverage in connection with an FHA-Insured Contract,
the Trustee shall, upon written request of a Servicing Officer and delivery to
the Trustee of a receipt signed by such Servicing Officer, cause the original
Contract and the related Contract File to be released to the Servicer and shall
execute such documents as the Servicer shall deem necessary to the prosecution
of any such proceedings. Upon request of a Servicing Officer, the Trustee shall
perform such other acts as reasonably requested by the Servicer and otherwise
cooperate with the Servicer in enforcement of the Certificateholders' rights and
remedies with respect to Contracts.
d. The Servicer's receipt of a Contract and/or Contract File shall obligate
the Servicer to return the original Contract and the related Contract File to
the Trustee when its need by the Servicer has ceased unless the Contract shall
be liquidated or repurchased as described in Section 3.05 or 8.05.
SECTION 11.15. Certain Matters Relating to FHA Insurance.
a. In the event the Company and the successor Servicer, if any, shall fail
to pay all FHA Insurance premiums with respect to the FHA-Insured Contracts
required by FHA Regulations, the Trustee shall pay such FHA Insurance premiums
and shall be entitled to reimbursement for such amounts pursuant to Section
8.03(d)(20).
b. If, following the Termination Date, HUD demands reimbursement from the
Trustee of an FHA Insurance claim paid on an FHA-Insured Contract prior to the
termination of the Trust, the Trustee agrees that it will not seek to recover
any such amount from any Person other than the Servicer that submitted such
claim.
11-10
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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 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 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 Trust Administration, Structured Finance. The Trustee will
give prompt written
12-1
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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 each of the Sub-Pool C Scheduled Principal Balance
and the Sub-Pool H Scheduled Principal Balance is reduced to zero or the last
Contract has been liquidated and all Products repossessed and all real estate
acquired through foreclosure 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 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.
12-2
<PAGE>
c. Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed from the Sub-Pool C 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 Sub-Pool C Class Percentage
Interests an amount equal to (i) as to Sub-Pool C Certificates (other than the
Class B-C Certificates), the Class A-1C Principal Balance, the Class A-2C
Principal Balance, the Class A-3C Principal Balance, the Class A-4C Principal
Balance, any Class A-2C Principal Liquidation Loss, any Class A-3C Principal
Liquidation Loss, and any Class A-4C Principal Liquidation Loss, together with
any Unpaid Class A-2C Interest Shortfall, any Unpaid Class A-3C Interest
Shortfall, any Unpaid Class A-4C Interest Shortfall, any Unpaid Class A-2C
Liquidation Loss Interest Shortfall, any Unpaid Class A-3C Liquidation Loss
Interest Shortfall, any Unpaid Class A-4C Liquidation Loss Interest Shortfall,
and one month's interest at the Class A-1C Pass-Through Rate, the Class A-2C
Pass-Through Rate, the Class A-3C Pass-Through Rate, and the Class A-4C Pass-
Through Rate on the sum of the Class A-1C Principal Balance, the Class A-2C
Principal Balance and any Class A-2C Liquidation Loss, the Class A-3C Principal
Balance and any Class A-3C Liquidation Loss, and the Class A-4C Principal
Balance and any Class A-4C Liquidation Loss, respectively, and (ii) as to Class
B-C Certificates, the Class B-C Principal Balance and any Class B-C Principal
Liquidation Loss, together with any Unpaid Class B-C Interest Shortfall, any
Unpaid Class B-C Liquidation Loss Interest Shortfall, and one month's interest
at the Class B-C Pass-Through Rate on the sum of the Class B-C Principal Balance
and any Class B-C Principal Liquidation Loss, and (iii) the amount which remains
on deposit in the Sub-Pool C Collection Account (other than amounts retained to
meet claims) after application pursuant to clauses (i) and (ii) above to the
Company; provided that any Sub-Pool C Guaranty Payment deposited in the Sub-Pool
C Collection Account shall be distributed only to the Class B-C
Certificateholders and any amount transferred from the Class A-2C Spread
Subaccount shall be distributed only to the Class A-2C Certificateholders, any
amount transferred from the Class A-3C Spread Subaccount shall be distributed
only to the Class A-3C Certificateholders, any amount transferred from the Class
A-4C Spread Subaccount shall be distributed only to the Class A-4C
Certificateholders, and any amount transferred from the Sub-Pool C Reserve
Account shall be distributed only to the Sub-Pool C Certificateholders (other
than the Class B-C 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 Sub-Pool C Class of
Certificates.
d. Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed from the Sub-Pool H Collection Account, in the order of
priority specified in Section 8.03(d), to Certificateholders on the Final
Distribution Date in proportion to their respective Sub-Pool H Class Percentage
Interests an amount equal to (i) as to Sub-Pool H Certificates (other than the
Class B-H Certificates), the Class A-1H Principal Balance, the Class A-2H
Principal Balance, the Class A-3H Principal Balance, the Class A-4H Principal
Balance, any Class A-2H Principal Liquidation Loss, any Class A-3H Principal
Liquidation Loss, and any Class A-4H Principal Liquidation Loss, together with
any Unpaid Class A-2H Interest Shortfall, any Unpaid Class A-3H Interest
Shortfall, any Unpaid Class A-4H Interest Shortfall, any Unpaid Class A-2H
Liquidation Loss Interest Shortfall, any Unpaid
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<PAGE>
Class A-3H Liquidation Loss Interest Shortfall, any Unpaid Class A-4H
Liquidation Loss Interest Shortfall, and one month's interest at the Class A-1H
Pass-Through Rate, the Class A-2H Pass-Through Rate, the Class A-3H Pass-Through
Rate, and the Class A-4H Pass- Through Rate on the sum of the Class A-lH
Principal Balance, the Class A-2H Principal Balance and any Class A-2H
Liquidation Loss, the Class A-3H Principal Balance and any Class A-3H
Liquidation Loss, and the Class A-4H Principal Balance and any Class A-4H
Liquidation Loss, respectively, and (ii) as to the Class B-H Certificates, the
Class B-H Principal Balance and any Class B-H Principal Liquidation Loss,
together with any Unpaid Class B-C Interest Shortfall, any Unpaid Class B-H
Liquidation Loss Interest Shortfall, and one month's interest at the Class B-H
Pass-Through Rate on the sum of the Class B-H Principal Balance and any Class
B-H Principal Liquidation Loss, and (iii) the amount which remains on deposit in
the Sub-Pool H Collection Account (other than amounts retained to meet claims)
after application pursuant to clauses (i) and (ii) above to the Company;
provided that any Sub-Pool H Guaranty Payment deposited in the Sub-Pool H
Collection Account shall be distributed only to the Class B-H Certificateholders
and any amount transferred from the Class A-2H Spread Subaccount shall be
distributed only to the Class A-2H Certificateholders, any amount transferred
from the Class A-3H Spread Subaccount shall be distributed only to the Class
A-3H Certificateholders, any amount transferred from the Class A-4H Spread
Subaccount shall be distributed only to the Class A-4H Certificateholders, and
any amount transferred from the Sub-Pool H Reserve Account shall be distributed
only to the Sub-Pool H Certificateholders (other than the Class B-H
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 Sub-Pool H Certificates.
e. 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.
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
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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.
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.
12-5
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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 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 Standard & Poor's,
Fitch, or any other nationally recognized statistical rating organization in
order to improve or maintain the rating of any Class of Sub-Pool C Certificates
or Class Sub-Pool H 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 of Sub-Pool C Certificates or Class Sub-Pool H Certificates 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
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.
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<PAGE>
d. Concurrently with the solicitation of any consent pursuant to this
Section 12.07, the Trustee shall furnish written notification to 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 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:
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
Telecopier Number: (612) 244-0089
If to Standard & Poor's:
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Attention: Asset-Backed Surveillance Group
Telecopier Number: (212) 208-1582
If to Fitch:
Fitch IBCA Inc.
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.
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.
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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.
SECTION 12.12. Nonpetition Covenant.
Each Certificateholder, by becoming a Certificateholder, agrees that it
will not, for any reason:
a institute proceedings for the Trust, Sub-Pool C or Sub-Pool H to be
adjudicated a bankrupt or insolvent, or
b consent to, or cooperate with the institution of bankruptcy or
insolvency proceedings against any of the Trust, Sub-Pool C or Sub-Pool H, or
c file a petition with respect to any of the Trust, Sub-Pool C or Sub-
Pool H seeking or consenting to reorganization or relief under any applicable
Federal or state law relating to bankruptcy, or
d consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Trust, Sub-Pool C or
Sub-Pool H or a substantial part of its property, or
e cause or permit the Trust, Sub-Pool C or Sub-Pool H to make any
assignment for the benefit of its creditors, or admit in writing its inability
to pay its debts generally as they become due, or declare or effect a moratorium
on its debt or take any action in furtherance of any such action.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 31st
day of March, 1998.
GREEN TREE FINANCIAL CORPORATION
By /s/ Phyllis A. Knight
----------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but
solely as Trustee
By /s/ Tamara Schultz-Fugh
----------------------------------------
Tamara Schultz-Fugh
Trust Officer
By /s/ James T. Kaufman
----------------------------------------
James T. Kaufman
Assistant Vice President
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EXHIBIT A-1
------- ---
FORM OF CLASS A-[#]C CERTIFICATE
--------------------------------
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.
[NO TRANSFER OF A THIS CLASS [A-2C, A-3C, A-4C,] CERTIFICATE OR ANY
INTEREST HEREIN SHALL BE MADE TO ANY EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e) (1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), UNLESS THE
PROSPECTIVE TRANSFEREE OF A CERTIFICATE OR INTEREST HEREIN 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
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.]
[THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE [CLASS A-
2C][CLASS A-3C] [AND CLASS A-4C] CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.]
A-1-1
<PAGE>
Class A-[1C][2C][3C][4C] No.
First Distribution Date: Pass-Through Rate: ____%
April __, 1998
Denomination: $___________
Servicer:
Green Tree Financial Corporation Aggregate Denomination of
All Class A-[1C][2C][3C][4C]Certificates:
$____________
Final Scheduled Distribution Date:
_________________
Class Percentage (or if such day is not a
Interest: __________ Business Day, then the next
succeeding Business Day)
CUSIP: _____
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1998-A
% CLASS A-[1C][2C][3C][4C] 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 Sub-Pool C of Green Tree Recreational, Equipment & Consumer
Trust 1998-A ("Sub-Pool C"), which includes among its assets a pool of retail
installment sales contracts and promissory notes for the purchase of a variety
of consumer products and equipment (including, without limitation, all related
security interests) and any and all rights to receive payments which are due
pursuant thereto on or after the applicable Cutoff Date. The Trust has been
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of March 1, 1998, between Green Tree Financial Corporation, as Seller and
Servicer (the "Company"), and U.S. Bank Trust National Association, as Trustee
(the "Trustee"). This Certificate is one of the Sub-Pool C 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.
A-1-2
<PAGE>
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business
Day) (the "Distribution Date") of each calendar month commencing in _________,
1998 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-[1C][2C][3C][4C] Distribution Amount to be
distributed on that Distribution Date. The Final Scheduled Distribution Date of
this Certificate is _____________ or the next succeeding Business Day if such
______________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Sub-Pool C 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.
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-1-3
<PAGE>
IN WITNESS WHEREOF, Green Tree Recreational, Equipment & Consumer Trust
1998-A has caused this Certificate to be duly executed by the manual signature
of a duly authorized officer of the Trustee.
Dated: _________, 1998 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1998-A
By U.S. BANK TRUST NATIONAL
ASSOCIATION
By ___________________________
Authorized Signatory
A-1-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the within 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-1-5
<PAGE>
EXHIBIT A-2
------- ---
FORM OF CLASS B-C CERTIFICATE
-----------------------------
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.
NO TRANSFER OF A THIS CLASS B-C CERTIFICATE OR ANY INTEREST HEREIN SHALL BE
MADE TO ANY EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT THAT IS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT
IS DESCRIBED IN SECTION 4975(e) (1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE") (EACH, A "PLAN"), UNLESS THE PROSPECTIVE TRANSFEREE OF A
CERTIFICATE OR INTEREST HEREIN 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 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.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1C, A-
C2, A-C3 AND A-C4 CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
A-2-1
<PAGE>
Class B-C No.
First Distribution Date: Denomination: $___________
April __, 1998
Aggregate Denomination of
Servicer: All Class B-C Certificates:
Green Tree Financial Corporation $___________
Class Percentage Final Scheduled Distribution Date:
Interest: __________ __________
(or if such day is not a
Pass-Through Rate: ____% Business Day, then the next
succeeding Business Day)
CUSIP: _____
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1998-A
% CLASS B-C 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 Sub-Pool C of Green Tree Recreational, Equipment & Consumer
Trust 1998-A ("Sub-Pool C"), which includes among its assets a pool of retail
installment sale contracts and promissory notes for the purchase of a variety of
consumer products and equipment (including, without limitation, all related
security interests) and any and all rights to receive payments which are due
pursuant thereto on or after the applicable Cutoff Date. The Trust has been
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of March 1, 1998, between Green Tree Financial Corporation, as Seller and
Servicer (the "Company"), and U.S. Bank Trust National Association, as Trustee
(the "Trustee"). This Certificate is one of the Sub-Pool C 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
_____________________, 1998 so long as the Agreement has not been terminated, by
check (or, if such Certificateholder holds Class B-C Certificates with an
aggregate Certificate Percentage Interest of at least 5% and so desires, by wire
transfer pursuant to instructions
A-2-2
<PAGE>
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-C Distribution Amount to be distributed on that Distribution Date. The
Final Scheduled Distribution Date of this Certificate is ______________, or the
next succeeding Business Day if such ___________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Sub-Pool C 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.
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-2-3
<PAGE>
IN WITNESS WHEREOF, Green Tree Recreational, Equipment & Consumer Trust
1998-A has caused this Certificate to be duly executed by the manual signature
of a duly authorized officer of the Trustee.
Dated: ____________, 1998 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1998-A
By U.S. BANK TRUST NATIONAL
ASSOCIATION
By ___________________________
Authorized Officer
A-2-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________ the within 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-2-5
<PAGE>
EXHIBIT B-1
------- ---
FORM OF CLASS A-[#]H CERTIFICATE
--------------------------------
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.
NO TRANSFER OF A THIS CLASS [A-1H, A-2H, A-3H, A-4H] CERTIFICATE OR ANY
INTEREST HEREIN SHALL BE MADE TO ANY EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e) (1) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), UNLESS THE
PROSPECTIVE TRANSFEREE OF A CERTIFICATE OR INTEREST HEREIN 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
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.
[THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE [CLASS A-
2H][CLASS A-3H][OR CLASS A-4H] CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.]
B-1-1
<PAGE>
Class A-[1H][2H][3H][4H] No.
Pass-Through Rate: ____%
First Distribution Date:
April __, 1998 Denomination: $___________
Servicer: Aggregate Denomination of
Green Tree Financial Corporation All Class A-[1H][2H][3H][4H]Certificates:
$___________
Class Percentage
Interest: __________ 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 1998-A
% CLASS A-[1H][2H][3H][4H] 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 Sub-Pool H of Green Tree Recreational, Equipment & Consumer
Trust 1998-A ("Sub-Pool H"), which includes among its assets a pool of
closed-end home equity loans and retail installment sales contracts and
promissory notes financing home improvements (including, without limitation, all
related security interests) and any and all rights to receive payments which are
due pursuant thereto on or after the applicable Cutoff Date. Sub-Pool H has been
created pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated
as of March 1, 1998, between Green Tree Financial Corporation, as Seller and
Servicer (the "Company"), and U.S. Bank Trust National Association, as Trustee
(the "Trustee"). This Certificate is one of the Sub-Pool H 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
____________________, 1998 so long as the Agreement has not been terminated, by
check (or, if such
B-1-2
<PAGE>
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-[1H][2H][3H][4H] Distribution Amount to be
distributed on that Distribution Date. The Final Scheduled Distribution Date of
this Certificate is _____________ or the next succeeding Business Day if such
______________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Sub-Pool H 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.
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-1-3
<PAGE>
IN WITNESS WHEREOF, Green Tree Recreational, Equipment & Consumer Trust
1998-A has caused this Certificate to be duly executed by the manual signature
of a duly authorized officer of the Trustee.
Dated: _________, 1998 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1998-A
By U.S. BANK TRUST NATIONAL
ASSOCIATION
By_________________________________
Authorized Signatory
B-1-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the within 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-1-5
<PAGE>
EXHIBIT B-2
------- ---
FORM OF CLASS B-H CERTIFICATE
-----------------------------
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.
NO TRANSFER OF A THIS CLASS B-H CERTIFICATE OR ANY INTEREST HEREIN SHALL BE
MADE TO ANY EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT THAT IS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT
IS DESCRIBED IN SECTION 4975(e) (1) OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE") (EACH, A "PLAN"), UNLESS THE PROSPECTIVE TRANSFEREE OF A
CERTIFICATE OR INTEREST HEREIN 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 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.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1H,
CLASS A-2H, CLASS A-3H AND A-4H CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
B-2-1
<PAGE>
Class B-H No.
First Distribution Date: Pass-Through Rate: ____%
April __, 1998
Servicer: Denomination: $___________
Green Tree Financial Corporation
Aggregate Denomination of
All Class B-H Certificates:
Class Percentage $___________
Interest: __________
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 1998-A
% CLASS B-H 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 Sub-Pool H of Green Tree Recreational, Equipment & Consumer
Trust 1998-A ("Sub-Pool H"), which includes among its assets a pool closed-end
home equity loans and retail installment sales contracts and promissory notes
financing home improvements (including, without limitation, all related security
interests) and any and all rights to receive payments which are due pursuant
thereto on or after the applicable Cutoff Date. Sub-Pool H has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
March 1, 1998, between Green Tree Financial Corporation, as Seller and Servicer
(the "Company"), and U.S. Bank Trust National Association, as Trustee (the
"Trustee"). This Certificate is one of the Sub-Pool H 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 _________,
1998 so
B-2-2
<PAGE>
long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B-H 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-H Distribution Amount to be distributed on
that Distribution Date. The Final Scheduled Distribution Date of this
Certificate is ______________, or the next succeeding Business Day if such
___________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Sub-Pool H 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.
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-2-3
<PAGE>
IN WITNESS WHEREOF, Green Tree Recreational, Equipment & Consumer Trust
1998-A has caused this Certificate to be duly executed by the manual signature
of a duly authorized officer of the Trustee.
Dated: ____________, 1998 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1998-A
By U.S. BANK TRUST NATIONAL
ASSOCIATION
By________________________________
Authorized Officer
B-2-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________ the within 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-2-5
<PAGE>
EXHIBIT C-1
FORM OF ASSIGNMENT -- SUB-POOL C
--------------------------------
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1998, between Green Tree Financial Corporation
(the "Company") and U.S. Bank Trust National Association, as Trustee (the
"Trustee"), the Company does hereby transfer, assign, set over and otherwise
convey to the Trustee all right, title and interest of the Company in and to (1)
the Consumer Product Contracts (including but not limited to all right, title
and interest in and to the related Collateral Security) and any and all rights
to receive payments on or with respect to the Consumer Product Contracts,
excluding with respect to all Consumer Product Contracts, any rights to receive
payments which were due pursuant thereto prior to the Cut-off Date, (2) the
Insurance Policies on any Products securing a Consumer Product Contract for the
benefit of the creditor of such Consumer Product Contract and all blanket
insurance policies to the extent they relate to the Consumer Product Contracts,
(3) all rights the Company may have against the originating dealer with respect
to the Consumer Product Contracts not originated by the Company, (4) the Errors
and Omissions Protection Policy as such policy relates to the Consumer Product
Contracts, (5) all documents contained in the Consumer Product Contract Files,
and (6) all proceeds and products 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 ____ day of March 1998.
GREEN TREE FINANCIAL CORPORATION
By ______________________________________
[Name]
[Title]
C-1-1
<PAGE>
EXHIBIT C-2
FORM OF ASSIGNMENT -- SUB-POOL H
--------------------------------
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of March 1, 1998, between Green Tree Financial Corporation
(the "Company") and U.S. Bank Trust National Association, as Trustee (the
"Trustee"), the Company does hereby transfer, assign, set over and otherwise
convey to the Trustee all right, title and interest of the Company in and to (1)
the Home Equity Contracts and Home Improvement Contracts (including but not
limited to all right, title and interest in and to the related Collateral
Security) and any and all rights to receive payments on or with respect to the
Home Equity Contracts and Home Improvement Contracts, excluding with respect to
all Home Equity Contracts and Home Improvement Contracts, any rights to receive
payments which were due pursuant thereto prior to the Cut-off Date, (2) the
Insurance Policies on any real estate securing a Home Equity Contract or Home
Improvement Contract for the benefit of the creditor of such Home Equity
Contract or Home Improvement Contract and all blanket insurance policies to the
extent they relate to the Home Equity Contracts and Home Improvement Contracts,
(3) all rights the Company may have against the originating lender or contractor
with respect to the Home Equity Contracts and Home Improvement Contracts not
originated by the Company, (4) the Errors and Omissions Protection Policy as
such policy relates to the Home Equity Contracts and Home Improvement Contracts,
(5) all documents contained in the Home Equity Contract and Home Improvement
Contract Files, and (6) all proceeds and products 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 ____ day of March 1998.
GREEN TREE FINANCIAL CORPORATION
By ____________________________________
[Name]
[Title]
C-2-1
<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 March 1, 1998
(the "Agreement") between the Company and U.S. Bank 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 ____ day of
March, 1998.
GREEN TREE FINANCIAL CORPORATION
By ________________________________________
[Name]
[Title]
D-1
<PAGE>
EXHIBIT E
---------
FORM OF OPINION OF COUNSEL FOR THE COMPANY
------------------------------------------
The opinion of Dorsey & Whitney LLP 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 an
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 the terms of any statute, order or
regulation, applicable to the Company, of any
E-1
<PAGE>
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, each of Sub-Pool C and Sub-Pool H 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 related Sub-Pool.
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
---------------------------------
U.S. Bank 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 March 1, 1998, 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 of the Company
in the Contracts, identified in the List of Contracts delivered pursuant to
Section 2.02(a) of the Pooling and Servicing Agreement, including, without
limitation, all related Collateral Security, all security interests created
thereby, and any and all rights to receive payments on or with respect to the
Contracts excluding, any rights to receive payments which were due pursuant
thereto prior to the Cut-off Date, provided that the Trustee has not received
the Contract Files with respect to those Home Equity Contracts and Home
Improvement Contracts identified on the attached list, (ii) all rights under
every Insurance Policy on any Product or real property securing a Contract for
the benefit of the creditor of such Contract and all rights under all blanket
insurance policies to the extent they related to the Contracts and the proceeds
from the Errors and Omissions Protection Policy to the extent they relate to the
Contracts, (iii) all documents contained in the Contract Files, (iv) the Limited
Guaranty, (v) a security interest in all amounts in the Spread Accounts and
Reserve Accounts and all investments thereof and (vi) all proceeds and products
of the foregoing. The Trustee acknowledges that it has conducted a cursory
review of the Contract Files with respect to the Home Equity Contracts and Home
Improvement Contracts (except as noted on the attached list) and hereby confirms
that, except as noted on the document exception listing attached hereto, each
such Contract File contained (a) an original contract or promissory note, (b) an
original or a copy of the mortgage, deed of trust or secured deed or similar
evidence of a lien on the related improved real estate, (c) in the case of
Contracts originated by a contractor, an original or a copy of an assignment of
the mortgage or deed of trust by the contractor to Green Tree and (d) a sale
control document. The Trustee has not otherwise reviewed the Contracts and
Contract Files for compliance with the terms of the Pooling and Servicing
Agreement.
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.
F-1
<PAGE>
IN WITNESS WHEREOF, U.S. Bank 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 31st day of March, 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
as Trustee
By _____________________________
Name:
Title:
By _____________________________
Name:
Title:
F-2
<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 March 1, 1998, between the Company and U.S. Bank 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 March 1, 1998, between the Company and U.S. Bank 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-1
-----------
FORM OF MONTHLY REPORT - SUB-POOL C
-----------------------------------
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1998-A
Sub-Pool C Distribution Date: __________
1. Amount Available
(a) Sub-Pool C Collection Account balance
as of last day of related Monthly Period __________
(b) Payments on account of principal
deposited during first 10 days of
current month __________
(c) Servicer Advances __________
(d) Self-Insurance Payments __________
(e) B-C Guaranty Payment __________
(f) Repurchase Proceeds __________
(g) Transfer from Excess Proceeds Account __________
2. Transfer from Sub-Pool C Spread Account
(a) Class A-2C Spread Subaccount
(b) Class A-3C Spread Subaccount
(c) Class A-4C Spread Subaccount
3. Transfer from Sub-Pool C Reserve Account __________
4. Monthly Servicing Fee __________
5. Servicer Advances Reimbursed __________
Class A-1C Certificates
- -----------------------
Class A-1C Interest
6. Amount distributed on account of interest __________
7. Class A-1C Interest Amount __________
8. Amount Applied to Class A-1C Interest Amount __________
9. Class A-1C Interest Shortfall __________
10. Amount applied to Unpaid Class
A-1C Interest Shortfall __________
I-1-1
<PAGE>
11. Remaining Unpaid Class A-1C
Interest Shortfall __________
Class A-1C Principal
12. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
13. Class A-1C Percentage of amount due or
Class A-1C Principal Balance, less __________
14. Amount distributed on account of principal __________
15. Class A-1C Principal Shortfall __________
16. Unpaid Class A-1C Principal Shortfall
(if any) following prior Distribution Date __________
17. Amount applied to Unpaid Class A Principal
Shortfall (if any) on current Distribution Date __________
18. Remaining Unpaid Class A-1C
Principal Shortfall __________
19. Class A-1C Principal Balance after giving effect
to Distribution __________
Class A-2C Certificates
- -----------------------
Class A-2C Interest
20. Amount distributed on account of interest __________
21. Class A-2C Interest Amount __________
22. Amount Applied to Class A-2C Interest Amount __________
23. Class A-2C Interest Shortfall __________
24. Amount applied to Unpaid Class A-2C
Interest Shortfall __________
25. Remaining Unpaid Class A-2C
I-1-2
<PAGE>
Interest Shortfall __________
Class A-2C Principal
26. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
27. Class A-2C Percentage of amount due or
Class A-2C Principal Balance, whichever
is less __________
28. Amount distributed on account of principal __________
29. Class A-2C Principal Shortfall __________
30. Unpaid Class A Principal Shortfall (if any)
following prior Distribution Date __________
31. Amount applied to Unpaid Class A-2C Principal
Shortfall (if any) on current
Distribution Date __________
32. Remaining Unpaid Class A-2C Principal Shortfall
Class A-2C Liquidation Loss Interest
33. Class A-2C Liquidation Loss Interest Amount __________
34. Amount distributed on account of Class A-2C
Liquidation Loss Interest Amount __________
35. Class A-2C Liquidation Loss Interest
Shortfall __________
36. Amount applied to Unpaid Class A-2C
Liquidation Loss Interest Shortfall __________
37. Remaining Unpaid Class A-2C Liquidation
Loss Interest Shortfall __________
38. Class A-2C Principal Liquidation Loss __________
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<PAGE>
39. Remaining Unpaid Class A-2C Principal
Liquidation Loss __________
40. Class A-2C Principal Balance after giving
effect to Distribution and Class A-2C
Principal Liquidation Loss __________
Class A-3C Certificates
- -----------------------
Class A-3C Interest
41. Amount distributed on account of interest __________
42. Class A-3C Interest Amount __________
43. Amount Applied to Class A-3C Interest Amount __________
44. Class A-3C Interest Shortfall __________
45. Amount applied to Unpaid Class A-3C
Interest Shortfall __________
46. Remaining Unpaid Class A-3C
Interest Shortfall __________
Class A-3C Principal
47. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
48. Class A-3C Percentage of amount due or Class
A-3C Principal Balance, whichever is less __________
49. Amount distributed on account of principal __________
50. Class A-3C Principal Shortfall __________
51. Unpaid Class A-3C Principal Shortfall
(if any) following prior Distribution Date __________
52. Amount applied to Unpaid Class A-3C Principal
Shortfall (if any) on current
Distribution Date __________
53. Remaining Unpaid Class A-3C Principal
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<PAGE>
Shortfall __________
Class A-3C Liquidation Loss Interest
54. Class A-3C Liquidation Loss Interest
Amount __________
55. Amount distributed on account of
Class A-3C Liquidation Loss Interest Amount __________
56. Class A-3C Liquidation Loss Interest
Shortfall __________
57. Amount applied to Unpaid Class A-3C
Liquidation Loss Interest Shortfall __________
58. Remaining Unpaid Class A-3C Liquidation
Loss Interest Shortfall __________
59. Class A-3C Principal Liquidation Loss __________
60. Class A-3C Principal Balance after giving effect to
Distribution and Class A-3C Principal Liquidation Loss __________
Class A-4C Certificates
- -----------------------
Class A-4C Interest
61. Amount distributed on account of interest __________
62. Class A-4C Interest Amount __________
63. Amount Applied to Class A-4C Interest Amount __________
64. Class A-4C Interest Shortfall __________
65. Amount applied to Unpaid Class A-4C
Interest Shortfall __________
66. Remaining Unpaid Class A-4C
Interest Shortfall __________
Class A-4C Principal
67. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
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(d) Repurchases __________
68. Class A-4C Percentage of amount due or
Class A-4C Principal Balance,
whichever is less __________
69. Amount distributed on account of principal __________
70. Class A-4C Principal Shortfall __________
71. Unpaid Class A-4C Principal Shortfall
(if any) following prior Distribution Date
72. Amount applied to Unpaid Class A-4C Principal
Shortfall (if any) on current __________
73. Distribution Date __________
74. Remaining Unpaid Class A-4C Principal Shortfall __________
Class A-4C Liquidation Loss Interest
75. Class A-4C Liquidation Loss Interest Amount __________
76. Amount distributed on account of
Class A-4C Liquidation Loss Interest Amount __________
77. Class A-4C Liquidation Loss Interest
Shortfall __________
78. Amount applied to Unpaid Class A-4C
Liquidation Loss Interest Shortfall __________
79. Remaining Unpaid Class A-4C Liquidation
Loss Interest Shortfall __________
80. Class A-4C Principal Liquidation Loss __________
81. Class A-4 Principal Balance after giving
effect to Distribution and Class A-4C __________
Principal Liquidation Loss __________
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<PAGE>
Class B-C Certificates
- ----------------------
Class B-C Interest
82. Amount distributed on account of interest __________
83. Class B-C Interest Amount __________
84. Amount Applied to Class B-C Interest Amount __________
85. Class B-C Interest Shortfall __________
86. Amount applied to Unpaid Class B-C
Interest Shortfall __________
87. Remaining Unpaid Class B-C Interest Shortfall __________
Class B-C Principal
88. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
89. Class B-C Percentage of amount due or Class B-C
Principal Balance, whichever is less __________
90. Amount distributed on account of principal __________
91. Class B-C Principal Shortfall __________
92. Unpaid Class B-C Principal Shortfall
(if any) following prior Distribution Date __________
93. Amount applied to Unpaid Class B-C
Principal Shortfall (if any) on current
Distribution Date __________
94. Remaining Unpaid Class B-C
Principal Shortfall __________
Class B-C Liquidation Loss Interest
95. Class B-C Liquidation Loss Interest Amount __________
96. Amount distributed on account of
Class B-C Liquidation Loss Interest Amount __________
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<PAGE>
97. Class B-C Liquidation Loss Interest Shortfall __________
98. Amount applied to Unpaid Class B-C
Liquidation Loss Interest Shortfall __________
99. Remaining Unpaid Class B-C Liquidation
Loss Interest Shortfall __________
100. Class B-C Principal Liquidation Loss __________
101. Class B-C Principal Balance after giving
effect to Distribution and Class B-C Principal __________
102. Amount deposited in Sub-Pool C Spread Account
a. Class A-2C Spread Subaccount
b. Class A-3C Spread Subaccount
c. Class A-4C Spread Subaccount
103. Amount deposited in (withdrawn from)
Reserve Account __________
104. Balance in Sub-Pool C Reserve Account __________
105. Amount of Class B-C Guaranty Payment __________
106. Sub-Pool C Monthly Servicing and Guaranty Fee __________
107. Sub-Pool C Scheduled Principal Balance __________
108. Sub-Pool C Factor __________
(a) Class A-1C __________
(b) Class A-2C __________
(c) Class A-3C __________
(d) Class A-4C __________
(e) Class B-C __________
Aggregate Scheduled Balances of delinquent Consumer Product Contracts as of
Determination Date
109. 30 - 59 days
(a) Number __________
(b) Aggregate Principal Amount __________
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110. 60 days or more
(a) Number __________
(b) Aggregate Principal Amount __________
111. Number of Products repossessed (by Product type) __________
112. Number of Products repossessed
(by Product type) but remaining in inventory __________
113. 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 U.S. Bank Trust National Association,
__________ with any questions regarding this Statement or your Distribution.
I-1-9
<PAGE>
EXHIBIT I-H
-----------
FORM OF MONTHLY REPORT - SUB-POOL H
-----------------------------------
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1998-A
Sub-Pool H Distribution Date: __________
1. Amount Available
(a) Sub-Pool H Collection Account balance
as of last day of related Monthly Period __________
(b) Payments on account of principal
deposited during first 10 days of
current month __________
(c) Servicer Advances __________
(d) Self-Insurance Payments __________
(e) B-H Guaranty Payment __________
(f) Repurchase Proceeds __________
(g) Transfer from Excess Proceeds Account __________
2. Transfer from Sub-Pool H Spread Account
(a) Class A-2H Spread Subaccount
(b) Class A-3H Spread Subaccount
(c) Class A-4H Spread Subaccount
3. Transfer from Sub-Pool H Reserve Account __________
4. Monthly Servicing Fee __________
5. Servicer Advances Reimbursed __________
Class A-1C Certificates
- -----------------------
Class A-1C Interest
6. Amount distributed on account of interest __________
7. Class A-1C Interest Amount __________
8. Amount Applied to Class A-1C Interest Amount __________
9. Class A-1C Interest Shortfall __________
10. Amount applied to Unpaid Class
A-1C Interest Shortfall __________
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11. Remaining Unpaid Class A-1C
Interest Shortfall __________
Class A-1C Principal
12. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
13. Class A-1C Percentage of amount due or
Class A-1C Principal Balance, less __________
14. Amount distributed on account of principal __________
15. Class A-1C Principal Shortfall __________
16. Unpaid Class A-1C Principal Shortfall
(if any) following prior Distribution Date __________
17. Amount applied to Unpaid Class A Principal
Shortfall (if any) on current Distribution Date __________
18. Remaining Unpaid Class A-1C
Principal Shortfall __________
19. Class A-1C Principal Balance after giving effect
to Distribution __________
Class A-2H Certificates
- -----------------------
Class A-2H Interest
20. Amount distributed on account of interest __________
21. Class A-2H Interest Amount __________
22. Amount Applied to Class A-2H Interest Amount __________
23. Class A-2H Interest Shortfall __________
24. Amount applied to Unpaid Class A-2H
Interest Shortfall __________
25. Remaining Unpaid Class A-2H
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Interest Shortfall __________
Class A-2H Principal
26. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
27. Class A-2H Percentage of amount due or
Class A-2H Principal Balance, whichever
is less __________
28. Amount distributed on account of principal __________
29. Class A-2H Principal Shortfall __________
30. Unpaid Class A Principal Shortfall (if any)
following prior Distribution Date __________
31. Amount applied to Unpaid Class A-2H Principal
Shortfall (if any) on current Distribution Date __________
32. Remaining Unpaid Class A-2H Principal Shortfall
Class A-2H Liquidation Loss Interest
33. Class A-2H Liquidation Loss Interest Amount __________
34. Amount distributed on account of Class A-2H
Liquidation Loss Interest Amount __________
35. Class A-2H Liquidation Loss Interest
Shortfall __________
36. Amount applied to Unpaid Class A-2H
Liquidation Loss Interest Shortfall __________
37. Remaining Unpaid Class A-2H Liquidation
Loss Interest Shortfall __________
38. Class A-2H Principal Liquidation Loss __________
39. Class A-2H Principal Balance after giving
effect to Distribution and Class A-2H
Principal Liquidation Loss __________
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Class A-3H Certificates
- -----------------------
Class A-3H Interest
40. Amount distributed on account of interest __________
41. Class A-3H Interest Amount __________
42. Amount Applied to Class A-3H Interest Amount __________
43. Class A-3H Interest Shortfall __________
44. Amount applied to Unpaid Class A-3H
Interest Shortfall __________
45. Remaining Unpaid Class A-3H
Interest Shortfall __________
Class A-3H Principal
46. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
47. Class A-3H Percentage of amount due or Class
A-3H Principal Balance, whichever is less __________
48. Amount distributed on account of principal __________
49. Class A-3H Principal Shortfall __________
50. Unpaid Class A-3H Principal Shortfall
(if any) following prior Distribution Date __________
51. Amount applied to Unpaid Class A-3H Principal
Shortfall (if any) on current
Distribution Date __________
52. Remaining Unpaid Class A-3H Principal
Shortfall __________
Class A-3H Liquidation Loss Interest
53. Class A-3H Liquidation Loss Interest
Amount __________
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54. Amount distributed on account of
Class A-3H Liquidation Loss Interest Amount __________
55. Class A-3H Liquidation Loss Interest
Shortfall __________
56. Amount applied to Unpaid Class A-3H
Liquidation Loss Interest Shortfall __________
57. Remaining Unpaid Class A-3H Liquidation
Loss Interest Shortfall __________
58. Class A-3H Principal Liquidation Loss __________
59. Class A-3H Principal Balance after giving effect to
Distribution and Class A-3H Principal Liquidation Loss __________
Class A-4H Certificates
- -----------------------
Class A-4H Interest
60. Amount distributed on account of interest __________
61. Class A-4H Interest Amount __________
62. Amount Applied to Class A-4H Interest Amount __________
63. Class A-4H Interest Shortfall __________
64. Amount applied to Unpaid Class A-4H
Interest Shortfall __________
65. Remaining Unpaid Class A-4H
Interest Shortfall __________
Class A-4H Principal
66. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
67. Class A-4H Percentage of amount due or
Class A-4H Principal Balance,
whichever is less __________
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<PAGE>
68. Amount distributed on account of principal __________
69. Class A-4H Principal Shortfall __________
70. Unpaid Class A-4H Principal Shortfall
(if any) following prior Distribution Date __________
71. Amount applied to Unpaid Class A-4H Principal
Shortfall (if any) on current __________
72. Distribution Date __________
73. Remaining Unpaid Class A-4H Principal Shortfall __________
Class A-4H Liquidation Loss Interest
74. Class A-4H Liquidation Loss Interest Amount __________
75. Amount distributed on account of
Class A-4H Liquidation Loss Interest Amount __________
76. Class A-4H Liquidation Loss Interest
Shortfall __________
77. Amount applied to Unpaid Class A-4H
Liquidation Loss Interest Shortfall __________
78. Remaining Unpaid Class A-4H Liquidation
Loss Interest Shortfall __________
79. Class A-4H Principal Liquidation Loss __________
80. Class A-4 Principal Balance after giving
effect to Distribution and Class A-4H Principal
Liquidation Loss __________
Class B-H Certificates
- ----------------------
Class B-H Interest
81. Amount distributed on account of interest __________
82. Class B-H Interest Amount __________
83. Amount Applied to Class B-H Interest Amount __________
84. Class B-H Interest Shortfall __________
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85. Amount applied to Unpaid Class B-H
Interest Shortfall __________
86. Remaining Unpaid Class B-H Interest Shortfall __________
Class B-H Principal
87. Amount due on account of principal: __________
(a) Scheduled principal __________
(b) Principal Prepayments __________
(c) Liquidated Contracts __________
(d) Repurchases __________
88. Class B-H Percentage of amount due or Class B-H
Principal Balance, whichever is less __________
89. Amount distributed on account of principal __________
90. Class B-H Principal Shortfall __________
91. Unpaid Class B-H Principal Shortfall
(if any) following prior Distribution Date __________
92. Amount applied to Unpaid Class B-H
Principal Shortfall (if any) on current
Distribution Date __________
93. Remaining Unpaid Class B-H
Principal Shortfall __________
Class B-H Liquidation Loss Interest
94. Class B-H Liquidation Loss Interest Amount __________
95. Amount distributed on account of
Class B-H Liquidation Loss Interest Amount __________
96. Class B-H Liquidation Loss Interest Shortfall __________
97. Amount applied to Unpaid Class B-H
Liquidation Loss Interest Shortfall __________
98. Remaining Unpaid Class B-H Liquidation
Loss Interest Shortfall __________
99. Class B-H Principal Liquidation Loss __________
100. Class B-H Principal Balance after giving
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effect to Distribution and Class B-H Principal
101. Amount deposited in Sub-Pool H Spread Account
a. Class A-2H Spread Subaccount
b. Class A-3H Spread Subaccount
c. Class A-4H Spread Subaccount
102. Amount deposited in (withdrawn from)
Reserve Account __________
103. Balance in Sub-Pool H Reserve Account __________
104. Amount of Class B-H Guaranty Payment __________
105. Sub-Pool H Monthly Servicing and Guaranty Fee __________
106. Sub-Pool H Scheduled Principal Balance __________
107. Sub-Pool H Factor __________
(a) Class A-1C __________
(b) Class A-2H __________
(c) Class A-3H __________
(d) Class A-4H __________
(e) Class B-H __________
Aggregate Scheduled Balances of delinquent Contracts as of Determination Date
108. 30 - 59 days
(a) Number __________
(b) Aggregate Principal Amount __________
109. 60 days or more
(a) Number __________
(b) Aggregate Principal Amount __________
110. Number of Home Equity/Home Improvement
Contracts foreclosed upon __________
111. Number of Home Equity/Home Improvement
Contracts foreclosed upon but remaining in inventory __________
112. Number of Contracts that became
Liquidated Contracts __________
113. The aggregate number and principal amount
of FHA-Insured Contracts on which either
(i) the Servicer has submitted a claim for
FHA Insurance, HUD rejected such claim and
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the Servicer has determined not to resubmit __________
such claim, or (ii) the Servicer has determined
not to submit a claim for FHA Insurance because
such claim would not be paid by HUD $_________
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 U.S. Bank Trust National Association,
__________ with any questions regarding this Statement or your Distribution.
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<PAGE>
EXHIBIT J-1
-----------
SPREAD ACCOUNT PLEDGE AGREEMENT
SUB-POOL C
This Sub-Pool C Spread Account Pledge Agreement is dated as of
March 1, 1998, by and among Green Tree RECS II Guaranty Corporation (the
"Pledgor"), U.S. Bank National Association (fka First Trust National
Association), as Collateral Agent (together with its permitted successors
hereunder, the "Collateral Agent"), and U.S. Bank Trust National Association, as
Trustee (the "Trustee") of Green Tree Recreational, Equipment & Consumer Trust
1998-A (the "Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool C") of retail installment sales contracts and promissory notes for the
purchase of a variety of consumer products and equipment (the "Consumer Product
Contracts") under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 1998 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 "Sub-
Pool C Certificates") representing undivided fractional interests in Sub-Pool C.
In order to facilitate the sale of the Sub-Pool C 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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Spread Account Deficiency Notice.
"Sub-Pool C Spread Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool C Spread Account, which
(a) if such Eligible Investments are securities, are (i) certificated securities
(as such term is used in Minn. Stat. (S) 336.8- 102(a)(4)), securities deemed to
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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, (b) if such Eligible Investments are
repurchase obligations, 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 (a) above, and (c) 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 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
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<PAGE>
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 Sub-Pool C Spread Account.
a. Establishment of Spread Account. On or prior to the Closing Date,
the Pledgor shall establish with the Collateral Agent three segregated trust
accounts referred to collectively herein as the "Sub-Pool C Spread Account." The
three accounts comprising the Sub-Pool C Spread Account shall be maintained in
the name of the Collateral Agent and designated respectively as follows: (1)
"U.S. Bank National Association, as Collateral Agent on behalf of U.S. Bank
Trust National Association, as Trustee for the benefit of the Class A- 2C
Certificates issued by Green Tree Recreational Equipment & Consumer Trust 1998-A
(Class A-2C Spread Subaccount, Green Tree RECS II Guaranty Corporation,
Pledgor);" (2) "U.S. Bank National Association, as Collateral Agent on behalf of
U.S. Bank Trust National Association, as Trustee for the benefit of the Class A-
3C Certificates issued by Green Tree Recreational Equipment & Consumer Trust
1998-A (Class A-3C Spread Subaccount, Green Tree RECS II Guaranty Corporation,
Pledgor);" and (3) "U.S. Bank National Association, as Collateral Agent on
behalf of U.S. Bank Trust National Association, as Trustee for the benefit of
the Class A-4C Certificates issued by Green Tree Recreational Equipment &
Consumer Trust 1998-A (Class A-4C
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<PAGE>
Spread Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor)." The
Sub-Pool C 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 Sub-Pool C Spread Account and all amounts deposited therein and
investments thereof are owned by the Pledgor, and all assets transferred to the
Sub-Pool C Spread Account are taxable to the Pledgor. The Sub-Pool C 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 (which may be the Collateral Agent or the Trustee) or in an account
otherwise acceptable to Fitch and Standard & Poor's. All amounts paid to the
Pledgor under Section 8.03(a)(8), (12), (16) and (20) and Section 8.03(d)(23) of
the Pooling and Servicing Agreement shall be deposited into the Sub-Pool C
Spread Account as provided in the Pooling and Servicing Agreement. Amounts shall
be withdrawn from the Sub-Pool C 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 Sub-Pool C Spread Account shall be issued, and all contracts,
receipts and other papers governing or evidencing the Sub-Pool C 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 Sub-Pool C Spread Account shall be released to the Pledgor.
b. Pledge of Sub-Pool C Spread Account.
(i) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-2C Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-2C 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 Class A-2C Spread
Subaccount up to the Class A-2C Spread Subaccount 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 with respect to the Class A-2C Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-2C Spread Subaccount plus any subsequent deposits into the Class A-2C
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-2C Spread Subaccount for the
benefit of the Class A-2C Certificateholders under this Section 3(b)(i) in
accordance with the terms hereof.
(ii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-3C Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-3C 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 Class A-3C Spread
Subaccount up to the Class A-3C Spread Subaccount 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 with respect
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<PAGE>
to the Class A-3C Certificates on such Distribution Date, subject to the limit
of the amount available in the Class A-3C Spread Subaccount plus any subsequent
deposits into the Class A-3C Spread Subaccount. The Collateral Agent and the
Trustee acknowledge and accept the grant of the security interest in the Class
A-3C Spread Subaccount for the benefit of the Class A-3C Certificateholders
under this Section 3(b)(ii) in accordance with the terms hereof.
(iii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-4C Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-4C 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 Class A-4C Spread
Subaccount up to the Class A-4C Spread Subaccount 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 with respect to the Class A-4C Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-4C Spread Subaccount plus any subsequent deposits into the Class A-4C
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-4C Spread Subaccount for the
benefit of the Class A-4C Certificateholders under this Section 3(b)(iii) in
accordance with the terms hereof.
(iv) 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
Sub-Pool C 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 Sub-Pool C 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 Sub-Pool C 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
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 Sub-Pool C Spread Account. The Collateral Agent shall
at the written direction of the Pledgor invest the funds in the Sub-Pool C
Spread Account in Sub-Pool C Spread Account Eligible Investments. Funds in the
Sub-Pool C 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 Sub-Pool C Spread Account Eligible
Investment by book entry or otherwise and (ii) send the Trustee a written
confirmation of its security interest in such Sub-Pool C Spread Account Eligible
Investment. All income and gain realized from any such investments as well as
any interest earned on deposits in the Sub-Pool C Spread Account shall be
deposited and retained in the Sub-Pool C Spread Account. Losses, if any,
realized on amounts in the Sub-Pool C Spread Account
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<PAGE>
invested pursuant to this paragraph shall first be credited against
undistributed investment earnings on amounts in the Sub-Pool C Spread Account
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Sub-Pool C 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 Sub-Pool
C Spread Account. All income or loss on funds held in the Sub-Pool C Spread
Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool C Spread Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool C Spread Account,
the amount of the Shortfall from the Sub-Pool C Spread Account to the Sub-Pool C
Collection Account.
e. Release of Sub-Pool C Spread Account Excess. If on any Distribution
Date, the amount in the Class A-2 C Spread Subaccount exceeds the Class A-2 C
Spread Subaccount Required Amount immediately following the payment to
Certificateholders on such Distribution Date, or the amount in the Class A-3 C
Spread Subaccount exceeds the Class A-3 C Spread Subaccount Required Amount
immediately following the payment to Class A-3C Certificateholders on such
Distribution Date, or the amount in the Class A-4 C Spread Subaccount exceeds
the Class A-4 C Spread Subaccount Required Amount immediately following the
payment to Class A-4 Certificateholders on such Distribution Date, the
Collateral Agent shall withdraw the amount of such excess from the applicable
Sub-Pool C Spread Account and distribute such amount to the Pledgor.
f. Termination. This Agreement shall terminate (after distribution of
any funds remaining in the Sub-Pool C 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 Sub-Pool C Spread Account, after payment of any amounts
into the Sub-Pool C Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool C 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 Sub-Pool C 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
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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 Sub-Pool
C 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.
(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) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not
downgrade, withdraw or qualify its then-current ratings of the Class
A-2C, A-3C and A-4C 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
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<PAGE>
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 Sub-Pool C Spread Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-2C,
A-3C and A-4C 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.
(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 Sub-Pool C Spread Account for purposes of determining whether the balance
thereof equals or exceeds the Required Sub-Pool C 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 Sub-Pool C
Spread Account in a form other than a Letter of Credit or other form of credit
enhancement, and deposit such amount to the Sub-Pool C Spread Account, for
transfer to the Sub-Pool C 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 Sub-Pool C Spread Account.
b. The Collateral Agent shall maintain records that accurately reflect
the funds on deposit in the Sub-Pool C Spread Account. On each Determination
Date, the Collateral Agent shall advise the Servicer as to the amount of funds
on deposit in the Sub-Pool C 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
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<PAGE>
assets of the Pledgor are less than the sum of the Required Sub-Pool C 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 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 of Pledgor.
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;
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<PAGE>
(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
(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 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 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 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
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<PAGE>
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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing 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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
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<PAGE>
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.
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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:__________________________
Name:________________________
Title:_______________________
GREEN TREE RECS II GUARANTY
CORPORATION, as Pledgor
By:__________________________
Name:________________________
Title:_______________________
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By:__________________________
Name:________________________
Title:_______________________
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<PAGE>
EXHIBIT J-2
-----------
SPREAD ACCOUNT PLEDGE AGREEMENT
SUB-POOL H
This Sub-Pool H Spread Account Pledge Agreement is dated as of
March 1, 1998, by and among Green Tree RECS II Guaranty Corporation (the
"Pledgor"), U.S. Bank National Association (fka First Trust National
Association), as Collateral Agent (together with its permitted successors
hereunder, the "Collateral Agent"), and U.S. Bank Trust National Association, as
Trustee (the "Trustee") of Green Tree Recreational, Equipment & Consumer Trust
1998-A (the "Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool H") of home equity loans and retail installment sales contracts and
promissory notes financing home improvements (the "Home Equity Contracts and
Home Improvement Contracts") under a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of March 1, 1998 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 "Sub-Pool H Certificates") representing undivided fractional
interests in Sub-Pool H. In order to facilitate the sale of the Sub-Pool H
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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Spread Account Deficiency Notice.
"Sub-Pool H Spread Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool H Spread
Account, which (a) if such Eligible Investments are securities, are
(i) certificated securities (as such term is used in Minn. Stat. (S) 336.8-
102(a)(4)), securities deemed to
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<PAGE>
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, (b) if such Eligible Investments are
repurchase obligations, 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 (a) above, and (c) 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 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
J-2-2
<PAGE>
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 Sub-Pool H Spread Account.
a. Establishment of Spread Account. On or prior to the Closing Date,
the Pledgor shall establish with the Collateral Agent three segregated trust
accounts referred to collectively herein as the "Sub-Pool H Spread Account." The
three accounts comprising the Spread Account shall be maintained in the name of
the Collateral Agent and designated respectively as follows: (1) "U.S. Bank
National Association, as Collateral Agent on behalf of U.S. Bank Trust National
Association, as Trustee for the benefit of Class A-2H Certificates issued by
Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-2H Spread
Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor);" (2) "U.S. Bank
National Association, as Collateral Agent on behalf of U.S. Bank Trust National
Association, as Trustee for the benefit of the Class A- 3H Certificates issued
by Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-3H Spread
Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor);" and (3) "U.S.
Bank National Association, as Collateral Agent on behalf of U.S. Bank Trust
National Association, as Trustee for the benefit of the Class A-4H Certificates
issued by Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-4H
Spread Subaccount,
J-2-3
<PAGE>
Green Tree RECS II Guaranty Corporation, Pledgor)." The Sub-Pool H 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
Sub-Pool H Spread Account and all amounts deposited therein and investments
thereof are owned by the Pledgor, and all assets transferred to the Sub-Pool H
Spread Account are taxable to the Pledgor. The Sub-Pool H 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 (which may
be the Collateral Agent or the Trustee) or in an account otherwise acceptable to
Fitch and Standard & Poor's. All amounts paid to the Pledgor under Section
8.03(d)(8), (12), (16) and (21) of the Pooling and Servicing Agreement shall be
deposited into the Sub-Pool H Spread Account as provided in the Pooling and
Servicing Agreement. Amounts shall be withdrawn from the Sub-Pool H Spread
Account only in accordance with the provisions of this Section 3 and Section
8.07 of the Pooling and Servicing Agreement. No passbook, certificate of deposit
or other similar instrument evidencing the Sub-Pool H Spread Account shall be
issued, and all contracts, receipts and other papers governing or evidencing the
Sub-Pool H 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 Sub-Pool H Spread Account shall be released to the
Pledgor.
b. Pledge of Sub-Pool H Spread Account.
(i) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-2H Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-2H 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 Class A-2H Spread
Subaccount up to the Class A-2H Spread Subaccount 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 with respect to the Class A-2H Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-2H Spread Subaccount plus any subsequent deposits into the Class A-2H
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-2H Spread Subaccount for the
benefit of the Class A-2H Certificateholders under this Section 3(b)(i) in
accordance with the terms hereof.
(ii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-3H Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-3H 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 Class A-3H Spread
Subaccount up to the Class A-3H Spread Subaccount 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 with respect
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<PAGE>
to the Class A-3H Certificates on such Distribution Date, subject to the limit
of the amount available in the Class A-3H Spread Subaccount plus any subsequent
deposits into the Class A-3H Spread Subaccount. The Collateral Agent and the
Trustee acknowledge and accept the grant of the security interest in the Class
A-3H Spread Subaccount for the benefit of the Class A-3H Certificateholders
under this Section 3(b)(ii) in accordance with the terms hereof.
(iii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-4H Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-4H 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 Class A-4H Spread
Subaccount up to the Class A-4H Spread Subaccount 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 with respect to the Class A-4H Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-4H Spread Subaccount plus any subsequent deposits into the Class A-4H
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-4H Spread Subaccount for the
benefit of the Class A-4H Certificateholders under this Section 3(b)(iii) in
accordance with the terms hereof.
(iv) 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
Sub-Pool H 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 Sub-Pool H 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 Sub-Pool H 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
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 Sub-Pool H Spread Account. The Collateral Agent shall
at the written direction of the Pledgor invest the funds in the Sub-Pool H
Spread Account in Spread Account Eligible Investments. Funds in the Sub-Pool H
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 Sub-Pool H Spread Account Eligible Investment by book
entry or otherwise and (ii) send the Trustee a written confirmation of its
security interest in such Sub-Pool H Spread Account Eligible Investment. All
income and gain realized from any such investments as well as any interest
earned on deposits in the Sub-Pool H Spread Account shall be deposited and
retained in the Sub-Pool H Spread Account. Losses, if any, realized on amounts
in the Sub-Pool H Spread Account
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<PAGE>
invested pursuant to this paragraph shall first be credited against
undistributed investment earnings on amounts in the Sub-Pool H Spread Account
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Sub-Pool H 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 Sub-Pool
H Spread Account. All income or loss on funds held in the Sub-Pool H Spread
Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool H Spread Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool H Spread Account,
the amount of the Shortfall from the Sub-Pool H Spread Account to the Sub-Pool H
Collection Account.
e. Release of Sub-Pool H Spread Account Excess. If on any Distribution
Date, the amount in the Class A-2 Spread Subaccount exceeds the Class A-2 Spread
Subaccount Required Amount immediately following the payment to the Class A-2H
Certificateholders on such Distribution Date, or the amount in the Class A-3
Subaccount exceeds the Class A-3 Spread Subaccount Required Amount immediately
following the payment to the Class A-3H Certificateholders on such Distribution
Date, or the amount in the Class A-4 Spread Subaccount exceeds the Class A-4
Spread Subaccount Required Amount immediately following the payment to the Class
A-4H Certificateholders on such Distribution Date, the Collateral Agent shall
withdraw the amount of such excess from the applicable Sub-Pool H Spread Account
and distribute such amount to the Pledgor.
f. Termination. This Agreement shall terminate (after distribution of
any funds remaining in the Sub-Pool H 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 Sub-Pool H Spread Account, after payment of any amounts
into the Sub-Pool H Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool H 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 Sub-Pool H 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
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<PAGE>
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 Sub-Pool
H 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.
(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) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not
downgrade, withdraw or qualify its then-current ratings of the Class
A-2H, Class A-3H and Class A-4H 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
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<PAGE>
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 Sub-Pool H
Spread Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-2H,
Class A-3H and Class A-4H 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.
(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 Sub-Pool H Spread Account for purposes of determining whether the balance
thereof equals or exceeds the Required Sub-Pool H 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 Sub-Pool H
Spread Account in a form other than a Letter of Credit or other form of credit
enhancement, and deposit such amount to the Sub-Pool H Spread Account, for
transfer to the Sub-Pool H 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 Sub-Pool H Spread Account.
b. The Collateral Agent shall maintain records that accurately reflect
the funds on deposit in the Sub-Pool H Spread Account. On each Determination
Date, the Collateral Agent shall advise the Servicer as to the amount of funds
on deposit in the Sub-Pool H 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
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<PAGE>
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 Sub-Pool H
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 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 of Pledgor.
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;
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<PAGE>
(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
(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 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 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 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
J-2-10
<PAGE>
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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing 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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
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<PAGE>
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.
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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:____________________________
Name:__________________________
Title:_________________________
GREEN TREE RECS II GUARANTY
CORPORATION, as Pledgor
By:____________________________
Name:__________________________
Title:_________________________
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By:____________________________
Name:__________________________
Title:_________________________
J-2-13
<PAGE>
EXHIBIT K-1
-----------
RESERVE ACCOUNT PLEDGE AGREEMENT
SUB-POOL C
This Sub-Pool C Reserve Account Pledge Agreement is dated as of
March 1, 1998, by and among Green Tree RECS II Guaranty Corporation (the
"Pledgor"), U.S. Bank National Association (fka First Trust National
Association), as Collateral Agent (together with its permitted successors
hereunder, the "Collateral Agent"), and U.S. Bank Trust National Association ,
as Trustee (the "Trustee") of Green Tree Recreational, Equipment & Consumer
Trust 1998-A (the "Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool C") of retail installment sales contracts and promissory notes for the
purchase of a variety of consumer products and equipment (the "Consumer Product
Contracts") under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 1998 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 "Sub-
Pool C Certificates") representing undivided fractional interests in Sub-Pool C.
In order to facilitate the sale of the Sub-Pool C 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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Sub-Pool C Reserve Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool C Reserve Account,
which (a) if such Eligible Investments are securities, 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
K-1-1
<PAGE>
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, (b) if such Eligible Investments are repurchase
obligations, 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 (a) above, and (c)
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.
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Reserve Account Deficiency Notice.
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 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
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<PAGE>
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 Sub-Pool C Reserve Account.
a. Establishment of Sub-Pool C Reserve Account. On or prior to the
Closing Date, the Pledgor shall establish with the Collateral Agent a trust
account referred to herein as the "Sub-Pool C Reserve Account." The Sub-Pool C
Reserve Account shall be maintained in the name of the Collateral Agent and
designated "U.S. Bank National Association, as Collateral Agent on behalf of
U.S. Bank Trust National Association, as Trustee for the benefit of the Class A-
1C, A-2C, A-3C and A-4C Certificates issued by Green Tree Recreational Equipment
& Consumer Trust 1998-A (Sub-Pool C Reserve Account, Green Tree RECS II Guaranty
Corporation, Pledgor)." The Sub-Pool C Reserve 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 Sub-Pool C Reserve Account and
all amounts deposited therein and investments thereof are owned by the Pledgor,
and all assets transferred to the Sub-Pool C Reserve Account are taxable to the
Pledgor. The Sub-Pool C Reserve 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 (which may be the Collateral Agent or the
Trustee) or in an account
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<PAGE>
otherwise acceptable to Fitch, Moody's and Standard & Poor's. All amounts paid
to the Pledgor under Section 8.03(a)(21) of the Pooling and Servicing Agreement
shall be deposited into the Sub-Pool C Reserve Account as provided in the
Pooling and Servicing Agreement. Amounts shall be withdrawn from the Sub-Pool C
Reserve 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 Sub-Pool C Reserve Account
shall be issued, and all contracts, receipts and other papers governing or
evidencing the Sub-Pool C Reserve 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 Sub-Pool C Reserve Account shall be
released to the Pledgor.
b. Pledge of Sub-Pool C Reserve Account. The Pledgor hereby pledges,
assigns, hypothecates, transfers and delivers to the Collateral Agent (for the
benefit of the Trustee and the Class A-1C, A-2C, A-3C and A-4C
Certificateholders), and hereby grants the Collateral Agent (for the benefit of
the Trustee and the Class A-1C, A-2C, A-3C and A-4C 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 Sub-Pool C
Reserve Account up to the Sub-Pool C Reserve 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 Sub-Pool C Reserve Account plus any
subsequent deposits into the Sub-Pool C Reserve Account.
The Collateral Agent and the Trustee acknowledge and accept the grant
of the security interest in the Sub-Pool C Reserve Account for the benefit of
the Class A-1C, A-2C, A-3C and A-4C 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
Sub-Pool C Reserve 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 Sub-Pool C Reserve 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 Sub-Pool C 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
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 Sub-Pool C Reserve Account. The Collateral Agent
shall at the written direction of the Pledgor invest the funds in the Sub-Pool C
Reserve Account in Reserve Account Eligible Investments. Funds in the Sub-Pool C
Reserve Account shall be invested in investments that mature on or before
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<PAGE>
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 Sub-Pool C Reserve Account Eligible Investment by book
entry or otherwise and (ii) send the Trustee a written confirmation of its
security interest in such Sub-Pool C Reserve Account Eligible Investment. All
income and gain realized from any such investments as well as any interest
earned on deposits in the Sub-Pool C Reserve Account shall be deposited and
retained in the Sub-Pool C Reserve Account. Losses, if any, realized on amounts
in the Sub-Pool C Reserve Account invested pursuant to this paragraph shall
first be credited against undistributed investment earnings on amounts in the
Sub-Pool C Reserve Account invested pursuant to this paragraph, and shall
thereafter be deemed to reduce the amount on deposit in the Sub-Pool C Reserve
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 Sub-Pool C Reserve Account. All income or loss on funds held
in the Sub-Pool C Reserve Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool C Reserve Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool C Reserve Account,
the amount of the Shortfall from the Sub-Pool C Reserve Account to the Sub-Pool
C Collection Account.
e. Release of Sub-Pool C Reserve Account Excess. If on any
Distribution Date, the amount in the Sub-Pool C Reserve Account exceeds the
Required Sub-Pool C Reserve Account Amount immediately following the payment to
Class A-1C, Class A-2C, Class A-3C and Class A-4C Certificateholders on such
Distribution Date, the Collateral Agent shall withdraw the amount of such excess
from the Sub-Pool C Reserve Account and distribute such amount to the Pledgor.
f. Termination. This Agreement shall terminate (after distribution of
any funds remaining in the Sub-Pool C Reserve 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 Sub-Pool C Reserve Account, after payment of any amounts
into the Sub-Pool C Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool C 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.
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<PAGE>
(i) At any time, the Pledgor may obtain the release of all or a
portion of the cash on deposit in the Sub-Pool C Reserve 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 Reserve
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.
(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) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not
downgrade, withdraw or qualify its then-current ratings of the Class
A-1C, Class A-2C,
K-1-6
<PAGE>
Class A-3C and Class A-4C 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 Reserve Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-1C,
Class A-2C, Class A-3C and Class A-4C 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.
(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 Sub-Pool C Reserve Account for purposes of determining whether the
balance thereof equals or exceeds the Required Sub-Pool C Reserve 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 Sub-Pool C Reserve Account in a form other than a Letter of Credit
or other form of credit enhancement, and deposit such amount to the Sub-Pool C
Reserve Account, for transfer to the Sub-Pool C 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 Sub-Pool C Reserve Account.
b. The Collateral Agent shall maintain records that accurately reflect
the funds on deposit in the Sub-Pool C Reserve Account. On each Determination
Date, the Collateral Agent shall advise the Servicer as to the amount of funds
on deposit in the Sub-Pool C Reserve Account.
K-1-7
<PAGE>
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 Sub-Pool C Reserve 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 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 of Pledgor.
K-1-8
<PAGE>
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
(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 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.
K-1-9
<PAGE>
b. Amendment. This Agreement may be amended from time to time by the
Pledgor, the Collateral Agent and the Trustee, with notice to Fitch 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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing 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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
K-1-10
<PAGE>
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
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.
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.
K-1-11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:____________________________
Name:__________________________
Title:_________________________
GREEN TREE RECS II GUARANTY
CORPORATION, as Pledgor
By:____________________________
Name:__________________________
Title:_________________________
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By:____________________________
Name:__________________________
Title:_________________________
K-1-12
<PAGE>
EXHIBIT K-2
-----------
RESERVE ACCOUNT PLEDGE AGREEMENT
SUB-POOL H
This Sub-Pool H Reserve Account Pledge Agreement is dated as of
March 1, 1998, by and among Green Tree RECS II Guaranty Corporation (the
"Pledgor"), U.S. Bank National Association, as Collateral Agent (together with
its permitted successors hereunder, the "Collateral Agent"), and U.S. Bank Trust
National Association (fka First Trust National Association), as Trustee (the
"Trustee") of Green Tree Recreational, Equipment & Consumer Trust 1998-A (the
"Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool H") of home equity loans and promissory notes for the purchase of a variety
of consumer products and retail installment sales contracts and promissory notes
financing home improvements (the "Home Equity Contracts and Home Improvement
Contracts") under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 1998 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 "Sub-
Pool H Certificates") representing undivided fractional interests in Sub-Pool H.
In order to facilitate the sale of the Sub-Pool H 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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Reserve Account Deficiency Notice.
"Sub-Pool H Reserve Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool H Reserve
K-2-1
<PAGE>
Account, which (a) if such Eligible Investments are securities, 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, (b) if such
Eligible Investments are repurchase obligations, 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 (a) above, and (c) 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 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.
K-2-2
<PAGE>
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 Sub-Pool H Reserve Account.
a. Establishment of Sub-Pool H Reserve Account. On or prior to the
Closing Date, the Pledgor shall establish with the Collateral Agent a trust
account referred to herein as the "Sub-Pool H Reserve Account." The Sub-Pool H
Reserve Account shall be maintained in the name of the Collateral Agent and
designated "U.S. Bank National Association, as Collateral Agent on behalf of
U.S. Bank Trust National Association, as Trustee for the benefit of the Class A-
1H, A-2H, A-3H and A-4H Certificates issued by Green Tree Recreational Equipment
& Consumer Trust 1998-A (Sub-Pool H Reserve Account, Green Tree RECS II Guaranty
Corporation, Pledgor)." The Sub-Pool H Reserve 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 Sub-Pool H Reserve Account and
all amounts deposited therein and investments thereof are owned by the Pledgor,
and all assets transferred to the Sub-Pool H Reserve Account are taxable to the
Pledgor.
K-2-3
<PAGE>
The Sub-Pool H Reserve 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 (which may be the Collateral Agent or the Trustee) or
in an account otherwise acceptable to Fitch, Moody's and Standard & Poor's. All
amounts paid to the Pledgor under Section 8.03(d)(22)of the Pooling and
Servicing Agreement shall be deposited into the Sub-Pool H Reserve Account as
provided in the Pooling and Servicing Agreement. Amounts shall be withdrawn from
the Sub-Pool H Reserve Account only in accordance with the provisions of this
Section 3 and Section 8.07 of the Pooling and Servicing Agreement. No passbook,
certificate of deposit or other similar instrument evidencing the Sub- Pool H
Reserve Account shall be issued, and all contracts, receipts and other papers
governing or evidencing the Sub-Pool H Reserve 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 Sub-Pool H Reserve Account
shall be released to the Pledgor.
b. Pledge of Sub-Pool H Reserve Account. The Pledgor hereby pledges,
assigns, hypothecates, transfers and delivers to the Collateral Agent (for the
benefit of the Trustee and the Class A-1H, A-H2, A-H3 and A-H4
Certificateholders), and hereby grants the Collateral Agent (for the benefit of
the Trustee and the Class A-1H, A-H2, A-H3 and A-H4 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 Sub-Pool H
Reserve Account up to the Sub-Pool H Reserve 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 Sub-Pool H Reserve Account plus any
subsequent deposits into the Sub-Pool H Reserve Account.
The Collateral Agent and the Trustee acknowledge and accept the grant
of the security interest in the Sub-Pool H Reserve Account for the benefit of
the Class A-1H, A-H2, A-H3 and A-H4 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
Sub-Pool H Reserve 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 Sub-Pool H Reserve 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 Sub-Pool H 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
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.
K-2-4
<PAGE>
c. Investment of Sub-Pool H Reserve Account. The Collateral Agent
shall at the written direction of the Pledgor invest the funds in the Sub-Pool H
Reserve Account in Sub-Pool H Reserve Account Eligible Investments. Funds in the
Sub-Pool H Reserve 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 Sub-Pool H Reserve Account Eligible
Investment by book entry or otherwise and (ii) send the Trustee a written
confirmation of its security interest in such Sub-Pool H Reserve Account
Eligible Investment. All income and gain realized from any such investments as
well as any interest earned on deposits in the Sub-Pool H Reserve Account shall
be deposited and retained in the Sub-Pool H Reserve Account. Losses, if any,
realized on amounts in the Sub-Pool H Reserve Account invested pursuant to this
paragraph shall first be credited against undistributed investment earnings on
amounts in the Sub-Pool H Reserve Account invested pursuant to this paragraph,
and shall thereafter be deemed to reduce the amount on deposit in the Sub-Pool H
Reserve 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 Sub-Pool H Reserve Account. All income or loss
on funds held in the Sub-Pool H Reserve Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool H Reserve Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool H Reserve Account,
the amount of the Shortfall from the Sub-Pool H Reserve Account to the Sub-Pool
H Collection Account.
e. Release of Sub-Pool H Reserve Account Excess. If on any
Distribution Date, the amount in the Sub-Pool H Reserve Account exceeds the
Required Sub-Pool H Reserve Account Amount immediately following the payment to
Class A-1H, Class A-H2, Class A-H3 and Class A-H4 Certificateholders on such
Distribution Date, the Collateral Agent shall withdraw the amount of such excess
from the Sub-Pool H Reserve Account and distribute such amount to the Pledgor.
f. Termination. This Agreement shall terminate (after distribution of
any funds remaining in the Sub-Pool H Reserve 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 Sub-Pool H Reserve Account, after payment of any amounts
into the Sub-Pool H Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool H Collection
Account shall be unconditional and irrevocable and shall not terminate upon, or
K-2-5
<PAGE>
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 Sub-Pool H Reserve 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 Reserve
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.
(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
K-2-6
<PAGE>
(D) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not
downgrade, withdraw or qualify its then-current ratings of the Class
A-1H, A-H2, A-H3 and A-H4 Certificates as a result of the delivery and
acceptance of such Letter of Credit.
The cost of obtaining and maintaining an 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 Reserve Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-1H,
A-H2, A-H3 and A-H4 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.
(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 Sub-Pool H Reserve Account for purposes of determining whether the
balance thereof equals or exceeds the Required Sub-Pool H Reserve 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 Sub-Pool H Reserve Account in a form other than a Letter of Credit
or other form of credit enhancement, and deposit such amount to the Sub-Pool H
Reserve Account, for transfer to the Sub-Pool H 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 Sub-Pool H Reserve Account.
K-2-7
<PAGE>
b. The Collateral Agent shall maintain records that accurately reflect
the funds on deposit in the Sub-Pool H Reserve Account. On each Determination
Date, the Collateral Agent shall advise the Servicer as to the amount of funds
on deposit in the Sub-Pool H Reserve 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 Sub-Pool H Reserve 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 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
K-2-8
<PAGE>
(vii) acquire obligations or securities of Green Tree or any
other shareholder of Pledgor.
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
(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 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
K-2-9
<PAGE>
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 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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing 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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
K-2-10
<PAGE>
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
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.
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.
K-2-11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By:_______________________________
Name:_____________________________
Title:____________________________
GREEN TREE RECS II GUARANTY
CORPORATION, as Pledgor
By:_______________________________
Name:_____________________________
Title:____________________________
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By:_______________________________
Name:_____________________________
Title:____________________________
K-2-12
<PAGE>
EXHIBIT L-1
-----------
SPREAD ACCOUNT DEFICIENCY NOTICE
--------------------------------
SUB-POOL C
----------
Date: ____________
U.S. Bank Trust National Association, as Trustee
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
U.S. Bank National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
You are hereby notified, pursuant to Section 8.06(b) of the Pooling and
Servicing Agreement between Green Tree Financial Corporation, as Seller and
Servicer, and U.S. Bank Trust National Association, as Trustee, dated as of
March 1, 1998, regarding Green Tree Recreational, Equipment & Consumer Trust
1998-A (the "Agreement"), that there are insufficient funds to make a
distribution on _________ 15, ___ (the "Distribution Date") of the amount
described in clause:
(5) of Section 8.03(a) of the Agreement and the amount of the insufficiency is
$________.
(9) of Section 8.03(a) of the Agreement and the amount of the insufficiency is
$________.
(13) of Section 8.03(a) of the Agreement and the amount of the insufficiency is
$________.
The Collateral Agent is hereby directed to withdraw, to the extent of funds on
deposit therein, and to deposit in the Sub-Pool C Collection Account on the
Distribution Date:
$________ from the Class A-2C Spread Subaccount.
$________ from the Class A-3C Spread Subaccount.
$________ from the Class A-4C Spread Subaccount.
L-1-1
<PAGE>
All capitalized terms used herein without definition shall have the meanings
specified in the Agreement.
GREEN TREE FINANCIAL CORPORATION,
as Servicer
By _______________________________
Its _____________________________
L-1-2
<PAGE>
EXHIBIT L-2
-----------
SPREAD ACCOUNT DEFICIENCY NOTICE
--------------------------------
SUB-POOL H
-----------
Date: ____________
U.S. Bank Trust National Association, as Trustee
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
U.S. Bank National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
You are hereby notified, pursuant to Section 8.07(b) of the Pooling and
Servicing Agreement between Green Tree Financial Corporation, as Seller and
Servicer, and U.S. Bank Trust National Association, as Trustee, dated as of
March 1, 1998, regarding Green Tree Recreational, Equipment & Consumer Trust
1998-A (the "Agreement"), that there are insufficient funds to make a
distribution on _________ 15, ___ (the "Distribution Date") of the amount
described in clause:
(5) of Section 8.03(d) of the Agreement and the amount of the insufficiency is
$________.
(9) of Section 8.03(d) of the Agreement and the amount of the insufficiency is
$________.
(13) of Section 8.03(d) of the Agreement and the amount of the insufficiency is
$________.
The Collateral Agent is hereby directed to withdraw, to the extent of funds on
deposit therein, and to deposit in the Sub-Pool H Collection Account on the
Distribution Date:
$________ from the Class A-2H Spread Subaccount.
$________ from the Class A-3H Spread Subaccount.
$________ from the Class A-4H Spread Subaccount.
L-2-1
<PAGE>
All capitalized terms used herein without definition shall have the meanings
specified in the Agreement.
GREEN TREE FINANCIAL CORPORATION,
as Servicer
By_____________________________
Its___________________________
L-2-2
<PAGE>
EXHIBIT M-1
-----------
RESERVE ACCOUNT DEFICIENCY NOTICE
---------------------------------
SUB-POOL C
-----------
Date: ____________
U.S. Bank Trust National Association, as Trustee
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
U.S. Bank National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
You are hereby notified, pursuant to Section 8.06(c) of the Pooling and
Servicing Agreement between Green Tree Financial Corporation, as Seller and
Servicer, and U.S. Bank Trust National Association, as Trustee, dated as of
March 1, 1998, regarding Green Tree Recreational, Equipment & Consumer Trust
1998-A (the "Agreement"), that there are insufficient funds to make a
distribution on _________ 15, ____, (the "Distribution Date") of the amounts
described in clauses (3) through (7), (9) through (11), and (13) through (15) of
Section 8.03(a) of the Agreement. The amount of the insufficiency is
$____________. The Collateral Agent is hereby directed to withdraw such amount
from the Sub-Pool C Reserve Account (to the extent of funds on deposit therein)
and deposit the same in the Sub-Pool C Collection Account on the Distribution
Date. All capitalized terms used herein without definition shall have the
meanings specified in the Agreement.
GREEN TREE FINANCIAL CORPORATION,
as Servicer
By ____________________________
Its ________________________
M-1-1
<PAGE>
EXHIBIT M-2
-----------
RESERVE ACCOUNT DEFICIENCY NOTICE
---------------------------------
SUB-POOL H
----------
Date: ____________
U.S. Bank Trust National Association, as Trustee
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
U.S. Bank National Association, as Collateral Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administrator
Structured Finance
You are hereby notified, pursuant to Section 8.07(c) of the Pooling and
Servicing Agreement between Green Tree Financial Corporation, as Seller and
Servicer, and U.S. Bank Trust National Association, as Trustee, dated as of
March 1, 1998, regarding Green Tree Recreational, Equipment & Consumer Trust
1998-A (the "Agreement"), that there are insufficient funds to make a
distribution on _________ 15, ____, (the "Distribution Date") of the amounts
described in clauses (3) through (7), (9) through (11), and (13) through (15) of
Section 8.03(d) of the Agreement. The amount of the insufficiency is
$____________. The Collateral Agent is hereby directed to withdraw such amount
from the Sub-Pool H Reserve Account (to the extent of funds on deposit therein)
and deposit the same in the Sub-Pool H Collection Account on the Distribution
Date. All capitalized terms used herein without definition shall have the
meanings specified in the Agreement.
GREEN TREE FINANCIAL CORPORATION,
as Servicer
By ____________________________
Its ________________________
M-2-1
<PAGE>
Exhibit 4.2
RESERVE ACCOUNT PLEDGE AGREEMENT
SUB-POOL C
This Sub-Pool C Reserve Account Pledge Agreement is dated as of March
1, 1998, by and among Green Tree RECS II Guaranty Corporation (the "Pledgor"),
U.S. Bank National Association (fka First Trust National Association), as
Collateral Agent (together with its permitted successors hereunder, the
"Collateral Agent"), and U.S. Bank Trust National Association , as Trustee (the
"Trustee") of Green Tree Recreational, Equipment & Consumer Trust 1998-A (the
"Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool C") of retail installment sales contracts and promissory notes for the
purchase of a variety of consumer products and equipment (the "Consumer Product
Contracts") under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 1998 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 "Sub-
Pool C Certificates") representing undivided fractional interests in Sub-Pool C.
In order to facilitate the sale of the Sub-Pool C 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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Sub-Pool C Reserve Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool C Reserve Account,
which (a) if such Eligible Investments are securities, 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
<PAGE>
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, (b) if such Eligible Investments are repurchase
obligations, 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 (a) above, and (c)
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.
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Reserve Account Deficiency Notice.
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 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.
-2-
<PAGE>
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 Sub-Pool C Reserve Account.
------------------------------------------------------
a. Establishment of Sub-Pool C Reserve Account. On or prior to the
Closing Date, the Pledgor shall establish with the Collateral Agent a trust
account referred to herein as the "Sub-Pool C Reserve Account." The Sub-Pool C
Reserve Account shall be maintained in the name of the Collateral Agent and
designated "U.S. Bank National Association, as Collateral Agent on behalf of
U.S. Bank Trust National Association, as Trustee for the benefit of the Class A-
1C, A-2C, A-3C and A-4C Certificates issued by Green Tree Recreational Equipment
& Consumer Trust 1998-A (Sub-Pool C Reserve Account, Green Tree RECS II Guaranty
Corporation, Pledgor)." The Sub-Pool C Reserve Account is separate from the
Trust
-3-
<PAGE>
and any amount on deposit therein will not constitute a part of the property of
the Trust. For all tax purposes, the Sub-Pool C Reserve Account and all amounts
deposited therein and investments thereof are owned by the Pledgor, and all
assets transferred to the Sub-Pool C Reserve Account are taxable to the Pledgor.
The Sub-Pool C Reserve 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 (which may be the Collateral Agent or the Trustee) 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)(21) of the Pooling and
Servicing Agreement shall be deposited into the Sub-Pool C Reserve Account as
provided in the Pooling and Servicing Agreement. Amounts shall be withdrawn from
the Sub-Pool C Reserve 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 Sub-Pool C
Reserve Account shall be issued, and all contracts, receipts and other papers
governing or evidencing the Sub-Pool C Reserve 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 Sub-Pool C Reserve Account
shall be released to the Pledgor.
b. Pledge of Sub-Pool C Reserve Account. The Pledgor hereby
pledges, assigns, hypothecates, transfers and delivers to the Collateral Agent
(for the benefit of the Trustee and the Class A-1C, A-2C, A-3C and A-4C
Certificateholders), and hereby grants the Collateral Agent (for the benefit of
the Trustee and the Class A-1C, A-2C, A-3C and A-4C 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 Sub-Pool C
Reserve Account up to the Sub-Pool C Reserve 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 Sub-Pool C Reserve Account
plus any subsequent deposits into the Sub-Pool C Reserve Account.
The Collateral Agent and the Trustee acknowledge and accept the grant
of the security interest in the Sub-Pool C Reserve Account for the benefit of
the Class A-1C, A-2C, A-3C and A-4C 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
Sub-Pool C Reserve 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 Sub-Pool C Reserve Account is
located in order to secure the full and timely performance of the obligations of
the Pledgor pursuant to this
-4-
<PAGE>
Agreement. Amounts properly withdrawn by the Collateral Agent and paid into the
Sub-Pool C 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 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 Sub-Pool C Reserve Account. The Collateral Agent
shall at the written direction of the Pledgor invest the funds in the Sub-Pool C
Reserve Account in Reserve Account Eligible Investments. Funds in the Sub-Pool
C Reserve 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 Sub-Pool C Reserve Account Eligible Investment by book
entry or otherwise and (ii) send the Trustee a written confirmation of its
security interest in such Sub-Pool C Reserve Account Eligible Investment. All
income and gain realized from any such investments as well as any interest
earned on deposits in the Sub-Pool C Reserve Account shall be deposited and
retained in the Sub-Pool C Reserve Account. Losses, if any, realized on amounts
in the Sub-Pool C Reserve Account invested pursuant to this paragraph shall
first be credited against undistributed investment earnings on amounts in the
Sub-Pool C Reserve Account invested pursuant to this paragraph, and shall
thereafter be deemed to reduce the amount on deposit in the Sub-Pool C Reserve
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 Sub-Pool C Reserve Account. All income or loss on funds
held in the Sub-Pool C Reserve Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool C Reserve Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool C Reserve Account,
the amount of the Shortfall from the Sub-Pool C Reserve Account to the Sub-Pool
C Collection Account.
e. Release of Sub-Pool C Reserve Account Excess. If on any
Distribution Date, the amount in the Sub-Pool C Reserve Account exceeds the
Required Sub-Pool C Reserve Account Amount immediately following the payment to
Class A-1C, Class A-2C, Class A-3C and Class A-4C Certificateholders on such
Distribution Date, the Collateral Agent shall withdraw the amount of such excess
from the Sub-Pool C Reserve Account and distribute such amount to the Pledgor.
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<PAGE>
f. Termination. This Agreement shall terminate (after distribution
of any funds remaining in the Sub-Pool C Reserve 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 Sub-Pool C Reserve Account, after payment of any amounts
into the Sub-Pool C Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool C 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 Sub-Pool C Reserve 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 Reserve 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) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not downgrade,
withdraw or qualify its then-current ratings of the Class A-1C, Class A-2C,
Class A-3C and Class A-4C 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 Reserve Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-1C,
Class A-2C, Class A-3C and Class A-4C 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.
(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
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such Letter of Credit or other form of credit enhancement shall be deemed to be
in the Sub-Pool C Reserve Account for purposes of determining whether the
balance thereof equals or exceeds the Required Sub-Pool C Reserve 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 Sub-Pool C Reserve Account in a form other than a Letter of Credit
or other form of credit enhancement, and deposit such amount to the Sub-Pool C
Reserve Account, for transfer to the Sub-Pool C 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 Sub-Pool C Reserve Account.
b. The Collateral Agent shall maintain records that accurately
reflect the funds on deposit in the Sub-Pool C Reserve Account. On each
Determination Date, the Collateral Agent shall advise the Servicer as to the
amount of funds on deposit in the Sub-Pool C Reserve 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 Sub-Pool C Reserve 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 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
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<PAGE>
(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 of Pledgor.
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 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 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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing Certificate
Percentage Interests aggregating 51% or more, for the purpose of adding any
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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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
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<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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By: /s/ Tamara Schultz-Fugh
---------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
GREEN TREE RECS II GUARANTY
CORPORATION, as Pledgor
By: /s/ Phyllis A. Knight
---------------------------------
Name: Phyllis A. Knight
Title: Senior Vice President and Treasurer
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By: /s/ Tamara Schultz-Fugh
---------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
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<PAGE>
Exhibit 4.3
RESERVE ACCOUNT PLEDGE AGREEMENT
SUB-POOL H
This Sub-Pool H Reserve Account Pledge Agreement is dated as of March
1, 1998, by and among Green Tree RECS II Guaranty Corporation (the "Pledgor"),
U.S. Bank National Association, as Collateral Agent (together with its permitted
successors hereunder, the "Collateral Agent"), and U.S. Bank Trust National
Association (fka First Trust National Association), as Trustee (the "Trustee")
of Green Tree Recreational, Equipment & Consumer Trust 1998-A (the "Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool H") of home equity loans and promissory notes for the purchase of a variety
of consumer products and retail installment sales contracts and promissory notes
financing home improvements (the "Home Equity Contracts and Home Improvement
Contracts") under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 1998 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 "Sub-
Pool H Certificates") representing undivided fractional interests in Sub-Pool H.
In order to facilitate the sale of the Sub-Pool H 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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Reserve Account Deficiency Notice.
<PAGE>
"Sub-Pool H Reserve Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool H Reserve Account,
which (a) if such Eligible Investments are securities, 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, (b) if such Eligible Investments are
repurchase obligations, 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 (a) above, and (c) 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 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
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<PAGE>
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 Sub-Pool H Reserve Account.
------------------------------------------------------
a. Establishment of Sub-Pool H Reserve Account. On or prior to the
Closing Date, the Pledgor shall establish with the Collateral Agent a trust
account referred to herein as the "Sub-Pool H Reserve Account." The Sub-Pool H
Reserve Account shall be maintained in the name of the Collateral Agent and
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designated "U.S. Bank National Association, as Collateral Agent on behalf of
U.S. Bank Trust National Association, as Trustee for the benefit of the Class A-
1H, A-2H, A-3H and A-4H Certificates issued by Green Tree Recreational Equipment
& Consumer Trust 1998-A (Sub-Pool H Reserve Account, Green Tree RECS II Guaranty
Corporation, Pledgor)." The Sub-Pool H Reserve 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 Sub-Pool H Reserve Account and
all amounts deposited therein and investments thereof are owned by the Pledgor,
and all assets transferred to the Sub-Pool H Reserve Account are taxable to the
Pledgor. The Sub-Pool H Reserve 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 (which may be the Collateral Agent or the
Trustee) or in an account otherwise acceptable to Fitch, Moody's and Standard &
Poor's. All amounts paid to the Pledgor under Section 8.03(d)(22)of the Pooling
and Servicing Agreement shall be deposited into the Sub-Pool H Reserve Account
as provided in the Pooling and Servicing Agreement. Amounts shall be withdrawn
from the Sub-Pool H Reserve Account only in accordance with the provisions of
this Section 3 and Section 8.07 of the Pooling and Servicing Agreement. No
passbook, certificate of deposit or other similar instrument evidencing the Sub-
Pool H Reserve Account shall be issued, and all contracts, receipts and other
papers governing or evidencing the Sub-Pool H Reserve 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 Sub-Pool H
Reserve Account shall be released to the Pledgor.
b. Pledge of Sub-Pool H Reserve Account. The Pledgor hereby
pledges, assigns, hypothecates, transfers and delivers to the Collateral Agent
(for the benefit of the Trustee and the Class A-1H, A-H2, A-H3 and A-H4
Certificateholders), and hereby grants the Collateral Agent (for the benefit of
the Trustee and the Class A-1H, A-H2, A-H3 and A-H4 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 Sub-Pool H
Reserve Account up to the Sub-Pool H Reserve 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 Sub-Pool H Reserve Account
plus any subsequent deposits into the Sub-Pool H Reserve Account.
The Collateral Agent and the Trustee acknowledge and accept the grant
of the security interest in the Sub-Pool H Reserve Account for the benefit of
the Class A-1H, A-H2, A-H3 and A-H4 Certificateholders under this Section 3(b)
in accordance with the terms hereof.
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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
Sub-Pool H Reserve 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 Sub-Pool H Reserve 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 Sub-Pool H 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
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 Sub-Pool H Reserve Account. The Collateral Agent
shall at the written direction of the Pledgor invest the funds in the Sub-Pool H
Reserve Account in Sub-Pool H Reserve Account Eligible Investments. Funds in
the Sub-Pool H Reserve 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 Sub-Pool H Reserve Account Eligible
Investment by book entry or otherwise and (ii) send the Trustee a written
confirmation of its security interest in such Sub-Pool H Reserve Account
Eligible Investment. All income and gain realized from any such investments as
well as any interest earned on deposits in the Sub-Pool H Reserve Account shall
be deposited and retained in the Sub-Pool H Reserve Account. Losses, if any,
realized on amounts in the Sub-Pool H Reserve Account invested pursuant to this
paragraph shall first be credited against undistributed investment earnings on
amounts in the Sub-Pool H Reserve Account invested pursuant to this paragraph,
and shall thereafter be deemed to reduce the amount on deposit in the Sub-Pool H
Reserve 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 Sub-Pool H Reserve Account. All income or loss
on funds held in the Sub-Pool H Reserve Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool H Reserve Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool H Reserve Account,
the amount of the Shortfall from the Sub-Pool H Reserve Account to the Sub-Pool
H Collection Account.
e. Release of Sub-Pool H Reserve Account Excess. If on any
Distribution Date, the amount in the Sub-Pool H Reserve Account exceeds the
Required Sub-Pool H Reserve Account Amount immediately following the
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payment to Class A-1H, Class A-H2, Class A-H3 and Class A-H4 Certificateholders
on such Distribution Date, the Collateral Agent shall withdraw the amount of
such excess from the Sub-Pool H Reserve Account and distribute such amount to
the Pledgor.
f. Termination. This Agreement shall terminate (after distribution
of any funds remaining in the Sub-Pool H Reserve 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 Sub-Pool H Reserve Account, after payment of any amounts
into the Sub-Pool H Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool H 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 Sub-Pool H Reserve 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 Reserve 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.
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<PAGE>
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.
(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) Standard & Poor's and Fitch shall each have advised the Trustee
and the Collateral Agent in writing that it will not downgrade, withdraw or
qualify its then-current ratings of the Class A-1H, A-H2, A-H3 and A-H4
Certificates as a result of the delivery and acceptance of such Letter of
Credit.
The cost of obtaining and maintaining an 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 Reserve Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-1H,
A-H2, A-H3 and A-H4 Certificates as a result of the delivery and acceptance of
such alternate form of credit enhancement.
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<PAGE>
The cost of obtaining and maintaining any such alternate form of
credit enhancement shall be borne solely by the Pledgor and Green Tree.
(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 Sub-Pool H Reserve Account for purposes of determining whether the
balance thereof equals or exceeds the Required Sub-Pool H Reserve 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 Sub-Pool H Reserve Account in a form other than a Letter of Credit
or other form of credit enhancement, and deposit such amount to the Sub-Pool H
Reserve Account, for transfer to the Sub-Pool H 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 Sub-Pool H Reserve Account.
b. The Collateral Agent shall maintain records that accurately
reflect the funds on deposit in the Sub-Pool H Reserve Account. On each
Determination Date, the Collateral Agent shall advise the Servicer as to the
amount of funds on deposit in the Sub-Pool H Reserve 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 Sub-Pool H Reserve 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:
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<PAGE>
(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 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 of Pledgor.
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
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<PAGE>
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
(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 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 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.
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<PAGE>
This Agreement may also be amended from time to time by the Pledgor,
the Collateral Agent and the Trustee, with notice to Fitch and Standard & Poor's
and with the consent of Holders of Certificates evidencing 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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
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<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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By: /s/ Tamara Schultz-Fugh
--------------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
GREEN TREE RECS II GUARANTY CORPORATION,
as Pledgor
By: /s/ Phyllis A. Knight
---------------------------------------
Name: Phyllis A. Knight
Title: Senior Vice President and Treasurer
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By: /s/ Tamara Schultz-Fugh
---------------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
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<PAGE>
Exhibit 4.4
SPREAD ACCOUNT PLEDGE AGREEMENT
SUB-POOL C
This Sub-Pool C Spread Account Pledge Agreement is dated as of March
1, 1998, by and among Green Tree RECS II Guaranty Corporation (the "Pledgor"),
U.S. Bank National Association (fka First Trust National Association), as
Collateral Agent (together with its permitted successors hereunder, the
"Collateral Agent"), and U.S. Bank Trust National Association, as Trustee (the
"Trustee") of Green Tree Recreational, Equipment & Consumer Trust 1998-A (the
"Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool C") of retail installment sales contracts and promissory notes for the
purchase of a variety of consumer products and equipment (the "Consumer Product
Contracts") under a Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 1, 1998 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 "Sub-
Pool C Certificates") representing undivided fractional interests in Sub-Pool C.
In order to facilitate the sale of the Sub-Pool C 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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Spread Account Deficiency Notice.
"Sub-Pool C Spread Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool C Spread Account, which
(a) if such Eligible Investments are securities, are (i) certificated
<PAGE>
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, (b) if such Eligible Investments are
repurchase obligations, 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 (a) above, and (c) 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 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
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<PAGE>
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 Sub-Pool C Spread Account.
-----------------------------------------------------
a. Establishment of Spread Account. On or prior to the Closing
Date, the Pledgor shall establish with the Collateral Agent three segregated
trust accounts referred to collectively herein as the "Sub-Pool C Spread
Account." The three accounts comprising the Sub-Pool C Spread Account shall be
maintained in the name of the Collateral Agent and designated respectively as
follows: (1) "U.S. Bank National Association, as Collateral Agent on behalf of
U.S. Bank Trust
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<PAGE>
National Association, as Trustee for the benefit of the Class A-2C Certificates
issued by Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-2C
Spread Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor);" (2) "U.S.
Bank National Association, as Collateral Agent on behalf of U.S. Bank Trust
National Association, as Trustee for the benefit of the Class A-3C Certificates
issued by Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-3C
Spread Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor);" and (3)
"U.S. Bank National Association, as Collateral Agent on behalf of U.S. Bank
Trust National Association, as Trustee for the benefit of the Class A-4C
Certificates issued by Green Tree Recreational Equipment & Consumer Trust 1998-A
(Class A-4C Spread Subaccount, Green Tree RECS II Guaranty Corporation,
Pledgor)." The Sub-Pool C 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 Sub-Pool C Spread Account and all amounts
deposited therein and investments thereof are owned by the Pledgor, and all
assets transferred to the Sub-Pool C Spread Account are taxable to the Pledgor.
The Sub-Pool C 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 (which may be the Collateral Agent or the Trustee) or in
an account otherwise acceptable to Fitch and Standard & Poor's. All amounts paid
to the Pledgor under Section 8.03(a)(8), (12), (16) and (20) and Section
8.03(d)(23) of the Pooling and Servicing Agreement shall be deposited into the
Sub-Pool C Spread Account as provided in the Pooling and Servicing Agreement.
Amounts shall be withdrawn from the Sub-Pool C 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 Sub-Pool C Spread Account shall be issued, and all
contracts, receipts and other papers governing or evidencing the Sub-Pool C
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 Sub-Pool C Spread Account shall be released to the Pledgor.
b. Pledge of Sub-Pool C Spread Account.
-----------------------------------
(i) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-2C Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-2C 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 Class A-2C Spread
Subaccount up to the Class A-2C Spread Subaccount 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 with respect to the Class A-2C Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-2C Spread Subaccount plus any subsequent deposits
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<PAGE>
into the Class A-2C Spread Subaccount. The Collateral Agent and the Trustee
acknowledge and accept the grant of the security interest in the Class A-2C
Spread Subaccount for the benefit of the Class A-2C Certificateholders under
this Section 3(b)(i) in accordance with the terms hereof.
(ii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-3C Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-3C 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 Class A-3C Spread
Subaccount up to the Class A-3C Spread Subaccount 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 with respect to the Class A-3C Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-3C Spread Subaccount plus any subsequent deposits into the Class A-3C
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-3C Spread Subaccount for the
benefit of the Class A-3C Certificateholders under this Section 3(b)(ii) in
accordance with the terms hereof.
(iii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-4C Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-4C 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 Class A-4C Spread
Subaccount up to the Class A-4C Spread Subaccount 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 with respect to the Class A-4C Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-4C Spread Subaccount plus any subsequent deposits into the Class A-4C
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-4C Spread Subaccount for the
benefit of the Class A-4C Certificateholders under this Section 3(b)(iii) in
accordance with the terms hereof.
(iv) 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
Sub-Pool C 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 Sub-Pool C 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
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<PAGE>
the Sub-Pool C 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
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 Sub-Pool C Spread Account. The Collateral Agent
shall at the written direction of the Pledgor invest the funds in the Sub-Pool C
Spread Account in Sub-Pool C Spread Account Eligible Investments. Funds in the
Sub-Pool C 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 Sub-Pool C Spread Account Eligible
Investment by book entry or otherwise and (ii) send the Trustee a written
confirmation of its security interest in such Sub-Pool C Spread Account Eligible
Investment. All income and gain realized from any such investments as well as
any interest earned on deposits in the Sub-Pool C Spread Account shall be
deposited and retained in the Sub-Pool C Spread Account. Losses, if any,
realized on amounts in the Sub-Pool C Spread Account invested pursuant to this
paragraph shall first be credited against undistributed investment earnings on
amounts in the Sub-Pool C Spread Account invested pursuant to this paragraph,
and shall thereafter be deemed to reduce the amount on deposit in the Sub-Pool C
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 Sub-Pool C Spread Account. All income or loss
on funds held in the Sub-Pool C Spread Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool C Spread Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool C Spread Account,
the amount of the Shortfall from the Sub-Pool C Spread Account to the Sub-Pool C
Collection Account.
e. Release of Sub-Pool C Spread Account Excess. If on any
Distribution Date, the amount in the Class A-2 C Spread Subaccount exceeds the
Class A-2 C Spread Subaccount Required Amount immediately following the payment
to Certificateholders on such Distribution Date, or the amount in the Class A-3
C Spread Subaccount exceeds the Class A-3 C Spread Subaccount Required Amount
immediately following the payment to Class A-3C Certificateholders on such
Distribution Date, or the amount in the Class A-4 C Spread Subaccount exceeds
the Class A-4 C Spread Subaccount Required Amount immediately following the
payment to Class A-4 Certificateholders on such Distribution Date, the
Collateral Agent shall withdraw the amount of such excess from the applicable
Sub-Pool C Spread Account and distribute such amount to the Pledgor.
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<PAGE>
f. Termination. This Agreement shall terminate (after distribution
of any funds remaining in the Sub-Pool C 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 Sub-Pool C Spread Account, after payment of any amounts
into the Sub-Pool C Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool C 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 Sub-Pool C 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 Sub-Pool C 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) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not downgrade,
withdraw or qualify its then-current ratings of the Class A-2C, A-3C and A-
4C 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 Sub-Pool C Spread Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-2C,
A-3C and A-4C 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.
(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
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<PAGE>
the Sub-Pool C Spread Account for purposes of determining whether the balance
thereof equals or exceeds the Required Sub-Pool C 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 Sub-Pool C
Spread Account in a form other than a Letter of Credit or other form of credit
enhancement, and deposit such amount to the Sub-Pool C Spread Account, for
transfer to the Sub-Pool C 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 Sub-Pool C Spread Account.
b. The Collateral Agent shall maintain records that accurately
reflect the funds on deposit in the Sub-Pool C Spread Account. On each
Determination Date, the Collateral Agent shall advise the Servicer as to the
amount of funds on deposit in the Sub-Pool C 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 Sub-Pool C 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 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
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<PAGE>
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 of Pledgor.
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
(iv) hold itself out as a separate entity and correct any known
misunderstanding regarding its separate identity.
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<PAGE>
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 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 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 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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing 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
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<PAGE>
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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
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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<PAGE>
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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By: /s/ Tamara Schultz-Fugh
-----------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
GREEN TREE RECS II GUARANTY CORPORATION,
as Pledgor
By: /s/ Joel H. Gottesman
-----------------------------------
Name: Joel H. Gottesman
Title: Senior Vice President and Secretary
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By: /s/ Tamara Schultz-Fugh
-----------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
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<PAGE>
Exhibit 4.5
SPREAD ACCOUNT PLEDGE AGREEMENT
SUB-POOL H
This Sub-Pool H Spread Account Pledge Agreement is dated as of March
1, 1998, by and among Green Tree RECS II Guaranty Corporation (the "Pledgor"),
U.S. Bank National Association (fka First Trust National Association), as
Collateral Agent (together with its permitted successors hereunder, the
"Collateral Agent"), and U.S. Bank Trust National Association, as Trustee (the
"Trustee") of Green Tree Recreational, Equipment & Consumer Trust 1998-A (the
"Trust").
Green Tree Financial Corporation ("Green Tree") has sold a pool ("Sub-
Pool H") of home equity loans and retail installment sales contracts and
promissory notes financing home improvements (the "Home Equity Contracts and
Home Improvement Contracts") under a Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of March 1, 1998 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 "Sub-Pool H Certificates") representing undivided fractional
interests in Sub-Pool H. In order to facilitate the sale of the Sub-Pool H
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 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 Standard &
Poor's and Fitch (if rated by Fitch).
"Shortfall" means an insufficiency of funds on a Distribution Date as
specified in a Spread Account Deficiency Notice.
"Sub-Pool H Spread Account Eligible Investments" means Eligible
Investments held by the Collateral Agent in the Sub-Pool H Spread Account, which
(a) if such Eligible Investments are securities, are (i) certificated
<PAGE>
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, (b) if such Eligible Investments are
repurchase obligations, 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 (a) above, and (c) 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
---------------------------------------------------------
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 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
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<PAGE>
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 Sub-Pool H Spread Account.
-----------------------------------------------------------------
a. Establishment of Spread Account. On or prior to the Closing Date,
the Pledgor shall establish with the Collateral Agent three segregated trust
accounts referred to collectively herein as the "Sub-Pool H Spread Account." The
three accounts comprising the Spread Account shall be maintained in the name of
the Collateral Agent and designated respectively as follows: (1) "U.S. Bank
National Association, as Collateral Agent on behalf of U.S. Bank Trust National
Association,
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<PAGE>
as Trustee for the benefit of Class A-2H Certificates issued by Green Tree
Recreational Equipment & Consumer Trust 1998-A (Class A-2H Spread Subaccount,
Green Tree RECS II Guaranty Corporation, Pledgor);" (2) "U.S. Bank National
Association, as Collateral Agent on behalf of U.S. Bank Trust National
Association, as Trustee for the benefit of the Class A-3H Certificates issued by
Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-3H Spread
Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor);" and (3) "U.S.
Bank National Association, as Collateral Agent on behalf of U.S. Bank Trust
National Association, as Trustee for the benefit of the Class A-4H Certificates
issued by Green Tree Recreational Equipment & Consumer Trust 1998-A (Class A-4H
Spread Subaccount, Green Tree RECS II Guaranty Corporation, Pledgor)." The Sub-
Pool H 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 Sub-Pool H Spread Account and all amounts deposited therein and
investments thereof are owned by the Pledgor, and all assets transferred to the
Sub-Pool H Spread Account are taxable to the Pledgor. The Sub-Pool H 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 (which may be the Collateral Agent or the Trustee) or in an account
otherwise acceptable to Fitch and Standard & Poor's. All amounts paid to the
Pledgor under Section 8.03(d)(8), (12), (16) and (21) of the Pooling and
Servicing Agreement shall be deposited into the Sub-Pool H Spread Account as
provided in the Pooling and Servicing Agreement. Amounts shall be withdrawn from
the Sub-Pool H Spread Account only in accordance with the provisions of this
Section 3 and Section 8.07 of the Pooling and Servicing Agreement. No passbook,
certificate of deposit or other similar instrument evidencing the Sub-Pool H
Spread Account shall be issued, and all contracts, receipts and other papers
governing or evidencing the Sub-Pool H 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 Sub-Pool H Spread Account
shall be released to the Pledgor.
b. Pledge of Sub-Pool H Spread Account.
(i) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-2H Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-2H 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 Class A-2H Spread
Subaccount up to the Class A-2H Spread Subaccount 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 with respect to the Class A-2H Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-2H Spread Subaccount plus any subsequent
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<PAGE>
deposits into the Class A-2H Spread Subaccount. The Collateral Agent and the
Trustee acknowledge and accept the grant of the security interest in the Class
A-2H Spread Subaccount for the benefit of the Class A-2H Certificateholders
under this Section 3(b)(i) in accordance with the terms hereof.
(ii) The Pledgor hereby pledges, assigns, hypothecates, transfers and
delivers to the Collateral Agent (for the benefit of the Trustee and the Class
A-3H Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-3H 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 Class A-3H Spread
Subaccount up to the Class A-3H Spread Subaccount 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 with respect to the Class A-3H Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-3H Spread Subaccount plus any subsequent deposits into the Class A-3H
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-3H Spread Subaccount for the
benefit of the Class A-3H Certificateholders under this Section 3(b)(ii) in
accordance with the terms hereof.
(iii) The Pledgor hereby pledges, assigns, hypothecates, transfers
and delivers to the Collateral Agent (for the benefit of the Trustee and the
Class A-4H Certificateholders), and hereby grants the Collateral Agent (for the
benefit of the Trustee and the Class A-4H 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 Class A-4H Spread
Subaccount up to the Class A-4H Spread Subaccount 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 with respect to the Class A-4H Certificates
on such Distribution Date, subject to the limit of the amount available in the
Class A-4H Spread Subaccount plus any subsequent deposits into the Class A-4H
Spread Subaccount. The Collateral Agent and the Trustee acknowledge and accept
the grant of the security interest in the Class A-4H Spread Subaccount for the
benefit of the Class A-4H Certificateholders under this Section 3(b)(iii) in
accordance with the terms hereof.
(iv) 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
Sub-Pool H 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 Sub-Pool H 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
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<PAGE>
the Sub-Pool H 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 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 Sub-Pool H Spread Account. The Collateral Agent
shall at the written direction of the Pledgor invest the funds in the Sub-Pool H
Spread Account in Spread Account Eligible Investments. Funds in the Sub-Pool H
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 Sub-Pool H Spread Account Eligible Investment by book
entry or otherwise and (ii) send the Trustee a written confirmation of its
security interest in such Sub-Pool H Spread Account Eligible Investment. All
income and gain realized from any such investments as well as any interest
earned on deposits in the Sub-Pool H Spread Account shall be deposited and
retained in the Sub-Pool H Spread Account. Losses, if any, realized on amounts
in the Sub-Pool H Spread Account invested pursuant to this paragraph shall first
be credited against undistributed investment earnings on amounts in the Sub-Pool
H Spread Account invested pursuant to this paragraph, and shall thereafter be
deemed to reduce the amount on deposit in the Sub-Pool H 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 Sub-Pool H Spread Account. All income or loss on funds held in the Sub-Pool
H Spread Account shall be taxable to the Pledgor.
d. Payment of Shortfall. Upon the Collateral Agent's receipt of a
Sub-Pool H Spread Account Deficiency Notice, the Collateral Agent shall
transfer, and the Pledgor hereby directs the Collateral Agent to transfer,
subject to the limit of the amount available in the Sub-Pool H Spread Account,
the amount of the Shortfall from the Sub-Pool H Spread Account to the Sub-Pool H
Collection Account.
e. Release of Sub-Pool H Spread Account Excess. If on any
Distribution Date, the amount in the Class A-2 Spread Subaccount exceeds the
Class A-2 Spread Subaccount Required Amount immediately following the payment to
the Class A-2H Certificateholders on such Distribution Date, or the amount in
the Class A-3 Subaccount exceeds the Class A-3 Spread Subaccount Required Amount
immediately following the payment to the Class A-3H Certificateholders on such
Distribution Date, or the amount in the Class A-4 Spread Subaccount exceeds the
Class A-4 Spread Subaccount Required Amount immediately following the payment to
the Class A-4H Certificateholders on such Distribution Date, the
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<PAGE>
Collateral Agent shall withdraw the amount of such excess from the applicable
Sub-Pool H Spread Account and distribute such amount to the Pledgor.
f. Termination. This Agreement shall terminate (after distribution
of any funds remaining in the Sub-Pool H 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 Sub-Pool H Spread Account, after payment of any amounts
into the Sub-Pool H Collection Account pursuant to Section 3(d), shall be
distributed to the Pledgor.
g. Nature of Obligations. The obligations of the Pledgor under the
Agreement to transfer the amount of any Shortfall to the Sub-Pool H 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 Sub-Pool H 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 Sub-Pool H 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
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<PAGE>
extension of the expiration date thereof in accordance with its terms in
exchange for the extended or amended Letter of Credit.
(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) Standard & Poor's and Fitch shall each have advised the
Trustee and the Collateral Agent in writing that it will not downgrade,
withdraw or qualify its then-current ratings of the Class A-2H, Class A-3H
and Class A-4H 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 Sub-Pool H Spread Account.
(iv) Any other form of credit enhancement delivered to the Collateral
Agent shall be satisfactory if and only if Standard & Poor's and Fitch shall
each have advised the Trustee and the Collateral Agent in writing that it will
not downgrade, withdraw or qualify its then-current ratings of the Class A-2H,
Class A-3H and Class A-4H 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.
-8-
<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 Sub-Pool H Spread Account for purposes of determining whether the balance
thereof equals or exceeds the Required Sub-Pool H 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 Sub-Pool H
Spread Account in a form other than a Letter of Credit or other form of credit
enhancement, and deposit such amount to the Sub-Pool H Spread Account, for
transfer to the Sub-Pool H 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 Sub-Pool H Spread Account.
b. The Collateral Agent shall maintain records that accurately
reflect the funds on deposit in the Sub-Pool H Spread Account. On each
Determination Date, the Collateral Agent shall advise the Servicer as to the
amount of funds on deposit in the Sub-Pool H 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 Sub-Pool H 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 of Pledgor.
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 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 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 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 and Standard & Poor's
and with the consent of Holders of Certificates evidencing Certificate
Percentage Interests aggregating 51% or more, for the purpose of adding any
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<PAGE>
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 II Guaranty Corporation
1700 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
If to the Collateral Agent:
U.S. Bank National Association
c/o U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East 5th Street
Third Floor
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
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<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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 31st day
of March, 1998.
U.S. BANK TRUST NATIONAL
ASSOCIATION, as Trustee
By: /s/ Tamara Schultz-Fugh
---------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
GREEN TREE RECS II GUARANTY
CORPORATION, as Pledgor
By: /s/ Joel H. Gottesman
---------------------------------
Name: Joel H. Gottesman
Title: Senior Vice President and Secretary
U.S. BANK NATIONAL
ASSOCIATION, as Collateral Agent
By: /s/ Tamara Schultz-Fugh
---------------------------------
Name: Tamara Schultz-Fugh
Title: Trust Officer
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<PAGE>
EXHIBIT 5.1
-----------
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-3
Green Tree Recreational, Equipment & Consumer Trust 1998-A
File No. 333-36943
Ladies and Gentlemen:
We have acted as counsel to Green Tree Financial Corporation, a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, of $1,000,000,000 of Asset-Backed
Securities (the "Securities") to be issued by Green Tree Recreational, Equipment
& Consumer Trusts to be formed by the Company from time to time, the related
preparation and filing of the Registration Statement on Form S-3 filed by the
Company with the Securities and Exchange Commission (the "Commission") on April
22, 1997, and as subsequently amended, including Amendment No. 1 thereto filed
with the Commission on May 6, 1997 (together, the "Registration Statement"), and
the preparation of a Prospectus Supplement dated March 20, 1998, and the related
Prospectus dated March 20, 1998 (together, the "Prospectus") relating to the
offer and sale by the Company of $320,870,000 (approximate) aggregate principal
amount of Class A-1C Certificates, $16,695,000 (approximate) aggregate principal
amount of Class A-2C Certificates, $12,980,000 (approximate) aggregate principal
amount of Class A-3C Certificates, $7,420,000 (approximate) aggregate principal
amount of Class A-4C Certificates, $12,986,947 (approximate) aggregate
principal amount of Class B-C Certificates, $87,750,000 (approximate) aggregate
principal amount of Class A-1H Certificates, $18,070,000 (approximate) aggregate
principal amount of Class A-
<PAGE>
Green Tree Financial Corporation
March 31, 1998
Page 2
2H Certificates, $9,680,000 (approximate) aggregate principal amount of Class A-
3H Certificates, $7,740,000 (approximate) aggregate principal amount of Class
A-4H Certificates and $5,808,053 (approximate) aggregate principal amount of
Class B-H Certificates (collectively, the "Certificates") to be issued by Green
Tree Recreational, Equipment & Consumer Trust 1998-A (the "Trust"). The corpus
of the Trust will consist of the Contracts, the related Collateral Security and
certain other property. The Securities are to be issued by the Trust under a
Pooling and Servicing Agreement dated March 1, 1998, by and between the Company,
as Seller and Servicer, and First Trust National Association (the "Pooling and
Servicing Agreement"). The Certificates are described in the Prospectus forming
part of the Registration Statement.
The Company will provide a Limited Guaranty (the "Limited Guaranty")
with respect to the Class B-C Certificates and the B-H Certificates.
We have examined the Registration Statement, the Prospectus, the
Pooling and Servicing Agreement, and such other related documents, and have
reviewed such questions of law, as we have considered necessary and appropriate
for the purposes of this opinion. Based on the foregoing, we are of the opinion
that:
1. The Pooling and Servicing Agreement has been duly authorized by
the Board of Directors of the Company and duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company, and the
Limited Guaranty of the Company provided for therein constitutes the valid and
binding obligation of the Company.
2. The Certificates have been duly executed and delivered in
accordance with the terms of the Pooling and Servicing Agreement, and are
legally and validly issued, and the holders of such Certificates are entitled to
the benefits of the Pooling and Servicing Agreement.
The opinions set forth above are subject to the following
qualifications and exceptions:
(a) Our opinion in paragraph 1 above is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar law of general application affecting creditors' rights.
<PAGE>
Green Tree Financial Corporation
March 31, 1998
Page 3
(b) Our opinion in paragraph 1 above is subject to the effect of
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing, and other similar
doctrines affecting the enforceability of agreements generally (regardless
of whether considered in a proceeding in equity or at law).
(c) Minnesota Statutes (S) 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota law
unless the corporation has filed a Notice of Business Activities Report and
provides that the use of the courts of the State of Minnesota for all
contracts executed and all causes of action that arose before the end of
any period for which a corporation failed to file a required report is
precluded. Insofar as our opinion may relate to the valid, binding and
enforceable character of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report or, if not exempt, has duly filed, and will continue to duly file,
all Notice of Business Activities Reports.
Our opinions expressed above are limited to the laws of the State of
Minnesota and the Delaware General Corporation Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising part of the Registration Statement.
Dated: March 31, 1998
Very truly yours,
CFS
<PAGE>
Exhibit 8.1
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, MN 55102-1639
Re: Green Tree Recreational, Equipment & Consumer Trust 1998-A
Federal Income Tax Consequences
Ladies and Gentlemen:
We have acted as counsel to Green Tree Financial Corporation, a
Delaware corporation (the "Company"), in connection with the registration under
the Securities Act of 1933, as amended, of $1,000,000,000 of Asset-Backed
Securities (the "Securities") to be issued by Green Tree Recreational, Equipment
& Consumer Trusts to be formed by the Company from time to time, the related
preparation and filing of the Registration Statement on Form S-3 filed by the
Company with the Securities and Exchange Commission (the "Commission") on April
22, 1997, and as subsequently amended, including Amendment No. 1 thereto filed
with the Commission on May 6, 1997 (together, the "Registration Statement"), and
the preparation of a Prospectus Supplement dated March 20, 1998, and the related
Prospectus dated March 20, 1998 (together, the "Prospectus") relating to the
offer and sale by the Company of $320,870,000 (approximate) aggregate principal
amount of Class A-C1 Certificates, $16,695,000 (approximate) aggregate principal
amount of Class A-C2 Certificates, $12,980,000 (approximate) aggregate principal
amount of Class A-C3 Certificates, $7,420,000 (approximate) aggregate principal
amount of Class A-C4 Certificates, $12,986,947 (approximate) aggregate
principal amount of Class B-C Certificates, $87,750,000 (approximate) aggregate
principal amount of Class A-H1 Certificates, $18,070,000 (approximate) aggregate
principal amount of Class A-H2 Certificates, $9,680,000 (approximate) aggregate
principal amount of Class A-H3 Certificates, $7,740,000 (approximate) aggregate
principal amount of Class A-H4 Certificates and $5,808,053 (approximate)
aggregate principal amount of Class B-H Certificates (collectively, the
"Certificates") to be issued by Green Tree Recreational, Equipment & Consumer
Trust 1998-A (the "Trust"). The corpus of the Trust will consist of the
Contracts, the related Collateral Security and certain other property. The
Securities are to be issued by the Trust under a Pooling and Servicing
<PAGE>
Green Tree Financial Corporation
March 31, 1998
Page 2
Agreement dated March 1, 1998, by and between the Company, as Seller and
Servicer, and First Trust National Association (the "Pooling and Servicing
Agreement"). The Certificates are described in the Prospectus forming part of
the Registration Statement.
You have requested our opinion with respect to certain federal income
tax consequences of the purchase, ownership and disposition of the Certificates.
For purposes of rendering our opinion we have examined the Registration
Statement, the Prospectus and the Pooling and Servicing Agreement, and such
related documents and agreements contemplated therein, and we have reviewed such
questions of law as we have considered necessary and appropriate. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to them in the Prospectus.
Our opinion is based upon existing law and currently applicable
Treasury Department regulations, current published administrative positions of
the Internal Revenue Service contained in revenue rulings and revenue
procedures, and judicial decisions, all of which are subject to change, either
prospectively or retroactively, and to possibly differing interpretations. Our
opinion is also based on the representations and warranties set forth in the
applicable Pooling and Servicing Agreement and the assumptions that the Company
and the Trustee will at all times comply with the requirements of the Pooling
and Servicing Agreement. Based upon the foregoing, as of the date hereof it is
our opinion that:
1. 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.
2. 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.
<PAGE>
Green Tree Financial Corporation
March 31, 1998
Page 3
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the headings "Certain
Federal Income Tax Consequences" and "Certain State Income Tax Consequences" in
the Prospectus, and under the heading "Certain Federal and State Income Tax
Consequences" in the Prospectus Supplement, and we hereby confirm that, insofar
as they constitute statements of law or legal conclusions as to the likely
outcome of material issues under the federal income tax laws, the discussion
under such heading accurately sets forth our advice.
Dated: March 31, 1998
Very truly yours,
CFS
