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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 1997
GREEN TREE FINANCIAL CORPORATION
as originator of Recreational, Equipment &
Consumer Trust 1997-D
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(Exact name of registrant as specified in its charter)
Delaware 01-08916 41-1807858
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(State or other Jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) 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
--------------
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.
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Not applicable
ITEM 3. Bankruptcy or Receivership.
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Not applicable
ITEM 4. Changes in Registrant's Certifying Accounting.
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Not applicable
ITEM 5. Other Events.
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On December 15, 1997, the Registrant sold approximately $567,923,639 of
Floating Rate Asset-Backed Notes and Asset-Backed Certificates issued
by Green Tree Recreational, Equipment & Consumer Trust 1997-D,
consisting of a pool of retail installment sales contracts for the
purchase of a variety of consumer products and equipment and certain
related property conveyed by Green Tree Financial Corporation.
ITEM 6. Resignations of Registrant's Directors.
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Not applicable
ITEM 7. Financial Statements and Exhibits.
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(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 Sale and Servicing Agreement between Green Tree
Recreational, Equipment & Consumer Trust 1997-D and
Green Tree Financial Corporation, as Seller and
Servicer, dated as of December 1, 1997.
4.2 Amended and Restated Trust Agreement dated as of
December 1, 1997, among Green Tree Financial
Corporation, as depositor, Green Tree Second GP
Inc., and Wilmington Trust Company, as owner
trustee.
4.3 Indenture dated as of December 1, 1997, between
Green Tree Recreational, Equipment & Consumer Trust
1997-D and First Trust National Association, as
trustee.
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.
Date: February 3, 1998 GREEN TREE FINANCIAL
CORPORATION
as originator of Recreational, Equipment
& Consumer Trust 1997-D
By: /s/ Scott T. Young
------------------------------------
Scott T. Young
Vice President and Controller
3
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INDEX TO EXHIBITS
Exhibit
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Number Page
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4.1 Sale and Servicing Agreement between Green Tree
Recreational, Equipment & Consumer Trust 1997-D and
Green Tree Financial Corporation, as Seller and
Servicer, dated as of December 1, 1997.
4.2 Amended and Restated Trust Agreement dated as of December 1,
1997, among Green Tree Financial Corporation, as depositor,
Green Tree Second GP Inc., and Wilmington Trust Company,
as owner trustee.
4.3 Indenture dated as of December 1, 1997, between Green
Tree Recreational, Equipment & Consumer Trust
1997-D and First Trust National Association, as
trustee.
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EXHIBIT 4.1
__________________________________________________________
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D
SALE AND SERVICING AGREEMENT
between
GREEN TREE RECREATIONAL, EQUIPMENT
& CONSUMER TRUST 1997-D
and
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
Dated as of December 1, 1997
__________________________________________________________
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TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.............................................. 1-1
SECTION 1.01. General............................................. 1-1
SECTION 1.02. Specific Terms...................................... 1-1
ARTICLE II - TRANSFER OF CONTRACTS................................... 2-1
SECTION 2.01. Transfer of Contracts............................... 2-1
SECTION 2.02. Conditions to Acceptance by Owner Trustee........... 2-1
SECTION 2.03. Conveyance of the Subsequent Contracts.............. 2-3
ARTICLE III - REPRESENTATIONS AND WARRANTIES......................... 3-1
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......................... 3-6
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.................................. 4-1
SECTION 4.01. Custody of Contracts.................................. 4-1
SECTION 4.02. Filings; Maintenance of Liens......................... 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................................... 5-1
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. Collections........................................... 5-2
SECTION 5.06. Enforcement........................................... 5-3
SECTION 5.07. Satisfaction of Contracts............................. 5-5
SECTION 5.08. Costs and Expenses.................................... 5-5
SECTION 5.09. Maintenance of Insurance.............................. 5-5
SECTION 5.10. Repossession.......................................... 5-7
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SECTION 5.11. Commingling of Funds.................................. 5-7
SECTION 5.12. Retitling; Security Interests......................... 5-8
SECTION 5.13. Servicer Advances..................................... 5-8
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer..... 5-9
SECTION 5.15. Annual Report of Accountants.......................... 5-9
SECTION 5.16. Certain Duties of the Servicer Under the Trust
Agreement........................................... 5-9
SECTION 5.17. Intentionally Omitted................................. 5-9
SECTION 5.18. Annual Statement as to Compliance; Notice of
Servicer............................................ 5-10
SECTION 5.19. Intentionally Omitted................................. 5-10
SECTION 5.20. Maintenance of Security Interests in Products......... 5-10
SECTION 5.21. Covenants, Representations, and Warranties of
Servicer............................................ 5-11
SECTION 5.22. Purchase of Contracts Upon Breach of Covenant......... 5-11
ARTICLE VI - DISTRIBUTIONS; TRUST ACCOUNTS; INTEREST
RATE CAP PAYMENTS; LIMITED GUARANTY
PAYMENTS; STATEMENTS TO
SECURITYHOLDERS........................................ 6-1
SECTION 6.01. Trust Accounts........................................ 6-1
SECTION 6.02. Collection Account Deposits........................... 6-2
SECTION 6.03. Permitted Withdrawals from Collection Account......... 6-3
SECTION 6.04. Permitted Withdrawals from Other Trust Accounts....... 6-3
SECTION 6.05. Limited Guaranty...................................... 6-4
SECTION 6.06. Distributions......................................... 6-5
SECTION 6.07. RESERVED.............................................. 6-7
SECTION 6.08. Statements to Securityholders......................... 6-7
ARTICLE VII - SERVICE TRANSFER....................................... 7-1
SECTION 7.01. Event of Termination.................................. 7-1
SECTION 7.02. Transfer.............................................. 7-2
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor.... 7-2
SECTION 7.04. Notification to Securityholders....................... 7-3
SECTION 7.05. Effect of Transfer.................................... 7-4
SECTION 7.06. Transfer of Collection Account........................ 7-4
SECTION 7.07. Limits on Liability................................... 7-4
SECTION 7.08. Waiver of Past Defaults............................... 7-5
ARTICLE VIII - TERMINATION........................................... 8-1
SECTION 8.01. Company's or Servicer's Repurchase Option............. 8-1
SECTION 8.02. Liquidation of Trust Estate........................... 8-2
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ARTICLE IX - INDEMNITIES............................................. 9-1
SECTION 9.01. Company's Indemnities................................. 9-1
SECTION 9.02. Liabilities to Obligors............................... 9-1
SECTION 9.03. Servicer's Indemnities................................ 9-1
SECTION 9.04. Operation of Indemnities.............................. 9-2
ARTICLE X - MISCELLANEOUS............................................ 10-1
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation
of Servicing Duties................................. 10-1
SECTION 10.02. Assignment or Delegation by Company.................. 10-2
SECTION 10.03. Amendment............................................ 10-2
SECTION 10.04. Notices.............................................. 10-3
SECTION 10.05. Merger and Integration............................... 10-5
SECTION 10.06. Headings............................................. 10-5
SECTION 10.07. Governing Law........................................ 10-5
SECTION 10.08. Limitation of Liability.............................. 10-5
EXHIBIT A - FORM OF ASSIGNMENT....................................... 10-7
EXHIBIT B - FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS................................... 10-8
EXHIBIT C - FORM OF MONTHLY REPORT................................... C-1
EXHIBIT D - FORM OF CERTIFICATE OF SERVICING
OFFICER................................................. D-1
EXHIBIT E - FORM OF ADDITION NOTICE.................................. E-1
EXHIBIT F - FORM OF SUBSEQUENT TRANSFER
INSTRUMENT.............................................. F-1
EXHIBIT G - FORM OF OFFICER'S CERTIFICATE
(SUBSEQUENT TRANSFER)................................... G-1
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THIS SALE AND SERVICING AGREEMENT, dated as of December 1, 1997, between
Green Tree Recreational, Equipment & Consumer Trust 1997-D (the "Issuer" or the
"Trust") and Green Tree Financial Corporation, a corporation organized and
existing under the laws of the State of Delaware, as Seller and Servicer (the
"Company").
WHEREAS, the Issuer wishes to purchase from the Company certain (a) 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, and (b) 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 each home equity loan
and some home improvement contracts, includes a mortgage securing each such loan
or contract; and
WHEREAS, the Company and the Issuer wish to set forth the terms and
conditions pursuant to which the Issuer will acquire the "Contracts," as
hereinafter defined, and the Company will service the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Company and the Issuer 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.
All terms defined in any Related Document and not otherwise defined in this
Agreement shall have the meanings given them in such Related Document.
"Addition Notice" means with respect to the transfer of Subsequent
Contracts to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit E, which shall be given not less than five
Business Days prior to the related Subsequent Transfer Date, of the Company's
designation of Subsequent Contracts to be sold to the Trust and the aggregate
Cut-off Date Principal Balances of such Subsequent Contracts.
"Additional Contract" means a Contract identified as such on the List of
Contracts.
"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 Sale and Servicing Agreement, as the same may be
amended or supplemented from time to time.
"Amount Available" means, as to any Distribution Date, an amount equal to
the Collected Funds for that Distribution Date plus any Interest Rate Cap
Payment and any
1-1
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other amounts deposited in the Collection Account on or before such Distribution
Date pursuant to Sections 6.05, 8.01 and 8.02 of this Agreement and Section
8.02(b) of the Indenture.
"Amount Held for Future Distribution" means, as to any Distribution Date,
the total of the amounts held in the Collection Account on the last day of the
related Monthly Period on account of Advance Payments in respect of such Monthly
Period.
"Balloon Loan" means a Home Equity 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.
"Business Day" means any day other than (a) a Saturday or a Sunday, or (b)
another day on which banking institutions in the city in which a Person is
taking action hereunder are authorized or obligated by law, executive order or
governmental decree to be closed.
"Calculation Agent" means the Person appointed by the Indenture Trustee to
establish LIBOR with respect to each Interest Reset Period. The Calculation
Agent shall be the Indenture Trustee unless the Indenture Trustee is unable or
unwilling so to act, in which case the Calculation Agent shall be a financial
institution appointed by the Trust.
"Capitalized Interest Account" means the account so designated and
established and maintained pursuant to Section 6.01(a).
"Certificate Distribution Account" means the account established and
maintained pursuant to Section 6.01(b).
"Certificate 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 the first
Distribution Date) at the Certificate Pass-Through Rate on the Certificate
Principal Balance.
"Certificate Interest Carryover Shortfall" means as to any Distribution
Date, the amount, if any, by which the amount distributed to Holders of the
Certificates on such Distribution Date pursuant to Section 5.2(a)(i) of the
Trust Agreement is less than the Certificate Interest Amount for such
Distribution Date.
"Certificate Liquidation Loss Interest Amount" means, as to any
Distribution Date, an amount equal to one month's interest at the Certificate
Pass-Through Rate on the Unpaid Certificate Principal Liquidation Loss, if any.
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"Certificate Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Certificates on such Distribution Date pursuant to Section
5.2(a)(v) of the Trust Agreement is less than the Certificate Liquidation Loss
Interest Amount for such Distribution Date.
"Certificate Majority" means Holders of Certificates representing more than
50% of the Certificate Principal Balance.
"Certificate Pass-Through Rate" means 7.25% per annum, computed on the
basis of a 360-day year of twelve 30-day months.
"Certificate Pool Factor" means, with respect to any Distribution Date, an
eight-digit decimal figure equal to the outstanding principal balance of the
Certificates as of such Distribution Date (after giving effect to all
distributions on such date) divided by the Original Certificate Principal
Balance.
"Certificate Principal Balance" means, as to any Distribution Date, the
Original Certificate Principal Balance less the sum of: (i) all amounts
distributed to Holders of Certificates on prior Distribution Dates on account of
principal pursuant to Section 5.2(a)(iii) and (iv) of the Trust Agreement; and
(ii) all Certificate Principal Liquidation Losses determined as of prior
Distribution Dates (whether or not the amount of such Certificate Principal
Liquidation Losses were included in any Guaranty Payments made by the Company).
"Certificate Principal Liquidation Loss" means, as to any Distribution
Date, the lesser of: (i) the amount, if any, by which the Certificate Principal
Balance and Note Principal Balance as of that Distribution Date, minus the
aggregate amount of principal distributed on account of the Notes and
Certificates on that Distribution Date, exceeds the Pool Scheduled Principal
Balance as of such Distribution Date, or (ii) the Certificate Principal Balance.
"Certificate Principal Shortfall" means, as to any Distribution Date on or
after the Distribution Date on which the Notes are paid in full, the remainder
of (i) the amount, if any, by which the amount distributed to Holders of
Certificates on such Distribution Date pursuant to Section 5.2(a)(iii) of the
Trust Agreement is less than (x) the Class A-1:HE/HI Formula Principal
Distribution Amount for such Distribution Date less (y) on the Distribution Date
on which the Notes are paid in full, that portion of the Class A-1:HE/HI Formula
Principal Distribution Amount paid to Noteholders, minus (ii) any Certificate
Principal Liquidation Loss determined as of that Distribution Date.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
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"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the sum of the amounts payable in respect of the
Certificates pursuant to Sections 5.2(a)(ii) and (vi) of the Trust Agreement.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, the amounts payable in respect of the
Certificates pursuant to Section 5.2(a)(i) and (v) of the Trust Agreement.
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date prior to the Distribution Date on which the
Notes are paid in full, zero; and with respect to any Distribution Date
commencing on the Distribution Date on which the Notes are paid in full, the
Class A-1:HE/HI Formula Principal Distribution Amount, less, on the Distribution
Date on which the Notes are paid in full, that portion of the Class A-1:HE/HI
Formula Principal Distribution Amount paid to Noteholders, plus the Certificate
Principal Liquidation Loss.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Unpaid Certificate
Principal Shortfall; provided, however, that on the Final Scheduled Distribution
Date, the principal required to be deposited into the Certificate Distribution
Account shall not be less than the amount that is necessary (after giving effect
to the other amounts to be deposited in the Certificate Distribution Account on
such Distribution Date and allocable to principal) to reduce to zero the
Certificate Principal Balance plus the Unpaid Certificate Principal Liquidation
Loss.
"Certificates" means the 7.25% Asset-Backed Certificates issued under the
Trust Agreement.
"Class" or "Class A" means pertaining to each Class of Notes.
"Class A Notes" means any one of the Class A-1:HE/HI, Class A-1, Class A-2,
Class A-3 and Class A-4 Notes.
"Class A-1 Interest Amount" means, with respect to any Distribution Date
and the related Interest Reset Period, an amount equal to interest at the Class
A-1 Interest Rate on the Class A-1 Principal Balance.
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"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-1 Notes on such Distribution Date pursuant to Section
8.02(c)(1)(i) of the Indenture is less than the Class A-1 Interest Amount for
such Distribution Date.
"Class A-1 Interest Rate" means, with respect to any Interest Reset Period,
a per annum rate of interest equal to LIBOR plus 0.15%, calculated on the basis
of actual days elapsed and a year of 360 days.
"Class A-1 Notes" means the Class A-1 Floating Rate Asset-Backed Notes
issued by the Trust pursuant to the Indenture.
"Class A-1 Percentage" means, as to any Distribution Date, the result,
expressed as a percentage, obtained by dividing: (i) the Original Class A-1
Principal Balance by (ii) the Original Note Principal Balance.
"Class A-1 Principal Balance" means, as to any Distribution Date, the
Original Class A-1 Principal Balance less the sum of all amounts distributed to
Holders of Class A-1 Notes on any prior Distribution Date on account of
principal pursuant to Section 8.02(c)(1)(iii) and (iv) of the Indenture.
"Class A-1 Principal Shortfall" means, as to any Distribution Date, the
amount, if any, by which the amount distributed to Holders of Class A-1 Notes on
such Distribution Date pursuant to Section 8.02(c)(1)(iii) of the Indenture is
less than the Class A-1 Percentage of the Formula Principal Distribution Amount
for such Distribution Date.
"Class A-1:HE/HI 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 and each
Home Improvement Contract and Home Equity Contract, 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 all such Contracts
outstanding 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 in
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respect of all such Contracts 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
(iii) the aggregate Scheduled Principal Balance of all such Contracts
that became Liquidated Contracts during the related Monthly
Period; plus
(iv) the aggregate Scheduled Principal Balance of all such Contracts
repurchased during the prior Monthly Period pursuant to Section
3.05 or 5.22; plus
(v) on the Distribution Date on which the Class A-1, Class A-2, Class
A-3 and Class A-4 Principal Balances are paid in full, the
Formula Principal Distribution Amount, less the amount
distributed to the Noteholders on that Distribution Date on
account of the Class A-1, Class A-2, Class A-3, and Class A-4
Principal Balances; and plus
(vi) on any Distribution Date which is after the Distribution Date on
which the Class A-1, Class A-2, Class A-3 and Class A-4 Principal
Balances have been paid in full, the Formula Principal
Distribution Amount.
The Class A-1:HE/HI Formula Principal Distribution Amount for the Distribution
Date in March 2029 shall be the sum of the Note Principal Balance and the
Certificate Principal Balance.
"Class A-1:HE/HI Interest Amount" means, with respect 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
the first Distribution Date) at the Class A-1:HE/HI Interest Rate on the Class
A-1:HE/HI Principal Balance.
"Class A-1:HE/HI Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-1:HE/HI Notes on such Distribution Date pursuant to
Section 8.02(c)(1)(i) of the Indenture is less than the Class A-1:HE/HI Interest
Amount for such Distribution Date.
"Class A-1:HE/HI Interest Rate" means 6.90% per annum calculated on the
basis of a 360-day year consisting of twelve 30-day months.
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"Class A-1:HE/HI Notes" means the Class A-1:HE/HI Fixed Rate Asset-Backed
Notes issued by the Trust pursuant to the Indenture.
"Class A-1:HE/HI Principal Balance" means, as to any Distribution Date, the
Original Class A-1:HE/HI Principal Balance less the sum of all amounts
distributed to Holders of Class A-1:HE/HI Notes on any prior Distribution Date
on account of principal pursuant to Section 8.02(c)(1)(iii) and (iv) of the
Indenture.
"Class A-1:HE/HI Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the amount distributed to Holders of Class A-
1:HE/HI Notes on such Distribution Date pursuant to Section 8.02(c)(1)(iii) of
the Indenture is less than the Class A-1:HE/HI Formula Principal Distribution
Amount for such Distribution Date.
"Class A-2 Interest Amount" means, with respect 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
the first Distribution Date) at the Class A-2 Interest Rate on the Class A-2
Principal Balance.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-2 Notes on such Distribution Date pursuant to Section
8.02(c)(2)(i) of the Indenture is less than the Class A-2 Interest Amount for
such Distribution Payment Date.
"Class A-2 Interest Rate" means 6.70% per annum calculated on the basis of
a 360-day year consisting of twelve 30-day months.
"Class A-2 Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to interest at the Class A-2 Interest Rate on the Unpaid
Class A-2 Principal Liquidation Loss, if any.
"Class A-2 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-2 Notes on such Distribution Date pursuant to Section
8.02(c)(2)(v) of the Indenture is less than the Class A-2 Liquidation Loss
Interest Amount for such Distribution Date.
"Class A-2 Notes" means the Class A-2 Fixed Rate Asset-Backed Notes issued
by the Trust pursuant to the Indenture.
"Class A-2 Percentage" means, as to any Distribution Date, the result,
expressed as a percentage, obtained by dividing: (i) the Original Class A-2
Principal Balance by (ii) the Original Note Principal Balance.
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"Class A-2 Principal Balance" means, as to any Distribution Date, the
Original Class A-2 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-2 Notes on prior Distribution Dates on account
of principal pursuant to Sections 8.02(c)(2)(iii) and (iv) of the Indenture; and
(ii) all Class A-2 Principal Liquidation Losses determined as of prior
Distribution Dates.
"Class A-2 Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(1) the amount, if any, by which (x) the remainder of (i) the Note
Principal Balance and the Certificate Principal Balance as of that
Distribution Date (before giving effect to any Class A-2 Principal
Liquidation Loss, Class A-3 Principal Liquidation Loss, Class A-4 Principal
Liquidation Loss and Certificate Principal Liquidation Loss for such
Distribution Date), minus (ii) the sum of the aggregate amount distributed
in respect of principal on the Notes and Certificates on that Distribution
Date, and minus (iii) the amount of any Class A-3 Principal Liquidation
Loss, Class A-4 Principal Liquidation Loss and Certificate Principal
Liquidation Loss determined as of that Distribution Date, exceeds (y) the
sum of the Pre-Funded Amount plus the Pool Scheduled Principal Balance as
of such Distribution Date; or
(2) the Class A-2 Principal Balance as of that Distribution Date.
"Class A-2 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed on such
Distribution Date to the Holders of the Class A-2 Notes pursuant to Section
8.02(c)(2)(iii) of the Indenture is less than the Class A-2 Percentage of the
Formula Principal Distribution Amount for such Distribution Date, minus (y) any
Class A-2 Principal Liquidation Loss determined as of that Distribution Date.
"Class A-2 Subaccount" means the subaccount within the Spread Account
established pursuant to Section 6.01(a).
"Class A-2 Subaccount Required Amount" means, as of any date of
determination, the lesser of (i) $1,569,475, (ii) .28% of the Pool Scheduled
Principal Balance, or (iii) 100% of the sum of the Class A-2 Principal Balance
and the Unpaid Class A-2 Principal Liquidation Loss.
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"Class A-3 Interest Amount" means, with respect 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
the first Distribution Date) at the Class A-3 Interest Rate on the Class A-3
Principal Balance.
"Class A-3 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-3 Notes on such Distribution Date pursuant to Section
8.02(c)(4)(i) of the Indenture is less than the Class A-3 Interest Amount for
such Distribution Date.
"Class A-3 Interest Rate" means 6.80% per annum calculated on the basis of
a 360-day year consisting of twelve 30-day months.
"Class A-3 Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to interest at the Class A-3 Interest Rate on the Unpaid
Class A-3 Principal Liquidation Loss, if any.
"Class A-3 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of Class A-3 Notes on such Distribution Date pursuant to Section
8.02(c)(4)(v) of the Indenture is less than the Class A-3 Liquidation Loss
Interest Amount for such Distribution Date.
"Class A-3 Notes" means the Class A-3 Fixed Rate Asset-Backed Notes issued
by the Trust pursuant to the Indenture.
"Class A-3 Percentage" means, as to any Distribution Date, the result,
expressed as a percentage, obtained by dividing: (i) the Original Class A-3
Principal Balance by (ii) the Original Note Principal Balance.
"Class A-3 Principal Balance" means, as to any Distribution Date, the
Original Class A-3 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-3 Notes on prior Distribution Dates on account
of principal pursuant to Section 8.02(c)(4)(iii) and (iv) of the Indenture; and
(ii) all Class A-3 Principal Liquidation Losses determined as of prior
Distribution Dates.
"Class A-3 Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(1) the amount, if any, by which (x) the remainder of (i) the Note
Principal Balance and Certificate Principal Balance as of that Distribution
Date, (before giving effect to any Class A-2 Principal Liquidation Loss,
Class A-3 principal Liquidation Loss, Class A-4 Principal Liquidation Loss
and Certificate Principal Liquidation Loss determined as of that
Distribution Date, minus (ii) the sum of
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the aggregate amount distributed in respect of principal on the Notes and
Certificates on that Distribution Date, and minus (iii) the amount of any
Class A-4 Principal Liquidation Loss and Certificate Principal Liquidation
Loss determined as of that Distribution Date, exceeds (y) the sum of the
Pre-Funded Amount plus the Pool Scheduled Principal Balance as of such
Distribution Date; or
(2) the Class A-3 Principal Balance as of that Distribution Date.
"Class A-3 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of the Class A-3 Notes on such Distribution Date pursuant to Section
8.02(c)(4)(iii) of the Indenture is less than the Class A-3 Percentage of the
Formula Principal Distribution Amount for such Distribution Date, minus (y) any
Class A-3 Principal Liquidation Loss determined as of that Distribution Date.
"Class A-3 Subaccount" means the subaccount within the Spread Account
established pursuant to Section 6.01(a).
"Class A-3 Subaccount Required Amount" means, as of any date of
determination, the lesser of (i) $386,240, (ii) .07% of the Pool Scheduled
Principal Balance, or (iii) 100% of the sum of the Class A-3 Principal Balance
and the Unpaid Class A-3 Principal Liquidation Loss.
"Class A-4 Interest Amount" means, with respect 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
the first Distribution Date) at the Class A-4 Interest Rate on the Class A-4
Principal Balance.
"Class A-4 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-4 Notes on such Distribution Date pursuant to Section
8.02(c)(6)(i) of the Indenture is less than the Class A-4 Interest Amount for
such Payment Date.
"Class A-4 Interest Rate" means 7.00% per annum calculated on the basis of
a 360-day year consisting of twelve 30-day months.
"Class A-4 Liquidation Loss Interest Amount" means, as to any Distribution
Date, an amount equal to interest at the Class A-4 Interest Rate on the Unpaid
Class A-4 Principal Liquidation Loss, if any.
"Class A-4 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A-4 Notes
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on such Distribution Date pursuant to Section 8.02(c)(6)(v) of the Indenture is
less than the Class A-4 Liquidation Loss Interest Amount for such Distribution
Date.
"Class A-4 Notes" means the Class A-4 Fixed Rate Asset-Backed Notes issued
by the Trust pursuant to the Indenture.
"Class A-4 Percentage" means, as to any Distribution Date, the result,
expressed as a percentage, obtained by dividing: (i) the Original Class A-4
Principal Balance by (ii) the Original Note Principal Balance.
"Class A-4 Principal Balance" means, as to any Distribution Date, the
Original Class A-4 Principal Balance less the sum of: (i) all amounts
distributed to Holders of Class A-4 Notes on prior Distribution Dates on account
of principal pursuant to Sections 8.02(c)(6)(iii) and (iv) of the Indenture; and
(ii) all Class A-4 Principal Liquidation Losses determined as of prior
Distribution Dates.
"Class A-4 Principal Liquidation Loss" means, as to any Distribution Date,
the lesser of:
(1) the amount, if any, by which (x) the remainder of (i) the Note
Principal Balance and Certificate Principal Balance as of that Distribution
Date (before giving effect to any Class A-2 Principal Liquidation Loss,
Class A-3 Principal Liquidation Loss, Class A-4 Principal Liquidation Loss
or Certificate Principal Liquidation Loss determined as of that
Distribution Date), minus (ii) the sum of the aggregate amount distributed
in respect of principal on the Notes and Certificates on that Distribution
Date, and minus (iii) the amount of any Certificate Balance Principal
liquidation Loss determined as of that Distribution Date, exceeds (y) the
sum of the Pre-Funded Amount plus the Pool Scheduled Principal Balance as
of such Distribution Date; or
(2) the Class A-4 Principal Balance as of that Distribution Date.
"Class A-4 Principal Shortfall" means, as to any Distribution Date, the
remainder of (x) the amount, if any, by which the amount distributed to Holders
of Class A-4 Notes on such Distribution Date pursuant to Section 8.02(c)(6)(iii)
of the Indenture is less than the Class A-4 Percentage of the Formula Principal
Distribution Amount for such Distribution Date, minus (y) any Class A-4
Principal Liquidation Loss determined as of that Distribution Date.
"Class A-4 Subaccount" means the subaccount within the Spread Account
established pursuant to Section 6.01(a).
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"Class A-4 Subaccount Required Amount" means, as of any date of
determination, the lesser of (i) $298,200, (ii) 0.05% of the Pool Scheduled
Principal Balance, or (iii) 100% of the sum of the Class A-4 Principal Balance
and the Unpaid Class A-4 Principal Liquidation Loss.
"Class Percentage Interest" means, as to any Note, 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 Note by the aggregate denomination of all
Notes of the related Class (which equals the Original Class A-1:HE/HI Principal
Balance in the case of a Class A-1:HE/HI Note, the Original Class A-1 Principal
Balance in the case of a Class A-1 Note, the Original Class A-2 Principal
Balance in the case of a Class A-2 Note, the Original Class A-3 Principal
Balance in the case of a Class A-3 Note and the Original Class A-4 Principal
Balance in the case of a Class A-4 Note). The aggregate Class Percentage
Interests for each Class of Notes shall equal 100%.
"Class Principal Balance" means, as to any date, the Class A-1:HE/HI
Principal Balance, the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, or the Class A-4 Principal Balance, as
appropriate.
"Closing Date" means December 15, 1997.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, with respect to any Contract, (i) the security
interests, if any, granted by or on behalf of the related Obligor with respect
thereto, including a first priority perfected security interest in the related
Product, (ii) if a Home Equity Contract or Secured Home Improvement Contract,
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 real
property, (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 Secured Home Improvement Contract and (viii) all security agreements
granting a security interest in the related Product and 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.
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"Collected Funds" means, as to any Distribution Date, an amount equal to
(a) the sum of (i) the amount on deposit in the Collection Account as of the
close of business on the last day of the related Monthly Period (exclusive of
any amounts deposited therein pursuant to Sections 6.05, 8.01 and 8.02 of this
Agreement and Section 8.02(b) of the Indenture), (ii) any amounts required to be
deposited in the Collection Account on or before the Business Day immediately
preceding such Distribution Date pursuant to Section 5.09 or 5.13, and (iii) any
amount deposited in the Collection Account in respect of principal on the
Consumer Product Contracts (exclusive of any amounts deposited therein pursuant
to Sections 6.05, 8.01 or 8.02) after the last day of the related Monthly Period
through and including the third Business Day prior to such 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 Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee from the Collection
Account pursuant to clauses (b) through (e), inclusive, of Section 6.03; and
(iii) with respect to all Distribution Dates other than the Distribution Date in
January 1997, any amount deposited in the Collection Account in respect of
principal on the Consumer Product Contracts (exclusive of any amounts deposited
therein pursuant to Sections 6.05, 8.01 or 8.02) on or after the first day of
the related Monthly Period and up to but excluding the third Business Day prior
to the preceding Distribution Date, but in no event later than the 10th day of
the related Monthly Period.
"Collection Account" means the account established and maintained pursuant
to Section 6.01(a).
"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" means a Contract other than a Home Equity
Contract or a Home Improvement Contract.
"Contract File" means, as to each Contract, (a) the original copy of the
Contract, including the executed evidence of the obligation of the Obligor; (b)
with respect to each Consumer Product Contract, 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) with respect to each Consumer Product Contract 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
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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 Consumer Product 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)
with respect to each Home Equity Contract and Secured Home Improvement Contract
(i) the original or a copy of the mortgage, deed of trust or security deed or
similar evidence of a lien on the related real property and evidence of due
recording of such mortgage, deed of trust or security deed, if available, (ii)
the sale control document, (iii) evidence of title insurance, if any; (e) the
assignment of the Contract (and an assignment in recordable form of the related
mortgage, deed of trust or security deed if a Home Equity Contract or 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; (f) any extension, modification or waiver
agreement(s); (g) a credit application signed by the Obligor, or a copy thereof;
and (h) if required by Section 5.09 with respect to such Contract, a certificate
of insurance or application form for insurance signed by the Obligor, or copies
thereof.
"Contract Rate" means, with respect to any particular Contract, the rate of
interest specified in that Contract and computed in accordance with the method
specified in that Contract.
"Contracts" means the retail installment sales contracts and promissory
notes and closed-end home equity loans described in the List of Contracts and
constituting part of the corpus of the Trust, which Contracts are to be assigned
and conveyed by the Company to the Trust, and includes, without limitation, all
related mortgages, deeds of trust, security deeds and security interests and any
and all rights to receive payments which are due pursuant to the Contracts on or
after the Cut-off Date, or Subsequent Cut-off Date with respect to a Subsequent
Contract.
"Corporate Trust Office" means, (i) with respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the Closing Date
is located at Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration (the telecopy number for the Corporate Trust Office of the Owner
Trustee on the date of the execution of this Agreement is 302-651-8882); and
(ii) with respect to the Indenture Trustee, the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at the Closing Date is located at First
Trust National Association, 180 East Fifth Street, St. Paul, Minnesota 55101
Attention: Corporate Trust
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Department (the telecopy number for the Corporate Trust Office of the Indenture
Trustee on the date of execution of this Agreement is 612-244-0089).
"Counsel for the Company" means Briggs and Morgan, P.A., or other legal
counsel for the Company.
"Cut-off Date" means December 1, 1997 or the date of origination of the
Contract, if later.
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Contracts.
"Cut-off Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cut-off Date, or Subsequent Cut-off Date if a
Subsequent Contract, after giving effect to all installments of principal due
prior thereto.
"Defaulted Contract" means a Contract with respect to which the Servicer
commenced repossession or foreclosure procedures, made a sale of such Contract
to a third party for repossession, foreclosure or other enforcement, or, in the
case of an FHA-Insured Contract, submitted a claim to FHA, or as to which there
was a payment 180 or more days past due (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 a 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.
"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 January 1998.
"Due Date" means, as to any Contract, the date of the month on which the
scheduled monthly payment for such Contract is due.
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"Electronic Ledger" means the electronic master record of installment sale
contracts, home improvement contracts and promissory notes and home equity loans
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 Indenture Trustee, 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 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 their then-
current ratings assigned to the Notes, as confirmed in writing by Standard &
Poor's and Fitch.
"Eligible Institution" means any depository institution (which may be the
Owner Trustee, the Indenture Trustee or an Affiliate of either) 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 the short-term
deposits of which have been rated, A-1+ by Standard & Poor's and F-1 by Fitch
(if rated by Fitch), or the unsecured long-term debt of which 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 or which shall otherwise
be acceptable to Standard & Poor's and Fitch.
"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 Indenture
Trustee or any
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Affiliate of the Indenture Trustee, acting in its commercial
capacity) incorporated under the laws of the United States of
America or any State thereof and subject to supervision and
examination by federal and/or state authorities, so long as, at
the time of such investment or contractual commitment providing
for such investment, the commercial paper or other short-term
deposits of such depository institution or trust company (or, in
the case of a depository institution which is the principal
subsidiary of a holding company, the commercial paper or other
short-term debt obligations of such holding company) are rated at
least 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 at
least AAA by Standard & Poor's and in one of the two highest
rating categories from Fitch (if rated by Fitch) at the time of
such investment; provided, however, that securities issued by any
particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding
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;
(vi) commercial paper having a rating of at least A-1+ from Standard &
Poor's and at least F-1+ by Fitch (if rated by Fitch) at the time
of such investment or pledge as a security; and
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(vii) other obligations or securities that are acceptable to both
Standard & Poor's and Fitch as an Eligible Investment hereunder
and will not reduce the rating assigned to any Class of Notes or
the Certificates by both Standard & Poor's and Fitch below the
lower of the then-current rating or the rating assigned to such
Notes or the Certificates as of the Closing Date by both Standard
& Poor's and Fitch, as evidenced in writing;
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.
Each of the Indenture Trustee and the Owner Trustee may trade with itself
or an Affiliate in the purchase or sale of such Eligible Investments.
"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 is a Title I approved lender under FHA regulations and which
services not less than an aggregate of $100,000,000 in outstanding principal
amount of retail installment sales contracts and/or consumer installment loans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Contracts comprising a portion of the corpus of the Trust.
"Final Scheduled Distribution Date" means March 15, 2029 (or, if such day
is not a Business Day, the next succeeding Business Day).
"Fitch" means Fitch I.B.C.A. Inc., or any successor thereto; provided that
if Fitch no longer has a rating outstanding on the Class A-1:HE/HI Notes, nor on
the Class A-1 Notes, nor on the Class A-2 Notes, nor on the Class A-3 Notes, nor
on the Class A-4 Notes, nor on the Certificates, then references herein to
"Fitch" shall be deemed to refer
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to the NRSRO then rating any Class of the Notes (or, if more than one such NRSRO
is then rating any Class of the Notes, 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.
"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.
"Formula Principal Distribution Amount" means, as of any Distribution Date,
the sum of the following amounts with respect to the related Monthly Period and
each Consumer Product Contract, in each case computed in accordance with the
method specified in the relevant Consumer Product Contract:
(i) all scheduled payments of principal due on all such Contracts
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
Prepay ments in Full received during the related Monthly Period
in respect of all such Contracts 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
(iii) the aggregate Scheduled Principal Balance of all such Contracts
that became Liquidated Contracts during the related Monthly
Period; plus;
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(iv) the aggregate Scheduled Principal Balance of all such Contracts
repurchased during the related Monthly Period pursuant to Section
3.05 or 5.22; plus
(v) with respect to Post-Funding Distribution Date, the Pre-
Funded Amount; plus
(vi) without duplication of the foregoing, any amount deposited
in the Collection Account in respect of principal on the
Consumer Product Contracts (excluding any amounts deposited
therein pursuant to Sections 6.05, 8.01 or 8.02) 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
(vii) the amount, if any, included in the Formula Principal
Distribution Amount for the preceding Distribution Date by
virtue of clause (vi) above.
"GTGP" means Green Tree Second GP Inc., a Minnesota corporation.
"Guaranty Payment" means, as of any Distribution Date, an amount equal to
the sum of: (i) any Certificate Principal Liquidation Loss determined as of that
Distribution Date; plus (ii) the amount, if any, by which (A) the
Certificateholders' Distributable Amount on such Distribution Date exceeds (B)
the remainder of (x) the sum of the Collected Funds as of that Distribution Date
plus any amounts on deposit in the Collection Account as of that Distribution
Date pursuant to Sections 8.01 or 8.02 minus (y) the amounts to be distributed
from the Collection Account on that Distribution Date pursuant to clauses (i)
through (iii) of Section 6.06(a); provided that the aggregate of all amounts
distributed in respect of principal shall not exceed the Original Certificate
Principal Balance.
"Home Equity Contracts" means the closed-end home equity loans described in
the List of Contracts and constituting part of the corpus of the Trust, which
Home Equity Contracts are to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, any and all related mortgages, deeds of
trust and security deeds and any and all rights to receive payments which are
due pursuant thereto on or after the Cut-off Date.
"Home Improvement Contracts" means the retail installment sales contracts
and promissory notes financing home improvements described in the List of
Contracts and constituting part of the corpus of the Trust, which Home
Improvement Contracts are to be assigned and conveyed by the Company to the
Trust, and includes, without limitation,
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any and all related mortgages, deeds of trust and security deeds and any and all
rights to receive payments which are due pursuant thereto on or after the Cut-
off Date.
"HUD" means the United States Department of Housing and Urban Development,
or any successor thereto.
"Indenture" means the Indenture, dated as of December 1, 1997, between the
Trust and First Trust National Association, as Indenture Trustee, as the same
may be amended and supplemented from time to time.
"Indenture Trustee" means the Person acting as Trustee under the Indenture,
its successors in interest and any successor Trustee under the Indenture.
"Independent" means, when used with respect to any specified Person, Briggs
and Morgan, P.A., or any Person who (i) is in fact independent of the Company
and the Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Company or the Servicer or in an
Affiliate of either and (iii) is not connected with the Company or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Initial Consumer Product Contract" means an Initial Contract that is a
Consumer Product Contract.
"Initial Contracts" means those Contracts identified as such in the List of
Contracts, all of which were originated on or before November 17, 1997, and
having an aggregate Cut-off Date Principal Balance of $410,689,840.
"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.
"Interest Rate Cap Agreement" means the Interest Rate Cap Agreement dated
December 5, 1997 between MLDP and the Trust, as the same may be amended or
supplemented from time to time.
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"Interest Rate Cap Payment" means, with respect to any Distribution Date,
an amount equal to the product of the Class A-1 Principal Balance times the
product of (i) the maximum of (x) the excess of the Class A-1 Interest Rate over
10% or (y) 0% and (ii) the number of days in the Interest Reset Period divided
by 360.
"Interest Reset Period" means, with respect to any Distribution Date, the
period from and including the prior Distribution Date (or, with respect to the
first Distribution Date, from and including the Closing Date) to but excluding
such Distribution Date.
"LIBOR" means, with respect to any Interest Reset Period, the offered rate,
as established by the Calculation Agent, for United States dollar deposits for
one month that appears on Telerate Page 3750 as of 11:00 A.M., London time, on
the LIBOR Determination Date for such Interest Reset Period. If on any LIBOR
Determination Date the offered rate does not appear on Telerate Page 3750, the
Calculation Agent will request each of the reference banks (which shall be major
banks that are engaged in transactions in the London interbank market selected
by the Calculation Agent) to provide the Calculation Agent with its offered
quotation for United States dollar deposits for one month to prime banks in the
London interbank market as of 11:00 A.M., London time, on such date. If at
least two reference banks provide the Calculation Agent with such offered
quotations, LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.00001), with five one-millionths of
a percentage point rounded upward, of all such quotations. If on such date
fewer than two of the reference banks provide the Calculation Agent with such
offered quotations, LIBOR on such date will be the arithmetic mean, rounded
upwards, if necessary, to the nearest 1/100,000 of 1% (.00001), with five one-
millionths of a percentage point rounded upward, of the offered per annum rates
that one or more leading banks in The City of New York selected by the
Calculation Agent are quoting as of 11:00 A.M., New York City time, on such date
to leading European banks for United States dollar deposits for one month;
provided, however, that if such banks are not quoting as described above, LIBOR
for such date will be LIBOR applicable to the Interest Reset Period immediately
preceding such Interest Reset Period.
"LIBOR Business Day" as used herein means a day that is both a Business Day
and a day on which banking institutions in the City of London, England are not
required or authorized by law to be closed.
"LIBOR Determination Date" means the second LIBOR Business Day prior to the
first day of the related Interest Reset Period.
"Limited Guaranty" means the obligation of the Company to make Guaranty
Payments pursuant to Section 6.05.
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"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 have been recovered, provided that any Defaulted Contract in
respect of which the related Product or real property has 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 February 2028 any Home Improvement
Contract as to which the Servicer has commenced foreclosure proceedings or made
a sale of the Contract to a third party for foreclosure or enforcement and 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 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 any 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 any repossessed Product.
"List of Contracts" means the lists identifying each Contract constituting
part of the corpus of the Trust and either delivered pursuant to Section 2.02(a)
of this Agreement or attached to a Subsequent Transfer Instrument as Exhibit A.
The List of Contracts shall set forth as to each Contract (i) the Cut-off Date
Principal Balance, (ii) the amount of monthly payments due from the Obligor,
(iii) the Contract Rate and (iv) the maturity date.
"MLDP" means Merrill Lynch Derivative Products AG, a Swiss share company
established under the laws of Switzerland.
"Monthly Period" means a calendar month during the term of this Agreement.
With respect to a Distribution Date, "related Monthly Period" means the calendar
month immediately preceding the month in which the Distribution Date occurs.
With respect to the January 1998 Distribution Date, "related Monthly Period"
with respect to the Home Equity Contracts and Home Improvement Contracts means
the period beginning on the Cut-off Date and ending December 31, 1997.
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"Monthly Report" has the meaning assigned in Section 5.13.
"Monthly Servicing and Guaranty Fee" means, as to any Distribution Date,
the Amount Available in the Collection Account on that Distribution Date after
payment in full of all amounts payable under Section 6.06(a)(i) through (v).
"Monthly Servicing Fee" means, as of any Distribution Date on which the
Company is not acting as Servicer, any amount agreed to by the Trustee and the
successor Servicer that does not exceed one-twelfth of the product of 0.75% and
the Pool Scheduled Principal Balance for the immediately preceding Distribution
Date.
"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.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(a).
"Note Majority" means, as to each Class of Notes, Holders of Notes
representing a majority of the Class Principal Balance of such Class.
"Note Pool Factor" means, with respect to any Distribution Date and each
Class of Notes, an eight-digit decimal figure equal to the outstanding principal
balance of such class of Notes as of such Distribution Date (after giving effect
to all distributions on such date) divided by the Original Principal Balance of
such Class of Notes as of the Closing Date.
"Note Principal Balance" means, as of any Distribution Date, the sum of the
Class A-1:HE/HI Principal Balance, Class A-1 Principal Balance, the Class A-2
Principal Balance, the Class A-3 Principal Balance, and the Class A-4 Principal
Balance.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
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"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amounts payable in respect of the Notes pursuant to
Sections 8.02(c)(1)(ii), 8.02(c)(2)(ii) and (vi), 8.02(c)(4)(ii) and (vi), and
8.02(c)(6)(ii) and (vi) of the Indenture.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, the amounts payable in respect of the Notes pursuant to
Sections 8.02(c)(1)(i), 8.02(c)(2)(i) and (v), 8.02(c)(4)(i) and (v) and
8.02(c)(6)(i) and (v) of the Indenture.
"Noteholders' Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the Class A-1:HE/HI Formula Principal Distribution
Amount plus the Noteholders' Percentage of the Formula Principal Distribution
Amount (but not to exceed the Note Principal Balance) and plus the aggregate
Principal Liquidation Loss of each Class of Notes.
"Noteholders' Percentage" means 100% until and including the Distribution
Date on which the Note Principal Balance and the aggregate Class A-1:HE/HI,
Class A-1, Class A-2, Class A-3 and Class A-4 Principal Liquidation Losses (if
any) are paid in full and 0% thereafter.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Unpaid Principal
Shortfall as of the close of the preceding Distribution Date; provided, that (i)
the Noteholders' Principal Distributable Amount on the Final Scheduled
Distribution Date shall not be less than the amount that is necessary (after
giving effect to other amounts to be deposited in the Note Distribution Account
on such Distribution Date and allocable to principal) to reduce the Note
Principal Balance plus the Unpaid Class A-1:HE/HI, A-1, A-2, A-3, and A-4
Principal Liquidation Losses to zero.
"Noteholders' Unpaid Principal Shortfall" means, with respect to any
Distribution Date, the amounts payable in respect of the Notes pursuant to
Sections 8.02(c)(1)(iv), 8.02(c)(2)(iv), 8.02(c)(4)(iv), and 8.02(6)(iv) of the
Indenture.
"Notes" means the Class A-1:HE/HI, Class A-1, Class A-2, Class A-3 or Class
A-4 Notes.
"NRSRO" means any nationally recognized statistical rating organization.
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"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 any 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
Indenture Trustee or Owner 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 Indenture Trustee, the Owner Trustee and the Company.
"Original Certificate Principal Balance" means $28,400,000.
"Original Class A-1 Principal Balance" means $284,990,000.
"Original Class A-1:HE/HI Principal Balance" means $167,923,639.
"Original Class A-2 Principal Balance" means $46,850,000.
"Original Class A-3 Principal Balance" means $22,720,000.
"Original Class A-4 Principal Balance" means $17,040,000.
"Original Class Principal Balance" means, with respect to any Class, the
Original Class A-1:HE/HI Principal Balance, Original Class A-1 Principal
Balance, the Original Class A-2 Principal Balance, the Original Class A-3
Principal Balance or the Original Class A-4 Principal Balance as appropriate.
"Original Note Principal Balance" means the sum of the Class A-1:HE/HI,
Class A-1, Class A-2, Class A-3, and Class A-4 Original Class Principal
Balances.
"Owner Trustee" means Wilmington Trust Company, acting not individually but
solely as trustee, or its successor in interest, and any successor appointed as
provided in the Trust Agreement.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Collection Account pursuant to the proviso in Section 3.05(a).
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"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Pledge Agreement" means the Reserve Account Pledge Agreement dated as of
December 1, 1997 among GTGP, the Indenture Trustee, U.S. Bank National
Association as Collateral Agent and the Trust.
"Pool Scheduled Principal Balance" means, as of any Distribution Date, the
aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the immediately preceding Monthly Period.
"Post-Funding Distribution Date" means the first Distribution Date which is
on or after the last day of the Pre-Funding Period.
"Pre-Funded Amount" means, on the Closing Date, $57,387,151.22 (i.e. the
difference between $567,923,639 and the aggregate Cut-off Date Principal
Balances of the Initial Contracts and the Additional Contracts), and on any
other date of determination, the amount then on deposit in the Pre-Funding
Account (excluding any investment earnings), after giving effect to any sale of
Subsequent Contracts to the Trust on such date.
"Pre-Funding Account" means the account so designated and established and
maintained pursuant to Section 6.01(a).
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the Pre-Funded Amount is less
than $10,000.00, or (b) March 1, 1998 or (c) the date on which an Event of
Termination occurs.
"Principal Liquidation Loss" means, with respect to any Distribution Date
and any Class of Notes, the amount by which the aggregate Principal Balance of
such Class and each junior Class and the Certificate Principal Balance exceeds
the Scheduled Pool Principal Balance, after giving effect to all distributions
of principal on such Distribution Date.
"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 are goods 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.
"Related Documents" means the Trust Agreement, the Indenture, the
Administration Agreement, the Interest Rate Cap Agreement, the Certificates, the
Notes, and the Underwriting Agreement. The Related Documents executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05 or Section 5.22, 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.
"Reserve Account" means the account held by the Collateral Agent for the
benefit of the Holders of the Notes pursuant to the Pledge Agreement.
"Reserve Account Deficiency Notice" has the meaning given in Section
6.04(c).
"Reserve Required Amount" means, as of any date of determination, the
lesser of (i) the sum of the Note Principal Balance and the Unpaid Class A-
1:HE/HI, A-1, A-2, A-3, and A-4 Principal Liquidation Losses or (ii) 1.50% of
the Pool Scheduled Principal Balance.
"Responsible Officer" means, with respect to the Owner 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
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referred because of knowledge of, familiarity with, and authority to act with
respect to a particular matter.
"Scheduled Principal Balance" means, as to any Contract and any
Distribution Date or the Cut-off Date or Subsequent Cut-off Date, as the case
may be, 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 Cut-off Date or Subsequent Cut-off 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. If for
any Contract the Cut-off Date is the date of origination of the Contract, its
Scheduled Principal Balance as of the Cut-off Date is the principal balance of
the Contract on the date of its origination.
"Secured Home Improvement Contract" means a Home Improvement Contract
secured by a mortgage, deed of trust or security deed or similar evidence of a
lien on the related real property.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means the Company.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Servicer Advance" means, with respect to any Distribution Date, the
amount, if any, deposited by the Servicer in the Collection Account pursuant to
Section 5.13.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"Spread Account" means the account so designated and established and
maintained pursuant to Section 6.01(a).
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"Spread Account Subaccount" means any of the Class A-2 Subaccount, Class
A-3 Subaccount or Class A-4 Subaccount.
"Spread Account Required Amount" means the sum of the Class A-2 Subaccount
Required Amount, the Class A-3 Subaccount Required Amount and the Class A-4
Subaccount Required Amount.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or any successor thereto; provided that, if
Standard & Poor's no longer has a rating outstanding on the Class A-1:HE/HI
Notes, nor on the Class A-1 Notes, nor on the Class A-2 Notes, nor on the Class
A-3 Notes, nor on the Class A-4 Notes, nor on the Certificate Certificates, then
references herein to "Standard & Poor's" shall be deemed to refer to the NRSRO
then rating any Class of the Notes (or, if more than one such NRSRO is then
rating any Class of the Notes, 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.
"Subsequent Contracts" means a Consumer Product Contract sold by the
Company to the Trust pursuant to Section 2.03, such Contract being identified on
Exhibit A attached to a Subsequent Transfer Instrument.
"Subsequent Cut-off Date" means, with respect to a Subsequent Contract, the
related Subsequent Transfer Date.
"Subsequent Transfer Date" means, with respect to each Subsequent Transfer
Instrument, the date on which the related Subsequent Contracts are sold to the
Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer Instrument
dated as of a Subsequent Transfer Date executed by the Trustee and the Company
substantially in the form of Exhibit F, by which the Company sells Subsequent
Contracts to the Trust.
"Telerate Page 3750" means the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor by the
Calculation Agent, for the purpose of displaying London interbank offered rates
of major banks).
"Trust" means the Green Tree Recreational, Equipment & Consumer Trust
1997-D.
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"Trust Accounts" means the Collection Account, the Note Distribution
Account, the Spread Account, the Capitalized Interest Account, the Pre-Funding
Account, and the Certificate Distribution Account.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as
of December 1, 1997 among the Company, GTGP and the Owner Trustee, as the same
may be amended and supplemented from time to time.
"Trust Property" means the property conveyed to the Trust pursuant to
Sections 2.01(a) and 2.03.
"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 or real property, 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.
"Underwriting Agreement" means, the Underwriting Agreement and related
Terms Agreement, each dated December 8, 1997, by and between Merrill Lynch
Pierce, Fenner & Smith Incorporated and the Company.
"Unpaid Certificate Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Certificate Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Certificate Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of
Certificates on account of any Unpaid Certificate Interest Shortfall pursuant to
Section 5.2(a)(ii) of the Trust Agreement on such immediately prior Distribution
Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Certificate Pass-Through Rate on such remainder from such
immediately prior Distribution Date to the current Distribution Date.
"Unpaid Certificate Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Certificate
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Certificate Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Certificates on account of any Unpaid
Certificate Liquidation Loss Interest Shortfall pursuant to Section 5.2(a)(vi)
of the Trust Agreement on such immediately prior Distribution Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the
Certificate Pass-Through Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
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"Unpaid Certificate Principal Liquidation Loss" means, as to any
Distribution Date, the amount, if any, by which the sum of all Certificate
Principal Liquidation Losses for all prior Distribution Dates is in excess of
the amounts distributed on prior Distribution Dates to Holders of Certificates
pursuant to Section 5.2(a)(vii) of the Trust Agreement, including any Guaranty
Payments.
"Unpaid Certificate Principal Shortfall" means, as to any Distribution
Date, the amount, if any, by which the aggregate of the Certificate Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Certificates pursuant to
Section 5.2(a)(iv) of the Trust Agreement.
"Unpaid Class A-1 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-1 Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class A-1 Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class A-1
Notes on account of any Unpaid Class A-1 Interest Shortfall pursuant to Section
8.02(c)(1)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A-1 Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-1 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-1 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-1 Notes pursuant to Section
8.02(c)(1)(iv) of the Indenture.
"Unpaid Class A-1: HE/HI Interest Shortfall" means, as to any Distribution
Date, the amount, if any, of the remainder of (x) the Class A-1: HE/HI Interest
Carryover Shortfall, if any, for the immediately prior Distribution Date, plus
(y) the Unpaid Class A-1: HE/HI Interest Shortfall determined as of such
immediately prior Distribution Date, minus (z) all amounts distributed to the
Holders of Class A-1: HE/HI Notes on account of any Unpaid Class A-1: HE/HI
Interest Shortfall pursuant to Section 8.02(c)(1)(ii) of the Indenture on such
immediately prior Distribution Date, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class A-1: HE/HI Interest Rate on
such remainder from such immediately prior Distribution Date to the current
Distribution Date.
"Unpaid Class A-1: HE/HI Principal Shortfall" means, as to any Distribution
Date, the amount, if any, by which the aggregate of the Class A-1: HE/HI
Principal Shortfalls for all prior Distribution Dates is in excess of the
amounts distributed on prior Distribution Dates to Holders of Class A-1: HE/HI
Notes pursuant to Section 8.02(c)(1)(iv) of the Indenture.
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"Unpaid Class A-2 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-2 Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class A-2 Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class A-2
Notes on account of any Unpaid Class A-2 Interest Shortfall pursuant to Section
8.02(c)(2)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A-2 Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-2 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-2
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-2 Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-2 Notes on account of any
Unpaid Class A-2 Liquidation Loss Interest Shortfall pursuant to Section
8.02(c)(2)(vi) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A-2 Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-2 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-2 Principal
Liquidation Losses for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-2 Notes pursuant
to Section 8.02(c)(2)(vii) of the Indenture.
"Unpaid Class A-2 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-2 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-2 Notes pursuant to Section
8.02(c)(2)(iv) of the Indenture.
"Unpaid Class A-3 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-3 Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class A-3 Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class A-3
Notes on account of any Unpaid Class A-3 Interest Shortfall pursuant to Section
8.02(c)(4)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A-3 Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-3 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-3
Liquidation
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Loss Interest Shortfall, if any, for the immediately prior Distribution Date,
plus (y) the Unpaid Class A-3 Liquidation Loss Interest Shortfall determined as
of such immediately prior Distribution Date, minus (z) all amounts distributed
to the Holders of Class A-3 Notes on account of any Unpaid Class A-3 Liquidation
Loss Interest Shortfall pursuant to Section 8.02(c)(4)(vi) of the Indenture on
such immediately prior Distribution Date, plus accrued interest (to the extent
payment thereof is legally permissible) at the Class A-3 Interest Rate on such
remainder from such immediately prior Distribution Date to the current
Distribution Date.
"Unpaid Class A-3 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-3 Principal
Liquidation Losses for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-3 Notes pursuant
to Section 8.02(c)(4)(vii) of the Indenture.
"Unpaid Class A-3 Principal Shortfall" means, as to any Distribution Date,
the amount, if any, by which the aggregate of the Class A-3 Principal Shortfalls
for all prior Distribution Dates is in excess of the amounts distributed on
prior Distribution Dates to Holders of Class A-3 Notes pursuant to Section
8.02(c)(4)(iv) of the Indenture.
"Unpaid Class A-4 Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-4 Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class A-4 Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class A-4
Notes on account of any Unpaid Class A-4 Interest Shortfall pursuant to Section
8.02(c)(6)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A-4 Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-4 Liquidation Loss Interest Shortfall" means, as to any
Distribution Date, the amount, if any, of the remainder of (x) the Class A-4
Liquidation Loss Interest Shortfall, if any, for the immediately prior
Distribution Date, plus (y) the Unpaid Class A-4 Liquidation Loss Interest
Shortfall determined as of such immediately prior Distribution Date, minus (z)
all amounts distributed to the Holders of Class A-4 Notes on account of any
Unpaid Class A-4 Liquidation Loss Interest Shortfall pursuant to Section
8.02(c)(6)(vi) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class A-4 Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class A-4 Principal Liquidation Loss" means, as to any Distribution
Date, the amount, if any, by which the sum of all Class A-4 Principal
Liquidation Losses for all
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prior Distribution Dates is in excess of the amounts distributed on prior
Distribution Dates to Holders of Class A-4 Notes pursuant to Section
8.02(c)(6)(vii) of the Indenture.
"Unpaid Class A-4 Principal Shortfall" means, as to any Distribution
Date, the amount, if any, by which the aggregate of the Class A-4 Principal
Shortfalls for all prior Distribution Dates is in excess of the amounts
distributed on prior Distribution Dates to Holders of Class A-4 Notes pursuant
to Section 8.02(c)(6)(iv) of the Indenture.
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ARTICLE II
TRANSFER OF CONTRACTS
---------------------
SECTION 2.01. Transfer of Contracts.
a. Subject to the terms and conditions of this Agreement, the Company
hereby transfers, assigns, sets over and otherwise conveys to the Trust by
execution of an assignment substantially in the form of Exhibit A hereto all
right, title and interest of the Company in and to (1) the Contracts (including,
without limitation, the Collateral Security), 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, or the
Subsequent Cut-off Date with respect to Subsequent Contracts, (2) the Insurance
Policies on any Products or real property securing a Contract for the benefit of
the creditor of such Contract and all blanket insurance policies to the extent
they relate to the Contracts, (3) all rights the Company may have against the
originating dealer, contractor or lender with respect to the Contracts not
originated by the Company, (4) the Errors and Omissions Protection Policy as
such policy relates to the Contracts, (5) all items contained in the Contract
Files, (6) the Trust Accounts and all funds on deposit therein from time to time
and all investments and proceeds thereof (including all income thereon except
income on the Pre-Funding Account), and (7) all proceeds and products of the
foregoing.
b. Although the parties intend that the conveyance of the Company's
right, title and interest in and to the Contracts and the Collateral Security
pursuant to this Agreement shall constitute a purchase and sale and not a pledge
of security for loans from the Certificateholders and/or the Noteholders, if
such conveyances are deemed to be a pledge of security for loans from the
Certificateholders, the Noteholders or any other Persons (the "Secured
Obligations"), the parties intend and agree that the rights and obligations of
the parties to the Secured Obligations shall be established pursuant to the
terms of this Agreement and that the Company shall be deemed to have granted to
the Trust, and the Company does hereby grant to the Trust, a perfected first-
priority security interest in the items designated in Section 2.01(a)(1) through
2.01(a)(7) above to secure the Secured Obligations, and that this Agreement
shall constitute a security agreement under applicable law. If the trust
created by this Agreement terminates prior to the satisfaction of the claims of
any Person under any Certificates, any Notes or the Secured Obligations, the
security interest created hereby shall continue in full force and effect and the
Owner Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
SECTION 2.02. Conditions to Acceptance by Owner Trustee.
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As conditions to the Owner Trustee's execution and delivery of the Notes on
behalf of the Trust and the execution, authentication and delivery of the
Certificates on behalf of the Trust on the Closing Date, the Owner Trustee on
behalf of the Trust shall have received the following on or before the Closing
Date:
a. The List of Contracts for all Initial and Additional Contracts,
certified by the Chairman of the Board, President or any Vice President of the
Company.
b. A letter from KPMG Peat Marwick L.L.P. or another nationally
recognized accounting firm, stating that such firm has reviewed the Initial
Contracts on a statistical sampling basis and, based on such sampling,
concluding that, except with respect to those Initial Contracts so specified in
the letter, such Initial Contracts conform in all material respects to the List
of Contracts, to a confidence level of 97.5%, with an error rate generally not
in excess of 1.8%.
c. 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 Related Documents and
the transactions contemplated hereunder, certified in each case by the secretary
or an assistant secretary of the Company.
d. Officially certified recent evidence of due incorporation and good
standing of the Company under the laws of the State of Delaware.
e. Evidence of filing with the Secretary of State of Minnesota of a UCC-1
financing statement, executed by the Company as debtor, naming the Trust as
secured party and describing the Contracts as collateral.
f. An executed copy of the Assignment substantially in the form of
Exhibit A hereto.
g. Evidence of continued coverage of the Company under the Errors and
Omissions Protection Policy.
h. Evidence of deposit in the Collection Account of all funds received
with respect to the Initial and Additional Contracts prior to the Closing Date
which were due on or after the Cut-off Date, together with an Officer's
Certificate to the effect that such amount is correct.
i. An Officer's Certificate confirming that the Company has reviewed the
original or a copy of each Contract and each Contract File, that each Contract
and Contract File conforms in all material respects with the List of Contracts
and that each
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Contract File is complete in all material respects and that each Product or real
property securing a Contract is covered by an Insurance Policy as required by
Section 3.02(f).
j. Evidence of the deposit of the Pre-Funded Amount in the Pre-Funding
Account and of the deposit of $1,564,476 in the Capitalized Interest Account.
k. Executed assignments to the Trustee on behalf of the Trust in
recordable form of each mortgage securing a Home Equity Contract or a Secured
Home Improvement Contract.
l. An executed copy of the Interest Rate Cap Agreement.
m. Such other documents and certificates as the Trust may request.
SECTION 2.03. Conveyance of the Subsequent Contracts.
a. Subject to the conditions set forth in paragraph (b) below, in
consideration of the Indenture Trustee's delivery on behalf of the Trust on the
related Subsequent Transfer Dates to or upon the order of the Company of all or
a portion of the balance of funds in the Pre-Funding Account, the Company shall
on any Subsequent Transfer Date sell, transfer, assign, set over and convey to
the Trust by execution and delivery of a Subsequent Transfer Instrument, all
right, title and interest of the Company in and to the Subsequent Contracts
identified on the List of Contracts attached to the Subsequent Transfer
Instrument (including, without limitation, the Collateral Security), and any and
all rights to receive payments on or with respect to the Subsequent Contracts
due on or after the related Subsequent Cut-off Date, the Insurance Policies on
any Products or real property securing a Subsequent Contract for the benefit of
the creditor of such Subsequent Contract and all blanket insurance policies to
the extent they relate to the Subsequent Contracts, all rights the Company may
have against the originating dealer contractor or lender with respect to the
Subsequent Contracts not originated by the Company, the Errors and Omissions
Protection Policy as such policy relates to the Subsequent Contracts, all items
contained in the Contract Files, and all proceeds and products of the foregoing.
The transfer to the Trust by the Company of the Subsequent Contracts shall be
absolute and is intended by the Company, the Trust and the Securityholders to
constitute and to be treated as a sale of the Subsequent Contracts by the
Company to the Trust. The purchase price paid by the Trust shall be one-hundred
percent (100%) of the aggregate Cut-off Date Principal Balances of the
Subsequent Contracts. The purchase price of Subsequent Contracts shall be paid
solely with the Pre-Funded Amount in the Pre-Funding Account.
b. The Company shall transfer the Subsequent Contracts to the Trust, and
the Trust shall purchase the Subsequent Contracts, only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:
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(i) the Company shall have provided the Trust and the Indenture
Trustee with an Addition Notice at least five Business Days prior to the
Subsequent Transfer Date and shall have provided any information reasonably
requested by the Indenture Trustee or the Trust with respect to the
Subsequent Contracts;
(ii) the Company shall have delivered to the Trust (with a copy to the
Indenture Trustee) a duly executed Subsequent Transfer Instrument
substantially in the form of Exhibit F, which shall include a List of
Contracts identifying the related Subsequent Contracts;
(iii) as of each Subsequent Transfer Date, as evidenced by delivery
of the Subsequent Transfer Instrument, the Company shall not be insolvent
nor shall it have been made insolvent by such transfer nor shall it be
aware of any pending insolvency;
(iv) the Pre-Funding Period shall not have ended;
(v) the Company shall have delivered to the Indenture Trustee and the
Trust an Officer's Certificate, substantially in the form attached hereto
as Exhibit G, confirming the satisfaction of each condition precedent and
the representations specified in this Section 2.03 and in Sections 3.01,
3.02, 3.03 and 3.04; and
(vi) the Company shall have delivered to the Indenture Trustee and the
Trust Opinions of Counsel addressed to the Rating Agencies, the Trust and
the Indenture Trustee with respect to the transfer of the Subsequent
Contracts substantially in the form of the Opinions of Counsel delivered to
the Indenture Trustee on the Closing Date regarding certain bankruptcy,
corporate and tax matters.
c. On or before the last day of the Pre-Funding Period, the Company shall
deliver to the Trust and the Indenture Trustee evidence that as a result of the
purchase by the Trust of the Subsequent Contracts and their inclusion in the
Indenture Collateral (as defined in the Indenture), the Notes and Certificates
shall not receive from Standard & Poor's or Fitch a lower credit rating than the
ratings assigned to the Notes and Certificates as of the Closing Date.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company makes the following representations and warranties, effective
as of the Closing Date, and as of each Subsequent Transfer Date with respect to
each Subsequent Contract identified on the List of Contracts attached to the
related Subsequent Transfer Instrument, on which the Trust will rely in
accepting the Contracts and the other Trust Property in trust and on which the
Owner Trustee relies in executing and delivering, on behalf of the Trust, the
Certificates and the Notes. The repurchase obligation of the Company set forth
in Section 3.05 constitutes the sole remedy available to the Trust, the Owner
Trustee, the Indenture Trustee, and the Securityholders for a breach of a
representation or warranty of the Company set forth in the Officer's Certificate
delivered pursuant to Section 2.02(i) or 2.03(b) or in Section 3.02, 3.03 or
3.04 of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company.
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 its Related
Documents and all of the transactions contemplated under this Agreement and
thereunder and to sell and assign the Trust Property to be sold and assigned to
the Trust by it and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and its Related Documents.
When executed and delivered, this Agreement and its Related Documents will
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their 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 Violations. The execution, delivery and performance by the Company
of this Agreement and its Related Documents and the fulfillment of their terms
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
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breach of any mortgage, indenture, contract or other agreement to which the
Company is a party or by which the Company may be bound.
d. 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, its Related Documents, or the
Securities which, if adversely determined, would in the opinion of the Company
have a material adverse effect on the transactions contemplated by this
Agreement and its Related Documents.
e. Licensing. The Company is duly registered or licensed as a finance
company in each state in which Contracts were originated, to the extent such
registration or licensure is required by applicable law.
f. 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.
With respect to each Contract:
a. List of Contracts. The information relating to the Contract set forth
in the List of Contracts is true and correct as of its date.
b. Payments. The most recent scheduled payment was made by or on behalf
of the Obligor (without any advance from the Company or any Person acting at the
request of the Company). No scheduled payment is delinquent for more than 59
days.
c. No Waivers. The terms of the Contract have not been waived, altered
or modified in any respect, except by instruments or documents identified in the
Contract File.
d. Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
e. No Defenses. The Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
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f. Insurance Coverage. The Product or real property, if any, securing
the Contract is covered by an Insurance Policy to the extent (if any) required
by Section 5.09. All premiums due as of the Closing Date, or the related
Subsequent Transfer Date for any Subsequent Contract, 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 Owner
Trustee, the Owner Trustee on behalf of the Trust will be entitled to the full
benefits of the FHA Insurance.
g. Origination. If a Consumer Product Contract, it 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. If
a Home Improvement Contract, it 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. If a Home Equity Contract, it 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.
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 the
Securities, unlawful or render the Contract unenforceable.
i. Compliance with Law. At the date of origination of the Contract, all
requirements of any federal and state laws, rules and regulations applicable to
the Contract, including, without limitation, usury, truth in lending and equal
credit opportunity laws, have been complied with, and (if such Contract is an
FHA-Insured Contract, the FHA Regulations) have been complied with, and the
Company shall for at least the period of this Agreement, maintain in its
possession, available for the Owner Trustee's inspection, and shall deliver to
the Owner 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 property,
if any, securing the Contract has not been released from the lien of the
Contract in whole or in part.
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k. Valid Security Interest or Lien. If a 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 Cut-off 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 Trust; and (c) the
Trust has and will have a valid and perfected and enforceable first priority
security interest in such Product. As to each Home Equity Contract and Secured
Home Improvement 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 priority lien on the real estate described in such
Contract.
l. Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal capacity to
execute the Contract.
m. Good Title. In the case of a Contract purchased from a dealer, 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 a security
interest. The Company has not sold, assigned or pledged the Contract to any
person and prior to the transfer of the Contract by the Company to the Trust,
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 Trust.
If such Contract is an FHA-Insured Contract, because the Indenture 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 Trust. No financing statement describing or
referring to any Contract (other than any financing statement naming the Trust
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 paragraph (b) above). The Company
has not waived any such default, breach, violation or event permitting
acceleration except payment delinquencies permitted by paragraph (b) above. As
of the Closing Date or the related Subsequent Transfer Date for any Subsequent
Contract, the related Product is, to the best of the Company's knowledge, free
of damage and in good repair.
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o. No Liens. If a Consumer Product Contract, there are, to the best of
the Company's knowledge, no liens or claims which have been filed for work,
labor or materials affecting the Product securing the Contract which are or may
be liens prior to, or equal or coordinate with, the lien of the Contract.
p. Equal Installments. Each Contract has a fixed Contract Rate and
provides for level monthly payments (except, in the case of a Balloon Loan, for
the final monthly payment of such loan) which fully amortize the loan over its
term.
q. Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
r. One Original. There is only one original executed Contract (other
than an original in the possession of the relevant Obligor), which original
Contract is in the possession of the Company or the Custodian on or before the
Closing Date or related Subsequent Transfer Date, for any Subsequent Contract.
Each Consumer Product Contract has been stamped to reflect the assignment of
such Contract to the Trust. Each Home Equity Contract and Home Improvement
Contract has been delivered to the Indenture Trustee or its Custodian on or
before the Closing Date.
s. Notation of Security Interest. If a 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 Trust 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.
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u. Filings. All filings, including UCC filings, required in any
jurisdiction to give the Trust a first perfected ownership interest in the
Contract, and to give the Indenture Trustee a first priority perfected security
interest in the Contract, have been made.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
a. Amounts. As of the Closing Date, the sum of the aggregate principal
amounts payable by Obligors under the Initial and Additional Contracts, equals
the Cut-off Date Pool Principal Balance.
b. Characteristics. The Initial Contracts, consisting of Home Equity
Contracts, Home Improvement Contracts, and Consumer Product Contracts, have the
following characteristics as of the Cut-off Date: (i) the aggregate Cut-off
Date Principal Balance is $410,689,840; (ii) the Obligors on not more than
16.85% (by Cut-off Date Pool Principal Balance) were located in any one state;
(iii) none had a remaining maturity of fewer than 5 months or more than 360
months; (iv) the final scheduled payment date on the such Contract with the
latest maturity is in December 2017; (v) each had an original principal balance
of at least $1,132.00 and not more than $1,490,025.00 and a Cut-off Date
Principal Balance of at least $731.62 and not more than $1,480,331.95; and (vi)
each had a contractual rate of interest of at least 7.15% and not more than 25%.
The Additional Contracts (all of which are Consumer Products Contracts)
have the following characteristics as of the Cut-off Date: (i) the Obligors on
not more than 15.15% of the Additional Contracts by Cut-off Date Principal
Balance are located in any one state; (ii) no Additional Contract had a
remaining maturity of fewer than 12 months or more than 240 months; (iii) the
final scheduled payment date on the Additional Contract with the latest maturity
is in December, 2017; (iv) each Additional Contract had an original principal
balance of at least $2,000.46 and not more than $537,660.00 and a Cut-off Date
Principal Balance of at least $2,000.46 and not more than $537,660.00; and (v)
each Additional Contract had a contractual rate of interest of at least 7.50%
and not more than 19.25%.
c. Subsequent Contracts. The Subsequent Contracts (all of which are
Consumer Product Contracts) have the following characteristics: (i) none has a
remaining term to maturity of more than 240 months; (ii) as of the end of the
Pre-Funding Period, the weighted average interest rate (by Cut-off Date
Principal Balance) is not less than 10.6%; (iii) as of the end of the Pre-
Funding Period, the percentage of each type of Consumer Product Contract (i.e.,
aircraft, horse trailer, keyboard instrument, marine product, motorcycle,
recreational vehicle, sport vehicle and trucks), as a percentage of all Consumer
Product Contracts, will be approximately the same as such percentages calculated
with respect to the Initial Consumer Product Contracts.
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d. Computer Tape. The Computer Tape made available by the Company was
complete and accurate as of its date and includes a description of the Initial
and Additional Contracts that are described in the List of Contracts.
e. Marking Records. The Company has caused the portions of the
Electronic Ledger relating to the Contracts to be clearly and unambiguously
marked to indicate that such Contracts constitute part of the Trust and are
owned by the Trust in accordance with the terms of the trust created hereunder.
f. 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.
g. Contractor/Lender Concentration. No more than 5% of the Home
Improvement Contracts and no more than 5% of the Home Equity Contracts, by Cut-
off Date Principal Balance, were originated by any one contractor or lender
(other than the Company).
SECTION 3.04. Representations and Warranties Regarding the Contract Files.
a. Possession. Immediately prior to the Closing Date, the Company will
have possession of each original Initial and Additional Contract and the related
Contract File. Immediately prior to each Subsequent Transfer Date the Company
will have possession of each Subsequent Contract and the related Contract File.
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, the Owner Trustee
or the Indenture 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 an Officer's
Certificate delivered pursuant to Section 2.02(i) or 2.03(b) that materially
adversely affects the interest of the Trust or the Securityholders in such
Contract and which breach has not been cured; provided, however, that (i) in the
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event that a party other than the Company first becomes aware of such a breach,
such discovering party shall notify the Company in writing within five Business
Days of the date of such discovery and (ii) with respect to any Contract
incorrectly described on the List of Contracts with respect to unpaid principal
balance, which the Company would otherwise be required to repurchase pursuant to
this Section, the Company may, in lieu of repurchasing such Contract, deposit in
the Collection Account no later than the first Determination Date that is 90 or
more days from the date of such discovery cash in an amount sufficient to cure
such deficiency or discrepancy. Any such cash so deposited shall be accounted
for as a collection of principal or interest on such Contract, according to the
nature of the deficiency or discrepancy. Notwithstanding any other provision of
this Agreement, the obligation of the Company under this Section shall not
terminate upon a Service Transfer pursuant to Article VII. Notwithstanding the
foregoing, the Company shall repurchase any 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 Indenture Trustee or its custodian,
for the benefit of the Trust within 30 days of the Closing Date.
b. Upon receipt by the Trust by deposit in the Collection Account of the
Repurchase Price under subsection (a) above, and upon receipt of a certificate
of a Servicing Officer in the form attached hereto as Exhibit B, the Indenture
Trustee shall release its security interest in such Contract and the Owner
Trustee on behalf of the Trust shall convey and assign to the Company all of the
Securityholders' right, title and interest in the repurchased Contract without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of the Trust.
c. The Company shall defend and indemnify the Owner Trustee, the Trust,
the Indenture Trustee, and the Securityholders 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(i) or Section
2.03(b).
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY
-------------------------------------------------
INTERESTS
---------
SECTION 4.01. Custody of Contracts.
a. Subject to the terms and conditions of this Section, the Trust
appoints the Servicer to maintain custody of the Contract Files related to the
Consumer Product Contracts for the benefit of the Trust and the Servicer shall
maintain custody of such Contract Files for the benefit of the Trust and shall
act as custodian therefor. The Trust appoints the Indenture Trustee to maintain
custody of the Contract Files for the Home Equity Contracts and Home Improvement
Contracts, as further specified in Section 6.01(k) of the Indenture.
b. The Servicer agrees to maintain the Contract Files related to the
Consumer Product Contracts 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 Trust by written notice. The Servicer may
temporarily move such 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 Contract Files related to the Consumer Product
Contracts:
(i) hold such Contract Files on behalf of the Trust, Indenture Trustee and
the Securityholders, maintain accurate records pertaining to each
Contract to enable it to comply with the terms and conditions of this
Agreement, maintain a current inventory thereof, conduct annual
physical inspections of Contract Files held by it under this Agreement
and certify to the Trust and the Indenture Trustee annually that it
continues to maintain possession of such Contract Files;
(ii) implement policies and procedures, in writing and signed by a Servicing
Officer, with respect to persons authorized to have access to the
Contract Files on the Servicer's premises and the receipting for
Contract Files taken from their storage area by an employee of the
Servicer for purposes of servicing or any other purposes; and
(iii) attend to all details in connection with maintaining custody of the
Contract Files on behalf of the Trust, the Indenture Trustee and the
Securityholders.
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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 Trust and the Indenture Trustee any failure by it to hold
the Contract Files as herein provided and shall promptly take appropriate action
to remedy any such failure. In acting as custodian of Contract Files the
Servicer agrees further not to assert any beneficial ownership interests in
Contract Files or the Contracts. The Servicer agrees to indemnify the Trust,
Owner Trustee, the Indenture Trustee and the Securityholders 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 them as
the result of any act or omission by the Servicer relating to the maintenance
and custody of the Contract Files; provided, however, that the Servicer will not
be liable for any portion of any such amount resulting from the negligence or
willful misconduct of any indemnified party.
SECTION 4.02. Filings; Maintenance of Liens.
On or prior to the Closing Date, the Company shall cause the UCC-1
financing statement referred to in Section 2.02(e) to be filed. The
Administrator on behalf of the Trust 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 Securityholders' interests
in the Contracts, including the Collateral Security, and their proceeds, 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 first priority
perfected security interest of the Trust 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 Owner Trustee, the Indenture 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 the security interest evidenced by any such financing or
continuation statement or notice of
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lien to become unperfected (whether immediately or with lapse of time), the
Company, no later than five days after the effective date of such change, shall
file, or cause to be filed, such amendments or financing statements as may be
required to preserve, perfect and protect the Securityholders' 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 Securityholders' right, title and interest in and to the
Contracts, including 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 real property liens
through subcontractors who are in the business of servicing consumer
receivables. The Servicer may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to each of the Trust,
the Indenture Trustee, 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 Owner Trustee, on behalf of the Trust and 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 the 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 Trust and the
Indenture 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
Trust and Indenture Trustee and their authorized agents reasonable access during
normal business hours to the Servicer's records relating to the Contracts and
will cause its personnel to
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assist in any examination of such records by the Trust and Indenture Trustee or
their authorized agents. The examination referred to in this Section will be
conducted in a manner which does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations. Without otherwise limiting
the scope of the examination the Trust and Indenture Trustee may make, the Trust
and Indenture 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 Section 5.14 and
compliance with the standards represented to exist as to each Contract in this
Agreement.
The Servicer shall provide to any Securityholder 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 Securityholder, to permit Securityholder 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 Securityholder,
by its acceptance of a Certificate or Note (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 the Trust and the Indenture Trustee.
c. On or before the ninth Business Day of each month, the Servicer will
provide to the Indenture 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. Collections.
The Servicer shall pay into the Collection Account: (i) as promptly as
practicable (no later than the next Business Day) following receipt thereof all
payments by or on behalf of the 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 Cut-off Date, which shall
be remitted to the Company), and all proceeds of all FHA Insurance claims,
received by the Servicer with respect to the Contracts; and (ii)
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on the Business Day immediately prior to each Distribution Date, all Servicer
Advances required to be made with respect to such Distribution Date pursuant to
Section 5.13.
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 Company 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 6.06.
The Servicer shall comply with FHA Regulations in servicing FHA-Insured
Contracts so that the related FHA Insurance remains in full force and effect,
except for good-faith disputes relating to FHA Regulations or such FHA
Insurance.
b. In accordance with the standard of care specified in Section 5.02, the
Servicer may, in its own name, if possible, or as agent for the Trust, commence
proceedings for the foreclosure of any real estate securing a Secured Home
Improvement Contract or Home Equity Contract, and may (with respect to an FHA-
Insured Contract) submit a claim to FHA in lieu of commencing foreclosure
proceedings, or may take such other steps that in the Servicer's reasonable
judgment will maximize Liquidation Proceeds with respect to the Contract,
including, for example, the sale of the Contract to a third party for
foreclosure or enforcement and, in the case of any default on a related prior
mortgage loan, the advancing of funds to correct such default and the advancing
of funds to pay off a related prior mortgage loan, which advances are
Liquidation Expenses that will be reimbursed to the Servicer out of related
Liquidation Proceeds before the related Net Liquidation Proceeds are deposited
in the Collection Account. The Servicer shall also deposit in the Collection
Account any Net Liquidation Proceeds received in connection with any Contract
which became a Liquidated Contract in a prior 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 Owner 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
Securityholders.
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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. Without limitation of the foregoing, in exercising
recourse rights, the Servicer is authorized on behalf of the Trust 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 the Collection
Account that the Servicer in good faith believes is required because of
prepayment in full of the Contract. The Servicer will not permit any rescission
or cancellation of any Contract.
f. 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 or Product the Servicer shall use
its best efforts to obtain an assumption agreement in connection therewith.
e. 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 Indenture Trustee, the Owner Trustee, the Noteholders or the
Certificateholders.
g. 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
February 2028.
h. 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, when aggregated with all previous
modifications or waivers of the provisions of Contracts, would cause any Notes
or Certificates to be treated as having been exchanged for other Notes or
Certificates in a taxable exchange under Section 1001 of the Code or any
proposed, temporary or final Treasury Regulations issued thereunder.
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SECTION 5.07. Satisfaction of Contracts.
Upon payment in full on any Contract, the Servicer will notify the Trust,
the Indenture Trustee, and the Company (if the Company is not the Servicer) on
the next succeeding Distribution Date by certification of a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Collection Account pursuant to Section 5.05 have been so deposited). The
Servicer is authorized to execute an instrument in satisfaction of such Contract
and to do such other acts and execute such other documents as the Servicer deems
necessary to discharge the Obligor thereunder and eliminate the lien on the
related Product or real property. 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 FHA Insurance premiums and 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 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 paragraph (b) below, the Servicer
shall cause to be maintained:
(i) with respect to each Contract financing the purchase of an
aircraft, one or more insurance policies providing complete coverage in
flight and on the ground;
(ii) with respect to each Contract financing the purchase of a truck,
one or more physical damage insurance policies;
(iii) with respect to each Contract financing the purchase of a Product
other than an aircraft, truck or keyboard instrument, with an original
principal balance of $7,501 or more, one or more insurance policies
providing
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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 on real property, hazard insurance (excluding flood
insurance coverage) if such Contract is secured by a mortgage, deed of
trust or security deed or 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 Collection Account from its own funds any deductible
amount with respect to claims under such blanket insurance policy relating to
the Contracts. The Servicer shall not, however, be required to deposit any
deductible amount with respect to claims under individual Insurance Policies
maintained pursuant to subsection (a)(i), (ii) and (iii) of this Section. If
the insurer under such blanket insurance policy shall cease to be acceptable to
the Servicer, the Servicer shall exercise its best reasonable efforts to obtain
from another insurer a replacement policy comparable to such policy.
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c. With respect to each Product that has been repossessed in connection
with a Defaulted Contract, the Servicer shall either (i) maintain one or more
Insurance Policies thereon or (ii) self-insure such Products and deposit into
the Collection Account from its own funds any losses caused by damage to such
Product that would have been covered by an 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 $100,000,000 or more and which are generally regarded as servicers
acceptable to institutional investors.
SECTION 5.10. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Product or take
such other steps that in the Servicer's reasonable judgment will maximize the
receipt of principal and interest or Net Liquidation Proceeds with respect to
the Contract secured by such Product (which may include retitling) subject to
the requirements of the applicable state and federal law, no later than five
Business Days after the time when such Contract becomes a Defaulted Contract.
In connection with such repossession or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be consistent with Section 5.02. In the event that title to any
Product is acquired in foreclosure or by deed in lieu of foreclosure, the deed
or certificate of sale shall be issued to the Indenture Trustee, as trustee, or,
at its election, to its nominee on behalf of the Indenture Trustee, as trustee.
SECTION 5.11. Commingling of Funds.
So long as the Company is the Servicer, any collections in respect of
Contracts collected by the Company shall, prior to the deposit thereof in the
Collection Account, be held in bank accounts entitled substantially as follows:
"[name of depository], as agent for First Trust National Association and other
trustees and Green Tree Financial Corporation, as their interests may appear."
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SECTION 5.12. Retitling; Security Interests.
a. If, at any time, a Service Transfer has occurred and the Company is no
longer the Servicer and the new Servicer is unable to foreclose upon a Product
because the title document for such Product does not show such Servicer or the
Indenture 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 Indenture Trustee as the secured party.
b. In order to facilitate the Servicer's actions, as described in
paragraph (a) above, 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 Trust or the
Indenture 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 Trust or the
Indenture Trustee otherwise becomes aware of the same, the Trust, the Indenture
Trustee and the Servicer, at the Company's expense, shall take such action as
may, in the opinion of counsel to the Indenture Trustee, be necessary to perfect
the security interests in the Products securing the Contracts in the name of the
Indenture Trustee by amending the title documents of such Products or by such
other reasonable means as may, in the opinion of counsel to the Indenture
Trustee, be necessary or prudent; provided, however, that such action shall not
be required if the Trust or Indenture Trustee receives written confirmation from
both Standard & Poor's and Fitch that the ratings of the Securities 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 Collection
Account, provided, however, that the Servicer shall be obligated to advance
Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such advances from subsequent
collections, including Net Liquidation Proceeds.
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SECTION 5.14. Monthly Reports; Certificate of Servicing Officer.
a. No later than 1:00 p.m. on each Determination Date, the Servicer shall
deliver to the Trust, the Indenture 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 C hereto.
b. Each Monthly Report pursuant to Section 5.14(a) shall be accompanied
by a certificate of a Servicing Officer substantially in the form of Exhibit D,
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.
c. The Company and (if different from the Company) the Servicer shall, on
request of the Trust, the Indenture Trustee, Standard & Poor's, Fitch or a
Securityholder, furnish the Trust, the Indenture Trustee and/or Standard &
Poor's, Fitch or a Securityholder such underlying data as may be reasonably
requested.
SECTION 5.15. Annual Report of Accountants.
On or before March 31 of each year, commencing March 31, 1998, 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 Trust, the Indenture 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 5.16. Certain Duties of the Servicer Under the Trust Agreement.
The Servicer shall, and hereby agrees that it will, monitor the Trust's
compliance with all applicable provisions of state and federal securities laws,
notify the Trust and the Administrator of any actions to be taken by the Trust
necessary for compliance with such laws and prepare on behalf of the Trust and
the Administrator all notices, filings or other documents or instruments
required to be filed under such laws.
SECTION 5.17. Intentionally Omitted.
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SECTION 5.18. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
a. The Servicer shall deliver to the Trust, the Indenture Trustee, and
each of Standard & Poor's and Fitch, on or before March 31 (or 90 days after the
end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 1998, an officer's certificate signed by any Responsible
Officer of the Servicer, dated as of December 31 (or other applicable date) of
the immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as shall
have elapsed from the Closing Date to the date of the first such certificate)
and of its performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
b. The Company or the Servicer shall deliver to the Servicer or the
Company (as applicable) and to the Trust, the Indenture Trustee, and each Rating
Agency, promptly after having obtained knowledge thereof, but in no event later
than two Business Days thereafter, written notice in an officer's certificate of
any event which with the giving of notice or lapse of time, or both, would
become an Event of Termination under Section 7.01.
SECTION 5.19. Intentionally Omitted.
SECTION 5.20. 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 Contract in the related
Product on behalf of the Trust, 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 Trust hereby
authorizes the Servicer, and the Servicer agrees, to take any and all steps
necessary to re-perfect such security interest on behalf of the Trust as
necessary because of the relocation of a Product or for any other reason. In
the event that the assignment of a Contract to the Trust 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 Trust, 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 Trust.
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b. Upon the occurrence of an Event of Termination, the Trust and the
Servicer shall take or cause to be taken such action as may, in the opinion of
counsel to the Trust, be necessary to perfect or re-perfect the security
interests in the Products securing the Contracts in the name of the Trust by
amending the title documents of such Products or by such other reasonable means
as may, in the opinion of counsel to the Trust, 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 5.21. Covenants, Representations, and Warranties of Servicer. By
its execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants on which the Trust relies in accepting
the Contracts and issuing the Notes and the Certificates and on which the
Indenture Trustee relies in authenticating the Notes.
a. Liens in Force. The Product or real estate 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 Trust, the Indenture Trustee or the Securityholders in the Contracts, the
Insurance Policies or the other Trust Property; and
c. No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Contract, except in accordance with Section 5.06.
SECTION 5.22. Purchase of Contracts Upon Breach of Covenant. Upon
discovery by any of the Servicer, the Trust or the Indenture Trustee of a breach
of any of the covenants set forth in Section 5.20(a) or 5.21, the party
discovering such breach shall give prompt written notice to the others;
provided, however, that the failure to give any such notice shall not affect any
obligation of the Servicer. Not later than the last day of the Monthly Period
that is 90 days after its discovery or receipt of notice of any breach of any
such covenant which materially and adversely affects the interests of the
Securityholders, the Indenture Trustee or the Trust in any Contract (including
any Liquidated Contract), the Servicer shall, unless it shall have cured such
breach in all material respects, purchase from the Trust the Contract affected
by such breach and pay the related Repurchase Price. It is understood and
agreed that the obligation of the Servicer to purchase any Contract (including
any Liquidated Contract) with respect to which such a breach has occurred and is
continuing shall, if such obligation is fulfilled, constitute the sole remedy
against the Servicer for such breach available to the Securityholders, the
Trust, or the Indenture Trustee on behalf of the Noteholders; provided, however,
that the Servicer shall indemnify the Owner Trustee, the Trust, the Indenture
Trustee, and the Securityholders against all costs, expenses, losses, damages,
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claims and liabilities, including reasonable fees and expenses of counsel, which
may be asserted against or incurred by any of them as a result of third party
claims arising out of the events or facts giving rise to such breach.
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ARTICLE VI
DISTRIBUTIONS; TRUST ACCOUNTS; INTEREST RATE CAP PAYMENTS;
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LIMITED GUARANTY PAYMENTS; STATEMENTS TO SECURITYHOLDERS
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SECTION 6.01. Trust Accounts.
a. The Servicer shall establish and maintain the following accounts in
the name of the Indenture Trustee, each of which shall be an Eligible Account
and initially shall be a segregated trust account established and maintained
with the Indenture Trustee:
(i) the Collection Account for the benefit of the Securityholders;
(ii) the Note Distribution Account for the benefit of the Noteholders;
(iii) the Spread Account, including the Class A-2, Class A-3, and
Class A-4 Subaccounts, for the benefit of the Class A-2, Class A-3 and
Class A-4 Noteholders, respectively;
(iv) the Capitalized Interest Account for the benefit of the
Noteholders; and
(v) the Pre-Funding Account for the benefit of the Noteholders other
than the Class A-1:HE/HI Noteholders.
b. The Servicer shall establish the Certificate Distribution Account in
the name of the Owner Trustee for the benefit of the Certificateholders. The
Certificate Distribution Account shall be an Eligible Account and initially
shall be a segregated trust account established and maintained with the Owner
Trustee.
c. All amounts held in the Trust Accounts (other than the Certificate
Distribution Account which is governed by the Trust Agreement) shall, to the
extent permitted by applicable laws, rules and regulations, be invested, as
directed by the Servicer, in Eligible Investments that mature not later than one
Business Day prior to the Distribution Date for the Monthly Period to which such
amounts relate. Any such written direction shall certify that any such
investment is authorized by this Section 6.01(c). Such investments in Eligible
Investments shall be made in the name of the Indenture Trustee on behalf of the
Trust, and such investments shall not be sold or disposed of prior to their
maturity. Any investment of funds in the Trust Accounts other than the
Certificate Distribution Account shall be made in Eligible Investments held by a
financial institution with respect to which (a) such institution has noted the
Indenture
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Trustee's interest therein by book entry or otherwise and (b) a confirmation of
the Indenture Trustee's interest has been sent to the Indenture Trustee by such
institution, provided that such Eligible Investments are (i) specific
certificated securities (as such term is used in N.Y.U.C.C., (S) 336.8-
313(1)(d)(i)), and (ii) either (A) in the possession of such institution or (B)
in the possession of a clearing corporation (as such term is used in N.Y.U.C.C.,
(S) 336.8-313(1)(g)) in New York or Minnesota, registered in the name of such
clearing corporation, not endorsed for collection or surrender or any other
purpose not involving transfer, not containing any evidence of a right or
interest inconsistent with the Indenture Trustee's security interest therein,
and held by such clearing corporation in an account of such institution.
Subject to the other provisions hereof, the Indenture Trustee shall have sole
control over each such investment and the income thereon, and any certificate or
other instrument evidencing any such investment, if any, shall be delivered
directly to the Indenture Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the
Indenture Trustee in a manner which complies with this Section. All interest,
dividends, gains upon sale and other income from, or earnings on, investments of
funds in the Trust Accounts (other than the Certificate Distribution Account and
Pre-Funding Account) shall be deposited in the Collection Account and
distributed on the next Distribution Date pursuant to Section 6.06. The
Servicer shall deposit in the applicable Trust Account (other than the
Certificate Distribution Account) an amount equal to any net loss on such
investments immediately as realized.
SECTION 6.02. Certain Collection Account Deposits.
a. Collections. The Servicer shall deposit in the Collection Account (no
later than the next Business Day as specified in Section 5.05) all payments by
or on behalf of the Obligors, all Liquidation Proceeds, and all proceeds of FHA
Insurance claims received by the Servicer with respect to the Contracts.
b. Servicer Advances. The Servicer shall deposit in the Collection
Account no later than the Business Day immediately prior to each Distribution
Date all Servicer Advances required to be made pursuant to Section 5.13.
c. Repurchased Contracts. The Company shall deposit in the Collection
Account the Repurchase Price for each Contract repurchased by it under Section
3.05. The Servicer shall deposit in the Collection Account the Repurchase Price
for each Contract repurchased by it under Section 5.22.
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SECTION 6.03. Permitted Withdrawals from Collection Account.
The Indenture Trustee may, from time to time as provided herein, make
withdrawals from the Collection Account of amounts deposited in said account
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 6.06;
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 Noteholders
or Certificateholders as of the date on which the related Scheduled Principal
Balance or Repurchase Price is determined;
c. to reimburse the Servicer out of Liquidation Proceeds for Liquidation
Expenses incurred by it, to the extent such reimbursement is permitted pursuant
to Section 5.08;
d. to withdraw any amount deposited in the Collection Account that was
not, or was in excess of the amount, required to be deposited therein; or
e. to make any rebates or adjustments deemed necessary by the Servicer
pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to paragraphs (a) and (b)
above, the Company's or the Servicer's entitlement thereto is limited to
collections or other recoveries on the related Contract, the Servicer shall keep
and maintain a separate accounting, on a Contract by Contract basis, for the
purpose of justifying any withdrawal from the Collection Account pursuant to
such paragraphs.
SECTION 6.04. Permitted Withdrawals from Other Trust Accounts.
a. Capitalized Interest Account Withdrawals. Not later than the Business
Day preceding the Post-Funding Distribution Date and each prior Distribution
Date, based on the information set forth in the related Monthly Statement, and
to the extent there are insufficient funds (including for purposes of such
calculation only Collected Funds in respect of interest on the Contracts and any
Interest Rate Cap Payment), to make the distributions in respect of interest on
the Notes in the amounts described in Section 8.02(c)(1)(i) and (ii),
8.02(c)(2)(i) and (ii), 8.02(c)(4)(i) and (ii) and 8.02(c)(6)(i) and (ii) of the
Indenture the Servicer shall deliver to the Indenture Trustee, with a copy to
the Trust and the Paying Agent, if any, by hand delivery, telex or facsimile
transmission, a written notice (a "Capitalized Interest Account Deficiency
Notice") specifying the amount
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of the insufficiency, if any, for each such Class, for such Distribution Date.
Such Capitalized Interest Account Deficiency Notice shall direct the Indenture
Trustee to remit such amount (to the extent of funds then on deposit) from the
Capitalized Interest Account for deposit in the Note Distribution Account on the
Distribution Date.
b. Spread Account Withdrawals. Not later than the Business Day prior to
each Distribution Date, based on the information set forth in the related
Monthly Statement, and to the extent there are insufficient funds (including for
purposes of such calculation only Collected Funds in respect of interest on the
Contracts, plus any deposit made pursuant to Section 6.04(a)) to make the
distributions in respect of interest on the Class A-2, A-3, and A-4 Notes in the
amounts described in Sections 8.02(c)(2)(i), (ii), (v) and (vi), 8.02(c)(4)(i),
(ii), (v) and (vi) and 8.02(c)(6)(i), (ii), (v) and (vi) of the Indenture,
respectively, the Servicer shall deliver to the Indenture Trustee, with a copy
to the Trust and the Paying Agent, if any, by hand delivery, telex or facsimile
transmission, a written notice (a "Spread Account Deficiency Notice") specifying
the amount of the insufficiency, if any, for each such Class, for such
Distribution Date. Such Spread Account Deficiency Notice shall direct the
Indenture Trustee to remit such amount (to the extent of funds then on deposit)
from the related Spread Account Subaccount for deposit in the Note Distribution
Account on the Distribution Date.
c. Reserve Account Withdrawals. Not later than the Business Day prior to
each Distribution Date, based on the information set forth in the related
Monthly Statement, and to the extent, after giving effect to any deposit made
pursuant to Sections 6.04(a) and 6.04(b), there are insufficient funds to make
the distributions in the amounts described in Section 8.02(c) of the Indenture,
(other than clauses (3), (5), (7) and (8) thereof), the Servicer shall deliver
to the Collateral Agent (as defined in the Pledge Agreement), with a copy to the
Indenture Trustee, the Trust and the Paying Agent, if any, by hand delivery,
telex or facsimile transmission, a written notice (a "Reserve Account Deficiency
Notice") specifying the amount of the insufficiency for such Distribution Date.
Such Reserve Account Deficiency Notice shall direct the Collateral Agent to
remit such amount (to the extent of funds then on deposit) from the Reserve
Account for deposit in the Note Distribution Account on the Distribution Date.
d. Pre-Funding Account Withdrawals. As described in Section 8.03(b) of
the Indenture, on the Post-Funding Distribution Date, the Indenture Trustee
shall withdraw the Pre-Funded Amount if any, from the Pre-Funding Account and
deposit such amount in the Note Distribution Account.
SECTION 6.05. Limited Guaranty.
a. No later than the Determination Date prior to each Distribution Date,
the Servicer (if other than the Company) shall notify the Company of the amount
of the Guaranty Payment (if any) for such Distribution Date. Not later than the
Business Day
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preceding each Distribution Date, the Company shall deposit the Guaranty
Payment, if any, for such Distribution Date into the Collection Account.
b. The obligations of the Company under this Section shall not terminate
upon or otherwise be affected by a Service Transfer pursuant to Article VII of
this Agreement.
c. The obligation of the Company to provide the Limited Guaranty under
this Agreement shall terminate on the Final Scheduled Distribution Date.
d. The obligation of the Company to make the Guaranty Payments described
in paragraph (a) above shall be unconditional and irrevocable. The Company
acknowledges that its obligation to make the Guaranty Payments described in
paragraph (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
Certificateholders.
e. If the Company fails to make a Guaranty Payment in whole or in part,
the Company or the Indenture Trustee shall promptly notify the Owner Trustee,
and the Owner Trustee shall promptly notify Standard & Poor's and Fitch.
SECTION 6.06. Distributions.
a. On each Distribution Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Monthly Certificate delivered
pursuant to Section 5.14) to make the following deposits and distributions by
11:00 a.m. (Minnesota time), to the extent of the Amount Available for such
Distribution Date and in the following order of priority; provided that any
Guaranty Payment shall be distributed solely to the Certificate Distribution
Account pursuant to Section 6.06(b) and any Interest Rate Cap Payment shall be
distributed solely to the Note Distribution Account pursuant to clause (iii),
below, as part of the Noteholders' Distributable Amount:
(i) Servicing Fee. If the Company or an Affiliate is not the Servicer,
then to the Servicer, the Servicing Fee for the related Monthly Period.
(ii) Servicer Advances. After payment of the amount specified in
clause (i) above, to reimburse the Servicer for Uncollectible Advances and
for Servicer Advances made with respect to Delinquent Payments that were
recovered during the prior Monthly Period.
(iii) Notes. After payment of the amounts specified in clauses (i) and
(ii) above, to the Note Distribution Account the sum of (1) the
Noteholders' Distributable Amount, less amounts deposited in the Note
Distribution Account pursuant to Section 6.04, plus (2) the amounts, if
any, required to be deposited in
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the Class A-2 Subaccount, Class A-3 Subaccount, Class A-4 Subaccount, and
Reserve Account pursuant to Sections 8.02(c)(3), (5), (7), and (8) of the
Indenture, respectively.
(iv) Certificates. After payment of the amounts specified in clauses
(i) through (iii) above, to the Certificate Distribution Account, the
Certificateholders' Distributable Amount.
(v) Spread Account. After payment of the amounts specified in clauses
(i) through (iv) above, to the Class A-2 Subaccount, the Class A-3
Subaccount and Class A-4 Subaccount, respectively, in the following order
of priority:
(1) to the Class A-2 Subaccount, the amount, if any, by which
the balance in the Class A-2 Subaccount is less than the Class A-2
Subaccount Required Amount; and
(2) to the Class A-3 Subaccount, the amount, if any, by which
the balance in the Class A-3 Subaccount is less than the Class A-3
Subaccount Required Amount; and
(3) to the Class A-4 Subaccount, the amount, if any, by which
the balance in the Class A-4 Subaccount is less than the Class A-4
Subaccount Required Amount.
(vi) Reserve Account. After payment of the amounts specified in
clauses (i) through (v) above, to the Reserve Account the amount, if any,
by which the balance in the Reserve Account is less than the Reserve
Required Amount.
(vii) FHA Insurance Premiums. After payment of the amounts specified
in clauses (i) through (vi) above to the Indenture 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 Indenture Trustee
or such Servicer.
(viii) Monthly Servicing and Guaranty Fee. After payment of the
amounts specified in clauses (i) through (vii) above, to the Company, the
Monthly Servicing and Guaranty Fee (which shall be due and payable even if
the Company is no longer acting as Servicer) equal to the remaining Amount
Available as compensation for its providing the Limited Guaranty and acting
as initial Servicer and (if the Company is acting as Servicer) any other
compensation owed to the Servicer pursuant to Section 7.02.
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b. Guaranty Payments. On each Distribution Date, the Servicer shall
instruct the Indenture Trustee to distribute to the Certificate Distribution
Account any Guaranty Payment deposited in the Collection Account pursuant to
Section 6.05.
c. Spread Account. On each Distribution Date on which the amount on
deposit in any Spread Account Subaccount after all distributions made in
accordance with this Section 6.06 exceeds the applicable Class A-2, A-3 or A-4
Subaccount Required Amount, the Servicer shall instruct the Indenture Trustee to
pay such excess to the Company.
d. Reserve Account. On each Distribution Date on which the amount on
deposit in the Reserve Account after all distributions made in accordance with
this Section 6.06 exceeds the Reserve Required Amount, the Servicer shall
instruct the Collateral Agent, with a copy to the Indenture Trustee, to pay such
excess to GTGP.
e. Capitalized Interest Account. If on the Post-Funding Distribution
Date there is any amount remaining on deposit in the Capitalized Interest
Account, the Servicer shall instruct the Indenture Trustee to pay the entire
amount to the Company.
SECTION 6.07. Interest Rate Cap Payment.
a. No later than the Determination Date prior to each Distribution Date,
the Servicer shall notify the Indenture Trustee and Merrill Lynch Capital
Services Inc., as calculation agent under the Interest Rate Cap Agreement, of
the Interest Rate Cap Payment (if any) to be made by MLDP for such Distribution
Date.
b. Any Interest Rate Cap Payment made by MLDP shall be deposited in the
Collection Account.
c. If MLDP fails to make an Interest Rate Cap Payment in whole or in
part, the Indenture Trustee shall promptly notify the Company, the Servicer (if
not the Company), the Owner Trustee, Standard & Poor's and Fitch.
SECTION 6.08. Statements to Securityholders.
a. On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder, and the Owner Trustee shall include with
each distribution to each Certificateholder, a statement (which statement shall
also be provided to each Rating Agency) based on information in the Monthly
Report delivered on the related Determination Date pursuant to Section 5.14,
setting forth the following information:
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(i) the amount of such distribution to Holders of each Class of Notes
and the Certificates allocable to interest, separately
identifying any Unpaid Class A-1:HE/HI Interest Shortfall, Unpaid
Class A-1 Interest Shortfall, Unpaid Class A-2 Interest
Shortfall, Unpaid Class A-3 Interest Shortfall, Unpaid Class A-4
Interest Shortfall and any Unpaid Certificate Interest Shortfall
included in such distribution and any remaining Unpaid Class A-
1:HE/HI Interest Shortfall, Unpaid Class A-1 Interest Shortfall,
Unpaid Class A-2 Interest Shortfall, Unpaid Class A-3 Interest
Shortfall, Unpaid Class A-4 Interest Shortfall and any Unpaid
Certificate Interest Shortfall after giving effect to such
distribution;
(ii) the Class A-1:HE/HI Interest Carryover Shortfall, Class A-1
Interest Carryover Shortfall, the Class A-2 Interest Carryover
Shortfall, the Class A-3 Interest Carryover Shortfall, the Class
A-4 Interest Carryover Shortfall and the Certificate Interest
Carryover Shortfall, if any, for such Distribution Date;
(iii) the amount of such distribution to Holders of each Class of
Notes and the Certificates allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments and
Unpaid Class A-1:HE/HI Principal Shortfall, Unpaid Class A-1
Principal Shortfall, Unpaid Class A-2 Principal Shortfall, Unpaid
Class A-3 Principal Shortfall, Unpaid Class A-4 Principal
Shortfall and any Unpaid Certificate Principal Shortfall included
therein, and any remaining Unpaid Class A-1:HE/HI Principal
Shortfall, Unpaid Class A-1 Principal Shortfall, Unpaid Class A-2
Principal Shortfall, Unpaid Class A-3 Principal Shortfall, Unpaid
Class A-4 Principal Shortfall and any Unpaid Certificate
Principal Shortfall after giving effect to such distribution;
(iv) the Class A-1:HE/HI Principal Shortfall, Class A-1 Principal
Shortfall, the Class A-2 Principal Shortfall, the Class A-3
Principal Shortfall, the Class A-4 Principal Shortfall and the
Certificate Principal Shortfall, if any, for such Distribution
Date;
(v) the Class A-1:HE/HI Principal Balance, Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance and the Certificate
Principal Balance after giving effect to the distribution of
principal on such Distribution Date;
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(vi) the amount, if any, of any Class A-2 Principal Liquidation Loss,
Class A-3 Principal Liquidation Loss, Class A-4 Principal
Liquidation Loss, and Certificate Principal Liquidation Loss
determined as of that Distribution Date;
(vii) the amount of such distribution to Holders of each Class of
Notes and the Certificates allocable to liquidation losses,
separately identifying the Class A-2 Liquidation Loss Interest
Amount, the Class A-3 Liquidation Loss Interest Amount, the Class
A-4 Liquidation Loss Interest Amount, the Certificate Liquidation
Loss Interest Amount and any Unpaid Class A-2 Liquidation Loss
Interest Shortfall, Unpaid Class A-2 Principal Liquidation Loss,
Unpaid Class A-3 Liquidation Loss Interest Shortfall, Unpaid
Class A-3 Principal Liquidation Loss, Unpaid Class A-4
Liquidation Loss Interest Shortfall, Unpaid Class A-4 Principal
Liquidation Loss, Unpaid Certificate Liquidation Loss Interest
Shortfall and Unpaid Certificate Principal Liquidation Loss
included therein, and any remaining Unpaid Class A-2 Liquidation
Loss Interest Shortfall, Unpaid Class A-2 Principal Liquidation
Loss, Unpaid Class A-3 Liquidation Loss Interest Shortfall,
Unpaid Class A-3 Principal Liquidation Loss, Unpaid Class A-4
Liquidation Loss Interest Shortfall, Unpaid Class A-4 Principal
Liquidation Loss, Unpaid Certificate Liquidation Loss Interest
Shortfall and Unpaid Certificate Principal Liquidation Loss after
giving effect to such distribution;
(viii) the Class A-2 Liquidation Loss Interest Shortfall, the Class
A-3 Liquidation Loss Interest Shortfall, the Class A-4
Liquidation Loss Interest Shortfall and the Certificate
Liquidation Loss Interest Shortfall, if any, for such
Distribution Date;
(ix) the amount, if any, deposited in or withdrawn from the
Capitalized Interest Account, any Spread Account Subaccount, or
the Reserve Account on such Distribution Date;
(x) the amount, if any, on deposit in the Capitalized Interest
Account, each Spread Account Subaccount, and the Reserve Account
after giving effect to all withdrawals and deposits on such
Distribution Date;
(xi) the amount, if any, of the Interest Rate Cap Payment and the
Guaranty Payment on such Distribution Date;
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(xii) on any Distribution Date prior to the Post-Funding Termination
Date, the Pre-Funded Amount on deposit in the Pre-Funding Account
on such Distribution Date; and on the Post-Funding Termination
Date, the Pre-Funded Amount, if any, deposited in the Note
Distribution Account.
(xiii) the amount of the Monthly Servicing and Guaranty Fee, if any,
paid to the Company with respect to the related Monthly Period
and (if the Company is not acting as Servicer) the amount of the
Monthly Servicing Fee paid to the Servicer with respect to such
Monthly Period;
(xiv) the Pool Scheduled Principal Balance for such Distribution
Date;
(xv) the Note Pool Factor for each Class and the Certificate Pool
Factor after giving effect to the distribution of principal on
such Distribution Date;
(xvi) the number and aggregate principal balances of all Contracts
delinquent (a) 30-59 days and (b) 60 or more days;
(xvii) the number of Products that were repossessed during the related
Monthly Period;
(xviii) the number of Products that were repossessed but remain in
inventory as of the last day of the related Monthly Period;
(xix) the number of Contracts that became Liquidated Contracts during
the related Monthly Period and the Net Liquidation Losses;
(xx) the number of Home Equity Contracts and Home Improvement
Contracts that became Liquidated Contracts during the related
Monthly Period, identifying such Contracts and the Net
Liquidation Losses on such Contracts;
(xxi) the number and aggregate principal balance of Home Equity
Contracts and Secured Home Improvement Contracts as to which
foreclosure of the related real property lien was commenced
during the related Monthly Period;
(xxii) the number and aggregate principal balance of Home Equity
Contracts and Secured Home Improvement Contracts as to which
foreclosure of the related real property lien was completed
during
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the related Monthly Period, exclusive of any such Contracts that
are Liquidated Contracts;
(xxiii) 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; and
(xxiv) the aggregate number and principal amount of FHA-Insured
Contracts on which either (i) the Servicer has submitted a claim
for FHA Insurance, HUD rejected such claim and the Servicer has
determined not to resubmit such claim, or (ii) the Servicer has
determined not to submit a claim for FHA Insurance because such
claim would not be paid by HUD.
In the case of information furnished pursuant to clauses (i) through (vi)
above, the amounts shall be expressed as a dollar amount per $1,000 denomination
of Note or Certificate, as applicable.
b. The Owner Trustee and the Indenture Trustee shall inform any of the
Noteholders or Certificateholders or Merrill Lynch Pierce, Fenner & Smith
Incorporated that inquires by telephone of the information contained in the most
recent Monthly Report.
c. Certificateholders may obtain copies of the statements delivered by
the Owner Trustee pursuant to paragraph (a) above upon written request to the
Owner Trustee at the Corporate Trust Office (together with a certification that
such Person is a Certificateholder and payment of any expenses associated with
the distribution thereof). Noteholders may obtain copies of the statements
delivered by the Indenture Trustee pursuant to paragraph (a) above upon written
request to the Indenture Trustee at its Corporate Trust Office (together with a
certification that such Person is a Noteholder and payment of any expenses
associated with the distribution thereof).
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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
Indenture Trustee, or the Securityholders 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 Indenture Trustee
or to the Servicer and the Indenture Trustee by Holders of Notes evidencing not
less than 25% of the Note Principal Balance or, if the Notes have been paid in
full, by Certificateholders evidencing not less than 25% of the Certificate
Principal Balance.
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
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<PAGE>
f. The failure of the Servicer to be an Eligible Servicer.
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, either the
Trust, the Indenture Trustee, a Note Majority, or a Certificate Majority, by
notice in writing to the Servicer (and to the Indenture Trustee and Trust if
given by the Certificateholders or Noteholders) 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 10.01, all authority and
power of the Servicer under this Agreement, whether with respect to the
Contracts, the Contract Files or otherwise (except with respect to the
Collection Account, the transfer of which shall be governed by Section 7.06),
shall pass to and be vested in the Indenture Trustee pursuant to and under this
Section 7.02; and, without limitation, the Indenture 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 Indenture 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 Indenture Trustee in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for administration by it of
all cash amounts which shall at the time be held by the Servicer for deposit, or
have been deposited by the Servicer, in the Collection Account, or for its own
account in connection with its services hereafter or thereafter received with
respect to the Contracts and the execution of any documents required to make the
Indenture 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. Indenture 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 10.01, the Indenture 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
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<PAGE>
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Indenture Trustee will not assume any
obligations of the Company pursuant to Section 3.05 and (ii) the Indenture
Trustee shall not be liable for any acts or omissions of the Servicer occurring
prior to such Service Transfer or for any breach by the Servicer of any of its
obligations contained herein or in any related document or agreement. As
compensation therefor, the Indenture Trustee shall be entitled to receive
reasonable compensation not in excess of the Monthly Servicing Fee.
Notwithstanding the above, the Indenture 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 Indenture
Trustee is prohibited by law from so acting, the Indenture Trustee shall act in
such capacity as hereinabove provided. In connection with such appointment and
assumption, the Indenture 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 Noteholders, exceed the
Monthly Servicing Fee. The Indenture 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 Securityholders.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Indenture Trustee, the Trust,
Standard & Poor's, and Fitch.
b. Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Owner Trustee on
behalf of the Trust shall give written notice thereof to Standard & Poor's,
Fitch and the Certificateholders at their respective addresses appearing on the
Certificate Register and the Indenture Trustee shall give written notice thereof
to Noteholders at their respective addresses appearing in the Note Register.
c. The Owner Trustee on behalf of the Trust 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.
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SECTION 7.05. Effect of Transfer.
a. After the Service Transfer, the Indenture Trustee or new Servicer may
notify Obligors to make payments directly to the new Servicer that are due under
the Contracts after the effective date of the Service Transfer.
b. After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article IX and Sections 3.05 and 5.19) other than
those relating to the management, administration, servicing or collection of the
Contracts.
SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.02, if the Collection Account
shall be maintained with the Servicer and an Event of Termination shall occur
and be continuing, the Servicer shall, after five days' written notice from the
Indenture 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, the Owner Trustee, the Indenture
Trustee and the Securityholders 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,
the Owner Trustee, the Indenture Trustee or the Securityholders (except as
explicitly provided in this Agreement) for any action taken, or for refraining
from taking any action, pursuant to this Agreement, other than any liability
that would otherwise be imposed by reason of the Servicer's breach of this
Agreement or willful misfeasance, bad faith or negligence (including errors in
judgment) in the performance of its duties, or by reason of reckless disregard
of obligations and duties under this Agreement or any violation of law.
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<PAGE>
SECTION 7.08. Waiver of Past Defaults.
A Note Majority or Certificate Majority may, on behalf of all Holders of
Notes and 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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<PAGE>
ARTICLE VIII
TERMINATION
-----------
SECTION 8.01. Company's or Servicer's Repurchase Option.
a. Subject to the conditions in subsection (b) below, the Company or the
Servicer may repurchase all of the Contracts and all Products and real property
acquired in respect of any Contract remaining in the Trust at a price equal to
the greatest of:
(i) the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which title to the underlying Product or
real property 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 or real property (as determined by the Company),
(ii) the aggregate fair market value (as determined by the Company)
of all of the assets of the Trust (but in no event more than the amount
sufficient to pay all principal and interest outstanding on the Securities,
plus any unpaid fees and expenses of the Indenture Trustee and the Owner
Trustee), or
(iii) the sum of the aggregate Note Principal Balance, Certificate
Principal Balance, Unpaid Class A Principal Liquidation Loss and Unpaid
Certificate Principal Liquidation Loss.
plus, one month's interest at the applicable Contract Rate on the Scheduled
Principal Balance of each Contract (including any Contract as to which the
related Product has been repossessed).
b. The purchase by the Company or the Servicer of all of the Contracts
pursuant to Section 8.01(a) shall be at the option of the Company or the
Servicer on any Distribution Date, but shall be conditioned upon (1) the Pool
Scheduled Principal Balance, as of the end of the Monthly Period immediately
preceding such Distribution Date, aggregating an amount equal to or less than
10% of the Cut-off Date Pool Principal Balance, (2) the Company or the Servicer
having provided the Indenture Trustee and the Owner 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 Indenture Trustee
and the Owner Trustee an unqualified Opinion of Counsel stating that payment of
the purchase price to the Securityholders will not constitute a voidable
preference or fraudulent transfer under the United States Bankruptcy Code. In
the event the notice described in the preceding sentence is given in connection
with the Company's election to purchase the Contracts, the Company shall deposit
in the
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Collection Account on the relevant Distribution Date in immediately available
funds an amount equal to the above-described purchase price and the Indenture
Trustee shall distribute the amounts so deposited in accordance with Section
6.06. Upon certification to the Indenture Trustee by a Servicing Officer,
following such final deposit, the Indenture Trustee shall promptly release to
the Company the Contract Files for the remaining Contracts, and the Indenture
Trustee and Owner Trustee on behalf of the Trust shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
SECTION 8.02. Liquidation of Trust Estate.
Upon any sale of the assets of the Trust pursuant to Section 9.2 of the
Trust Agreement, the Trust shall instruct the Indenture Trustee to deposit the
proceeds from such sale after all payments and reserves therefrom have been made
(the "Insolvency Proceeds") in the Collection Account. On the Distribution Date
on which the Insolvency Proceeds are deposited in the Collection Account (or, if
such proceeds are not so deposited on a Distribution Date, on the Distribution
Date immediately following such deposit), the Trust shall instruct the Indenture
Trustee to distribute such funds, together with all other Available Funds, in
accordance with the terms of Section 6.06(a).
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<PAGE>
ARTICLE IX
INDEMNITIES
-----------
SECTION 9.01. Company's Indemnities.
The Company will defend and indemnify the Trust, the Owner Trustee, the
Indenture Trustee (including the paying agent and any other agents of the Owner
Trustee and the Indenture Trustee), and the Securityholders against any and all
costs, expenses, losses, damages, taxes, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation of any third-
party claims arising out of or resulting from (i) 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, tax, claim or liability is not provided
for by the Company's repurchase of such Contract pursuant to Section 3.05), (ii)
the use or ownership of any Products or real estate related to a Contract by the
Company or the Servicer or any Affiliate of either, or (iii) the Company's or
the Trust's violation of federal or state securities laws in connection with the
offering and sale of the Securities. 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 9.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Owner Trustee, Indenture Trustee, or
the Securityholders under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Trust, the Owner Trustee, Indenture Trustee,
and the Securityholders expressly disclaim such assumption.
SECTION 9.03. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Owner Trustee, the
Indenture Trustee (including the Paying Agent and any other agents of the Owner
Trustee and the Indenture Trustee) and the Securityholders against any and all
costs, expenses, losses, damages, taxes, claims and liabilities, including any
failure to comply with FHA Regulations in enforcing an FHA-Insured Contract,
including reasonable fees and expenses of counsel and expenses of litigation, in
respect of any action taken or omitted to be taken by the Servicer with respect
to any Contract, 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
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<PAGE>
Service Transfer (but the original Servicer's obligations under this Section
9.03 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 9.04. 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 pursuant to this Article
and the recipient thereafter collects any of such amounts from others, the
recipient will repay such amounts collected to the Company or the Servicer, as
the case may be, without interest.
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<PAGE>
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.01. 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 Trust and the Indenture Trustee. No such resignation shall become effective
until the Indenture 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 and foreclosing real property liens
through subcontractors who are in the business of servicing consumer receivables
or home equity loans, and may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to the Trust and the
Indenture 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.
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<PAGE>
SECTION 10.02. 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 a Note Majority and a Certificate Majority,
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 VI.
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 10.03. Amendment.
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trust, with the prior written consent of the Indenture Trustee
but without the consent of any of the Securityholders, 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,
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 Notes or
the Certificates, 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 Securityholder.
b. This Agreement may also be amended from time to time by the Company,
the Servicer and the Trust with the prior written consent of the Indenture
Trustee and with the consent of a Certificate Majority and a Note Majority with
respect to each Class (which consent of any Holder of a Certificate or Note
given pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate or Note and of any Certificate or Note issued upon
the transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Certificate or Note) for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Holders of Certificates or Notes; provided, however, no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of
10-2
<PAGE>
payments on Contracts or distributions required to be made on any Certificate or
Note or the Certificate Pass-Through Rate, Class A-1:HE/HI Interest Rate, Class
A-1 Interest Rate, Class A-2 Interest Rate, Class A-3 Interest Rate, or Class A-
4 Interest Rate, (b) amend any provisions of Section 6.06 in such a manner as to
affect the priority of payment of interest, principal or premium to Noteholders
or Certificateholders, or (c) reduce the aforesaid percentage required to
consent to any such amendment or any waiver hereunder, without the consent of
the Holders of all Securities then outstanding, and provided further, that the
Rating Agency Condition has been satisfied.
c. Concurrently with the solicitation of any consent pursuant to this
Section 10.03, the Indenture 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 10.03, the Indenture Trustee shall
furnish written notification of the substance of such amendment to Standard &
Poor's, Fitch and each Securityholder.
d. It shall not be necessary for the consent of Securityholders under
this Section 10.03 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 Securityholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
e. Each of the Owner Trustee and Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects its own rights, duties
or immunities under this Agreement or otherwise.
f. In connection with any amendment pursuant to this Section, the Owner
Trustee and Indenture 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.
g. Upon the execution of any amendment or consent pursuant to this
Section 10.03, 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 Securityholder hereunder shall be bound thereby.
SECTION 10.04. Notices.
All communications and notices pursuant hereto to the Servicer, the
Company, the Trust, the Owner Trustee, the Indenture Trustee, Standard & Poor's
and Fitch shall be in writing and delivered (by facsimile or other means) or
mailed to it at the appropriate following address:
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<PAGE>
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 Trust or Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopier Number: 302-651-8882
If to the Indenture Trustee:
First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
Telecopier Number: (612) 244-0089
If to 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 I.B.C.A. 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.
10-4
<PAGE>
All communications and notices pursuant hereto to a Securityholder shall be
in writing and delivered or mailed at the address shown in the Certificate
Register or Note Register, as applicable.
SECTION 10.05. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 10.06. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 10.07. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
SECTION 10.08. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of Green Tree Recreational,
Equipment & Consumer Trust 1997-D under the Trust Agreement, in the exercise of
the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or the other Related Documents.
10-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this ____
day of December, 1997.
ISSUER:
GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST
1997-D
By Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee for the Trust
By__________________________________
Its_______________________________
SELLER AND SERVICER:
GREEN TREE FINANCIAL CORPORATION
By
------------------------------------
Phyllis A. Knight, Senior Vice President
and Treasurer
Acknowledged and Accepted:
FIRST TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By
---------------------------------
Name:
Title:
By
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT
------------------
In accordance with the Sale and Servicing Agreement (the "Agreement") dated
as of December 1, 1997 between Green Tree Financial Corporation (the "Company")
and Green Tree Recreational, Equipment & Consumer Trust 1997-D, the Company does
hereby transfer, assign, set over and otherwise convey to the Trust all right,
title and interest of the Company in (i) the Contracts identified in the List of
Contracts including, without limitation, all Collateral Security 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, or Subsequent Cut-off Date with respect to a Subsequent Contract, or (ii)
the Insurance Policies on any Products 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 relate to the Contracts, (iii) all rights
the Company may have against the originating dealer, contractor or lender with
respect to Contracts not originated by the Company, (iv) the Errors and
Omissions Protection Policy as such policy relates to the Contracts, (v) all
items contained in the Contract Files, (vi) the Trust Accounts and all funds on
deposit therein from time to time and all investments and proceeds thereof
(including all income thereon), and (vii) all proceeds and products in any way
derived from any of the foregoing. Capitalized terms used herein but not
defined herein have the meanings assigned to them in the Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ______ day of December, 1997.
GREEN TREE FINANCIAL CORPORATION
By
--------------------------------------
[Name]
[Title]
<PAGE>
EXHIBIT B
---------
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"); he is duly authorized to
execute and deliver this certificate on behalf of the Servicer pursuant to
Section 3.05 of the Sale and Servicing Agreement (the "Agreement"), dated as of
December 1, 1997 between the Company and Green Tree Recreational, Equipment &
Consumer Trust 1997-D (the "Trust") (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement):
1. The Contracts on the attached schedule are to be repurchased by the
[Company] [Servicer] on the date hereof pursuant to Section [3.05] [5.22] of the
Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to Section [3.05] [5.22] of the Agreement, be assigned
by the Trust to the [Company] [Servicer].
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
________, 19__.
GREEN TREE FINANCIAL CORPORATION
By
--------------------------------
[Name]
[Title]
<PAGE>
EXHIBIT C
---------
FORM OF MONTHLY REPORT
----------------------
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D
Distribution Date:
-----------------
1. Amount Available
-----------------
(a) Collected Funds
-----------------
- Amount on deposit in Collection Account on last
day of related Monthly Period
-----------------
- Principal Payments on Consumer Product Contracts
deposited during first ten days of current month
-----------------
- Servicer Advances
-----------------
- LESS excluded amounts
-----------------
(b) Guaranty Payment
-----------------
(c) Repurchase of Pool/Payments on Liquidation
of Trust Estate
-----------------
(d) Interest Rate Cap Payment
-----------------
2. Other deposits in Note Distribution Account
(a) Capitalized Interest Account Withdrawals
-----------------
(b) Spread Account Withdrawals
-----------------
- A-2 Subaccount
-----------------
- A-3 Subaccount
-----------------
- A-4 Subaccount
-----------------
(c) Reserve Account Withdrawals
-----------------
(d) Pre-Funded Amount Withdrawals
-----------------
3. Total deposited in Note Distribution Account
-----------------
4. Total deposited in Certificate
Distribution Account
-----------------
5. Monthly Servicing Fee (if Company not Servicer)
-----------------
C-1
<PAGE>
Class A-1:HE/HI Notes
- ---------------------
Class A-1:HE/HI Interest
6. Class A-1:HE/HI Interest Rate
-----------------
7. Class A-1:HE/HI Interest Amount
-----------------
8. Amount paid on account of Class A-1:HE/HI Interest Amount
-----------------
9. Class A-1:HE/HI Interest Carryover Shortfall
-----------------
10. Amount paid on account of Unpaid Class A-1:HE/HI
Interest Shortfall
-----------------
11. Remaining Unpaid Class A-1:HE/HI Interest Shortfall
-----------------
Class A-1:HE/HI Principal
12. Class A-1:HE/HI Formula Principal Distribution Amount:
(a) Scheduled principal
-----------------
(b) Principal Prepayments
-----------------
(c) Liquidated Contracts
-----------------
(d) Repurchases
-----------------
(e) Formula Principal Distribution Amount,
if applicable
-----------------
13. Amount paid on account of Class A-1:HE/HI
Principal Balance
-----------------
14. Class A-1:HE/HI Principal Shortfall
-----------------
15. Unpaid Class A-1:HE/HI Principal Shortfall
-----------------
16. Amount paid on account of Unpaid Class A-1:HE/HI
Principal Shortfall
-----------------
17. Remaining Unpaid Class A-1:HE/HI Principal Shortfall
-----------------
C-2
<PAGE>
Class A-1 Notes
- ---------------
Class A-1 Interest
18. Class A-1 Interest Rate
-----------------
19. Class A-1 Interest Amount
-----------------
20. Amount paid on account of Class A-1 Interest Amount
-----------------
21. Class A-1 Interest Carryover Shortfall
-----------------
22. Amount paid on account of Unpaid Class A-1
Interest Shortfall
-----------------
23. Remaining Unpaid Class A-1 Interest Shortfall
-----------------
Class A-1 Principal
24. Formula Principal Distribution Amount:
(a) Scheduled principal
-----------------
(b) Principal Prepayments
-----------------
(c) Liquidated Contracts
-----------------
(d) Repurchases
-----------------
(e) Principal received first 10 days of
current month on Consumer Product Contracts
-----------------
(f) LESS principal received first ten days of
prior month included in prior month's Formula
Principal Distribution Amount
-----------------
(g) Pre-Funded Amount
-----------------
25. Class A-1 Percentage of Formula Principal Distribution
Amount or Class A-1 Principal Balance, whichever is less
-----------------
26. Amount paid on account of Class A-1 Principal Balance
-----------------
27. Class A-1 Principal Shortfall
-----------------
28. Unpaid Class A-1 Principal Shortfall
-----------------
29. Amount paid on account of Unpaid Class A-1 Principal
Shortfall
-----------------
C-3
<PAGE>
30. Remaining Unpaid Class A-1 Principal Shortfall
-----------------
Class A-2 Notes
- ---------------
Class A-2 Interest
31. Class A-2 Interest Rate
-----------------
32. Class A-2 Interest Amount
-----------------
33. Amount paid on account of Class A-2 Interest Amount
-----------------
34. Class A-2 Interest Carryover Shortfall
-----------------
35. Amount paid on account of Unpaid Class A-2
Interest Shortfall
-----------------
36. Remaining Unpaid Class A-2 Interest Shortfall
-----------------
Class A-2 Principal
37. Class A-2 Percentage of Formula Principal Distribution
Amount or Class A-2 Principal Balance, whichever is less
-----------------
38. Amount paid on account of Class A-2 Principal Balance
-----------------
39. Class A-2 Principal Shortfall
-----------------
40. Unpaid Class A-2 Principal Shortfall
-----------------
41. Amount applied to Unpaid Class A-2 Principal Shortfall
-----------------
42. Remaining Unpaid Class A-2 Principal Shortfall
-----------------
Class A-2 Liquidation Loss Interest and Principal
43. Class A-2 Liquidation Loss Interest Amount
-----------------
44. Amount paid on account of Class A-2 Liquidation
Loss Interest Amount
-----------------
45. Class A-2 Liquidation Loss Interest Shortfall
-----------------
C-4
<PAGE>
46. Amount paid on account of Unpaid Class A-2 Liquidation
Loss Interest Shortfall
-----------------
47. Remaining Unpaid Class A-2 Liquidation Loss Interest
Shortfall
-----------------
48. Class A-2 Principal Liquidation Loss
-----------------
49. Amount paid on account of Unpaid Class A-2 Principal
Liquidation Loss
-----------------
50. Remaining Unpaid Class A-2 Principal
Liquidation Loss
-----------------
51. Class A-2 Principal Balance plus Class A-2 Principal
Liquidation Loss after giving effect to payments
on Distribution Date
-----------------
Class A-3 Notes
- ---------------
Class A-3 Interest
52. Class A-3 Interest Rate
-----------------
53. Class A-3 Interest Amount
-----------------
54. Amount paid on account of Class A-3 Interest Amount
-----------------
55. Class A-3 Interest Carryover Shortfall
-----------------
56. Amount paid on account of Unpaid Class A-3
Interest Shortfall
-----------------
57. Remaining Unpaid Class A-3 Interest Shortfall
-----------------
Class A-3 Principal
58. Class A-3 Percentage of Formula Principal Distribution
Amount or Class A-3 Principal Balance, whichever is less
-----------------
59. Amount paid on account of Class A-3 Principal Balance
-----------------
60. Class A-3 Principal Shortfall
-----------------
C-5
<PAGE>
61. Unpaid Class A-3 Principal Shortfall
-----------------
62. Amount paid on account of Unpaid
Class A-3 Principal Shortfall
-----------------
63. Remaining Unpaid Class A-3 Principal Shortfall
-----------------
Class A-3 Liquidation Loss Interest and Principal
64. Class A-3 Liquidation Loss Interest Amount
-----------------
65. Amount paid on account of Class A-3 Liquidation
Loss Interest Amount
-----------------
66. Class A-3 Liquidation Loss Interest Shortfall
-----------------
67. Amount paid on account of Unpaid Class A-3 Liquidation
Loss Interest Shortfall
-----------------
68. Remaining Unpaid Class A-3 Liquidation Loss Interest
Shortfall
-----------------
69. Class A-3 Principal Liquidation Loss
-----------------
70. Amount paid on account of Unpaid Class A-3 Principal
Liquidation Loss
-----------------
71. Remaining Unpaid Class A-3 Principal
Liquidation Loss
-----------------
72. Class A-3 Principal Balance plus Class A-3 Principal
Liquidation Loss after giving effect to payments
on Distribution Date
-----------------
Class A-4 Notes
- ---------------
Class A-4 Interest
73. Class A-4 Interest Rate
-----------------
74. Class A-4 Interest Amount
-----------------
75. Amount paid on account of Class A-4 Interest Amount
-----------------
C-6
<PAGE>
76. Class A-4 Interest Carryover Shortfall
-----------------
77. Amount paid on account of Unpaid Class A-4 Interest
Shortfall
-----------------
78. Remaining Unpaid Class A-4 Interest Shortfall
-----------------
Class A-4 Principal
79. Class A-4 Percentage of Formula Principal Distribution
Amount or Class A-4 Principal Balance, whichever is less
-----------------
80. Amount paid on account of Class A-4
Principal Balance
-----------------
81. Class A-4 Principal Shortfall
-----------------
82. Unpaid Class A-4 Principal Shortfall
-----------------
83. Amount paid on account of Unpaid Class A-4
Principal Shortfall
-----------------
84. Remaining Unpaid Class A-4 Principal Shortfall
-----------------
Class A-4 Liquidation Loss Interest and Principal
85. Class A-4 Liquidation Loss Interest Amount
-----------------
86. Amount paid on account of Class A-4 Liquidation
Loss Interest Amount
-----------------
87. Class A-4 Liquidation Loss Interest Shortfall
-----------------
88. Amount paid on account of Unpaid Class A-4 Liquidation
Loss Interest Shortfall
-----------------
89. Remaining Unpaid Class A-4 Liquidation Loss Interest
Shortfall
-----------------
90. Class A-4 Principal Liquidation Loss
-----------------
91. Amount paid on account of Unpaid Class A-4 Principal
Liquidation Loss
-----------------
C-7
<PAGE>
92. Remaining Unpaid Class A-4 Principal
Liquidation Loss
-----------------
93. Class A-4 Principal Balance plus Class A-4 Principal
Liquidation Loss after giving effect to payments on
Distribution Date
-----------------
Certificates
- ------------
Certificate Interest
94. Certificate Pass-through Rate
-----------------
95. Certificate Interest Amount
-----------------
96. Amount distributed on account of Certificate
Interest Amount
-----------------
97. Certificate Interest Carryover Shortfall
-----------------
98. Amount distributed on account of Unpaid Certificate
Interest Carryover Shortfall
-----------------
99. Remaining Unpaid Certificate Interest
Carryover Shortfall
-----------------
Certificate Principal
100. Certificate Percentage of Class A-1:HE/HI Formula Principal
Distribution Amount or Certificate Balance,
whichever is less
-----------------
101. Amount distributed on account of Certificate
Principal Balance
-----------------
102. Certificate Principal Shortfall
-----------------
103. Unpaid Certificate Principal Shortfall
-----------------
104. Amount distributed on account of Unpaid
Certificate Principal Shortfall
-----------------
C-8
<PAGE>
105. Remaining Unpaid Certificate Principal Shortfall
-----------------
Certificate Liquidation Loss Interest and Principal
106. Certificate Liquidation Loss Interest Amount
-----------------
107. Amount distributed on account of Certificate
Liquidation Loss Interest Amount
-----------------
108. Certificate Liquidation Loss Interest Shortfall
-----------------
109. Amount distributed on account of Unpaid Certificate
Liquidation Loss Interest Shortfall
-----------------
110. Remaining Unpaid Certificate Liquidation Loss Interest
Shortfall
-----------------
111. Certificate Principal Liquidation Loss
-----------------
112. Amount distributed on account of Unpaid Certificate
Principal Liquidation Loss
-----------------
113. Remaining Unpaid Certificate Principal
Liquidation Loss
-----------------
114. Certificate Principal Balance plus Certificate Principal
Liquidation Loss after giving effect to distributions
on Distribution Date
-----------------
Notes and Certificates
- ----------------------
115. Amount deposited in Spread Account Subaccounts
Class A-2 Subaccount
-----------------
Class A-3 Subaccount
-----------------
Class A-4 Subaccount
-----------------
116. Amount released to Company from Spread Account Subaccounts
Class A-2 Subaccount
-----------------
Class A-3 Subaccount
-----------------
Class A-4 Subaccount
-----------------
C-9
<PAGE>
117. Balance in Spread Account Subaccounts
Class A-2 Subaccount
-----------------
Class A-3 Subaccount
-----------------
Class A-4 Subaccount
-----------------
118. Amount deposited in Reserve Account
-----------------
119. Amount released to GTGP from Reserve Account
-----------------
120. Balance in Reserve Account
-----------------
121. Amount released to Company from Capitalized
Interest Account
-----------------
122. Balance in Capitalized Interest Account
-----------------
123. Pre-Funded Amount on deposit in Pre-Funding Account
-----------------
124. Amount of Guaranty Payment
-----------------
125. Monthly Servicing and Guaranty Fee
-----------------
126. Pool Scheduled Principal Balance
-----------------
127. Pool Factor
(a) Class A-1: HE/HI
-----------------
(b) Class A-1
-----------------
(c) Class A-2
-----------------
(d) Class A-3
-----------------
(e) Class A-4
-----------------
(f) Certificate
-----------------
Aggregate Scheduled Balances of Delinquent Contracts as of Determination Date
128. 30 - 59 days
(a) Number
-----------------
(i) Total
-----------------
(ii) Home Equity and Home Improvement
-----------------
(b) Aggregate Principal Balance
-----------------
(i) Total
-----------------
(ii) Home Equity and Home Improvement
-----------------
C-10
<PAGE>
129. 60 days or more
(a) Number
-----------------
(i) Total
-----------------
(ii) Home Equity and Home Improvement
-----------------
(b) Aggregate Principal Balance
-----------------
(i) Total
-----------------
(ii) Home Equity and Home Improvement
-----------------
130. Number of Products repossessed (by Product type)
-----------------
131. Number of Products repossessed (by Product type)
but remaining in inventory
-----------------
132. Contracts that became Liquidated Contracts
(a) Number
-----------------
(i) Total
-----------------
(ii) Home Equity and Home Improvement
-----------------
(b) Net Liquidation Losses
-----------------
(i) Total
-----------------
(ii) Home Equity and Home Improvement
-----------------
133. Home Equity and Home Improvement Contracts in
Foreclosure
-----------------
(a) Number
-----------------
(b) Aggregate Principal Balance
-----------------
134. Foreclosed Home Equity and Home Improvement Contracts,
excluding Liquidated Contracts
-----------------
(a) Number
-----------------
(b) Aggregate Principal Balance
-----------------
135. Amount Paid to Servicer as Reimbursement
for Prior Servicer Advances
-----------------
136. The aggregate number and principal amount of
FHA-Insured Contracts on which either
(i) the Servicer has submitted a claim for
FHA Insurance, HUD rejected such claim and
the Servicer has determined not to resubmit
such claim, or (ii) the Servicer has determined -----------------
not to submit a claim for FHA Insurance because
such claim would not be paid by HUD $
-----------------
C-11
<PAGE>
The amounts set out in lines ________________through ____________above are
expressed as a dollar amount per $1,000 denomination of Note or Certificate.
Please contact [____________of First Trust National Association,_______________]
[_____________of Wilmington Trust Company,_________________] with any questions
regarding this Statement or your Distribution.
C-12
<PAGE>
EXHIBIT D
---------
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 "Servicer"), and that as such he is
duly authorized to execute and deliver this certificate on behalf of the
Servicer pursuant to Section 5.14 of the Sale and Servicing Agreement (the
"Agreement") dated as of December 1, 1997 between the Company and Green Tree
Recreational, Equipment & Consumer Trust 1997-D (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 Section 5.14 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]
D-1
<PAGE>
EXHIBIT E
---------
FORM OF ADDITION NOTICE
-----------------------
___________, 1997
First Trust National Association Green Tree Recreational, Equipment
180 East Fifth Street & Consumer Trust 1997-D
St. Paul, MN 55101 c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopier Number: 302-651-8882
Re: Sale and Servicing Agreement (the "Agreement"), dated as of December
1, 1997, between Green Tree Recreational, Equipment & Consumer Trust
1997-D (the "Trust") and Green Tree Financial Corporation (the
"Company")
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the meanings
given them in the Agreement. The Company hereby notifies the Trust of an
assignment to the Trust of Subsequent Contracts on the date and in the amounts
set forth below:
Subsequent Transfer Date:____________________________
Cut-off Date Principal Balance of Subsequent Contracts to be assigned to
Trust on Subsequent Transfer Date: $_____________
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
GREEN TREE FINANCIAL CORPORATION
By:
-----------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST 1997-D
By Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee for the Trust
By:
----------------------------------
Name:
-------------------------------
Title:
------------------------------
E-1
<PAGE>
EXHIBIT F
---------
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
--------------------------------------
In accordance with the Sale and Servicing Agreement (the "Agreement") dated
as of December 1, 1997, between the undersigned and Green Tree Recreational,
Equipment & Consumer Trust 1997-D (the "Trust"), the undersigned does hereby
transfer, assign, set over and otherwise convey to the Trust, without recourse,
(i) all right, title and interest of the Company in and to the Contracts
identified in the List of Contracts attached hereto (the "Contracts"),
including, without limitation, all right, title and interest in and to the
Collateral Security and all rights to receive payments on or with respect to the
Contracts due on or after the Subsequent Cut-off Date, (ii) the Insurance
Policies on any Products 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 relate to the Contracts, (iii) all rights the
Company may have against the originating dealer, contractor or lender with
respect to Contracts not originated by the Company, (iv) the Errors and
Omissions Protection Policy as such policy relates to the Contracts, (v) all
items contained in the Contract Files, and (vi) all proceeds and products in any
way derived from any of the foregoing.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Section 2.03 and Article
III of the Agreement and no others. All undefined capitalized terms used in
this Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ____day of___________________, 199_.
GREEN TREE FINANCIAL CORPORATION
[Seal] By:
-----------------------------------
[NAME]
[TITLE]
F-1
<PAGE>
Acknowledgement of Trust
------------------------
The Owner Trustee, on behalf of the Trust, acknowledges the foregoing
assignment and acknowledges that the Contracts and related property described
above constitute Trust Property and Indenture Collateral (as defined in the
Indenture).
GREEN TREE RECREATIONAL, CONSUMER &
EQUIPMENT TRUST 1997-D
By: Wilmington Trust Company,
not in its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Acknowledged:
- ------------
First Trust National Association,
as Trustee Indenture
By:
-----------------------------------
Name:
--------------------------------
Title:
-------------------------------
F-2
<PAGE>
EXHIBIT G
---------
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
---------------------------------------------------
The undersigned certifies that he/she is [TITLE] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he/she is
duly authorized to execute and deliver this certificate on behalf of the Company
in connection with the Sale and Servicing Agreement dated as of December 1, 1997
(the "Agreement") between the Company and Green Tree Recreational, Equipment &
Consumer Trust 1997-D (the "Trust"). All capitalized terms used herein without
definition have the respective meanings specified in the Agreement. The
undersigned further certifies that:
1. This Certificate is delivered in connection with the sale to the Trust
on________________________(the "Subsequent Transfer Date") of Contracts (the
"Subsequent Contracts") identified in the List of Contracts attached to the
Subsequent Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and warranties
in Section 3.01 of the Agreement are true and correct; all representations and
warranties in Sections 2.03, 3.02, and 3.03 of the Agreement with respect to the
Subsequent Contracts are true to the best of his/her knowledge; and all
representations in Section 3.04 of the Agreement with respect to the Subsequent
Contracts are true and correct.
3. All conditions precedent to the sale of the Subsequent Contracts to the
Trust under Section 2.03 of the Agreement have been satisfied.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
_____________________, 199_.
[NAME]
[TITLE]
G-1
<PAGE>
EXHIBIT 4.2
__________________________________________________________
AMENDED AND RESTATED
TRUST AGREEMENT
DATED AS OF DECEMBER 1, 1997
AMONG
GREEN TREE FINANCIAL CORPORATION,
AS DEPOSITOR
GREEN TREE SECOND GP INC.
AND
WILMINGTON TRUST COMPANY,
AS OWNER TRUSTEE
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D
__________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS........................................................ 1-1
SECTION 1.1. Definitions................................................. 1-1
SECTION 1.2. Usage of Terms.............................................. 1-5
SECTION 1.3. Calculations................................................ 1-5
SECTION 1.4. Section References.......................................... 1-6
SECTION 1.5. Action by or Consent of Certificateholders.................. 1-6
ARTICLE II - CREATION OF TRUST................................................. 2-1
SECTION 2.1. Creation of Trust........................................... 2-1
SECTION 2.2. Office...................................................... 2-1
SECTION 2.3. Purposes and Powers......................................... 2-1
SECTION 2.4. Appointment of Owner Trustee................................ 2-2
SECTION 2.5. Initial Capital Contribution of Trust Estate................ 2-2
SECTION 2.6. Declaration of Trust........................................ 2-2
SECTION 2.7. Liability of the Owners..................................... 2-3
SECTION 2.8. Title to Trust Property..................................... 2-3
SECTION 2.9. Situs of Trust.............................................. 2-4
SECTION 2.10. Representations and Warranties of the Depositor and
GTGP....................................................... 2-4
SECTION 2.11. Federal Income Tax Allocations.............................. 2-7
SECTION 2.12. Covenants of the General Partner............................ 2-8
SECTION 2.13. Covenants of the Certificate Owners......................... 2-9
ARTICLE III - THE CERTIFICATES................................................. 3-1
SECTION 3.1. Initial Ownership........................................... 3-1
SECTION 3.2. The Certificates............................................ 3-1
SECTION 3.3. Authentication of Certificates.............................. 3-1
SECTION 3.4. Registration of Transfer and Exchange of Certificates....... 3-2
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates........... 3-5
SECTION 3.6. Persons Deemed Owners....................................... 3-5
SECTION 3.7. Access to List of Certificateholders' Names and Addresses... 3-6
SECTION 3.8. Maintenance of Office or Agency............................. 3-6
SECTION 3.9. Appointment of Paying Agent................................. 3-6
ARTICLE IV - ACTIONS BY OWNER TRUSTEE.......................................... 4-1
SECTION 4.1. Restriction on Power of Certificate Owner and
Certificateholder.......................................... 4-1
SECTION 4.2. Prior Notice to Certificateholders with Respect to Certain
Matters.................................................... 4-1
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy..... 4-1
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 4.4. Restrictions on Certificateholders' Power................... 4-2
ARTICLE V - APPLICATION OF TRUST FUNDS; CERTAIN DUTIES......................... 5-1
SECTION 5.1. Trust Accounts.............................................. 5-1
SECTION 5.2. Application of Funds in Certificate Distribution Account.... 5-2
SECTION 5.3. Method of Payment........................................... 5-4
SECTION 5.4. No Segregation of Monies; No Interest....................... 5-4
SECTION 5.5. Accounting; Reports; Tax Returns............................ 5-4
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE............................. 6-1
SECTION 6.1. General Authority........................................... 6-1
SECTION 6.2. General Duties.............................................. 6-1
SECTION 6.3. Action upon Instruction..................................... 6-2
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions............................................... 6-3
SECTION 6.5. No Action Except under Specified Documents or
Instructions............................................... 6-4
SECTION 6.6. Restrictions................................................ 6-4
SECTION 6.7. Administration Agreement.................................... 6-4
ARTICLE VII - CONCERNING THE OWNER TRUSTEE..................................... 7-1
SECTION 7.1. Acceptance of Trust and Duties.............................. 7-1
SECTION 7.2. Furnishing of Documents..................................... 7-3
SECTION 7.3. Representations and Warranties.............................. 7-3
SECTION 7.4. Reliance; Advice of Counsel................................. 7-4
SECTION 7.5. Not Acting in Individual Capacity........................... 7-5
SECTION 7.6. Owner Trustee Not Liable for Certificates, Notes or
Contracts.................................................. 7-5
SECTION 7.7. Owner Trustee May Own Certificates and Notes................ 7-5
ARTICLE VIII - COMPENSATION OF OWNER TRUSTEE................................... 8-1
SECTION 8.1. Owner Trustee's Fees and Expenses........................... 8-1
SECTION 8.2. Indemnification............................................. 8-1
SECTION 8.3. Nonrecourse Obligations..................................... 8-1
ARTICLE IX - TERMINATION....................................................... 9-1
SECTION 9.1. Termination of the Trust.................................... 9-1
SECTION 9.2. Dissolution Events with respect to General Partner.......... 9-2
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER
TRUSTEES................................................................. 10-1
SECTION 10.1. Eligibility Requirements for Owner Trustee................. 10-1
SECTION 10.2. Resignation or Removal of Owner Trustee.................... 10-1
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 10.3. Successor Owner Trustee.................................... 10-2
SECTION 10.4. Merger or Consolidation of Owner Trustee................... 10-2
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.............. 10-3
ARTICLE XI - MISCELLANEOUS PROVISIONS.......................................... 11-1
SECTION 11.1. Amendment.................................................. 11-1
SECTION 11.2. No Recourse................................................ 11-2
SECTION 11.3. Governing Law.............................................. 11-2
SECTION 11.4. Severability of Provisions................................. 11-3
SECTION 11.5. Certificates Nonassessable and Fully Paid.................. 11-3
SECTION 11.6. Third-Party Beneficiaries.................................. 11-3
SECTION 11.7. Counterparts............................................... 11-3
SECTION 11.8. Notices.................................................... 11-3
</TABLE>
EXHIBITS:
Exhibit A Form of Certificate of Trust
Exhibit B Form of Certificate
<PAGE>
THIS AMENDED AND RESTATED TRUST AGREEMENT, dated as of December 1, 1997, is
made among Green Tree Financial Corporation, a Delaware corporation, as
depositor (the "Seller"), Green Tree Second GP Inc., a Minnesota corporation, as
General Partner ("GTGP"), and Wilmington Trust Company, a Delaware banking
corporation, as owner trustee (in such capacity, the "Owner Trustee").
WHEREAS, the Seller, GTGP and the Owner Trustee entered in to a Trust
Agreement, dated as of December 1, 1997 (the "Original Trust Agreement"), to
facilitate the formation of Green Tree Recreational, Equipment & Consumer Trust
1997-D (the "Trust");
WHEREAS, the Seller, GTGP and the Owner Trustee desire to amend and restate
the Original Trust Agreement in its entirety as of the date hereinabove set
forth;
NOW, THEREFORE, In consideration of the mutual agreements herein contained,
and of other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.1. Definitions.
Unless otherwise expressly defined herein, the terms defined in the Sale
and Servicing Agreement (defined below) shall have the same meanings in this
Agreement. Whenever capitalized and used in this Agreement, the following words
and phrases, unless otherwise specified, shall have the following meanings:
Administration Agreement: The Administration Agreement, dated as of
December 1, 1997, among the Administrator, the Trust, and the Indenture Trustee,
as the same may be amended and supplemented from time to time.
Administrator: Green Tree Financial Servicing Corporation, a Delaware
Corporation, or any successor Administrator under the Administration Agreement.
Agreement or this Agreement: This Amended and Restated Trust Agreement, as
it may be amended or supplemented from time to time.
Authentication Agent: Wilmington Trust Company, or its successor in
interest, and any successor authentication agent appointed as provided in this
Agreement.
Benefit Plan: The meaning assigned in Section 3.4(i).
1-1
<PAGE>
Book-Entry Certificate: 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 Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code (S) 3801 et seq., as the same may be amended from time to time.
Certificate: The trust certificates evidencing the beneficial interest of
an Owner in the Trust, substantially in the form attached as Exhibit B.
Certificate Depository Agreement: The agreement among the Trust, the
Owner Trustee, the Administrator and The Depository Trust Company, as the
initial Depository, dated as of the Closing Date, relating to the Certificates,
as it may be amended or supplemented from time to time.
Certificate Distribution Account: The account designated as the
Certificate Distribution Account in, and which is established and maintained
pursuant to, Section 5.1.
Certificate of Trust: The Certificate of Trust substantially in the form
of Exhibit A hereto filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.4.
Certificateholder or Holder: A Person in whose name a Certificate is
registered in the Certificate Register.
Code: The Internal Revenue Code of 1986, as amended.
Corporate Trust Office: The principal office of the Owner Trustee at which
at any particular time its corporate trust business shall be administered, which
office at the Closing Date is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; the telecopy number for the Corporate Trust Office on the date
of the execution of this Agreement is 302-651-8882.
Definitive Certificate: The meaning specified in Section 3.4(g).
Depositor: The Seller in its capacity as depositor hereunder.
Depository: The initial Depository, The Depository Trust Company, the
nominee of which is Cede & Co., as the registered Holder of Certificates
representing $28,400,000 in aggregate Certificate Principal Balance as of the
Closing Date, and any permitted successor
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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 Agreement: Either the Certificate Depository Agreement or the
Note Depository Agreement.
Depository Participant: 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.
Dissolution Event: With respect to any General Partner, the withdrawal or
expulsion of such Person as General Partner of the Trust or the termination or
dissolution of such Person, or the occurrence of an Insolvency Event with
respect to such Person.
ERISA: The meaning assigned to such term in Section 3.4(i).
Expenses: The meaning assigned to such term in Section 8.2.
General Partner: GTGP or any subsequent General Partner as permitted by
this Agreement.
GTGP: Green Tree Second GP Inc., a Minnesota corporation.
Green Tree: Green Tree Financial Corporation, a Delaware corporation, and
its successors in interest.
Indemnified Parties: The meaning assigned to such term in Section 8.2.
Insolvency Event: With respect to a specified Person, (a) the commencement
of an involuntary case against such Person under the federal bankruptcy laws, as
now or hereinafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law, and such case is not dismissed within 60
days; or (b) the filing of a decree or entry of an order for relief by a court
having jurisdiction in the premises in respect of such Person or any substantial
part of its property in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs; or (c) the
commencement by such Person of a voluntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the making by
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such Person of any general assignment for the benefit of creditors, or the
failure by such Person generally to pay its debts as such debts become due, or
the taking of action by such Person in furtherance of any of the foregoing.
Note Depository Agreement: The agreement among the Trust, the Indenture
Trustee, the Administrator and The Depository Trust Company, dated as of the
Closing Date, relating to the Notes, as it may be amended or supplemented from
time to time.
Original Certificate Principal Balance: $28,400,000.
Owner or Certificate Owner: With respect to any Book-Entry Certificate,
each Person who is the beneficial owner of a Book-Entry Certificate as reflected
in the records of the Depository, or if a Depository Participant is not the
Certificate Owner, then as reflected in the records of a Person maintaining an
account with the Depository (directly or indirectly, in accordance with the
rules of the Depository); and with respect to any Definitive Certificate, the
Certificateholder.
Owner Trustee: Wilmington Trust, or its successor in interest, acting not
individually but solely as trustee hereunder, and any successor trustee
appointed as provided in this Agreement.
Paying Agent: Any paying agent or co-paying agent appointed pursuant to
Section 3.9, which initially shall be Wilmington Trust.
Record Date: With respect to any Distribution Date, the close of business
on the last Business Day immediately preceding such Distribution Date.
Related Documents: The Sale and Servicing Agreement, the Indenture, the
Certificates, the Notes, the Administration Agreement, the Certificate
Depository Agreement, the Note Depository Agreement, the Interest Rate Cap
Agreement, and the Underwriting Agreement. The Related Documents executed by
any party are referred to herein as "such party's Related Documents," "its
Related Documents" or by a similar expression.
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated as
of December 1, 1997 between the Trust and Green Tree, as Seller and as Servicer,
as the same may be amended and supplemented from time to time.
Secretary of State: The Secretary of State of the State of Delaware.
Seller: Green Tree, or its successor in interest.
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Servicer's Certificate: The Monthly Report delivered by the Servicer to
the Trust, the Indenture Trustee and the Paying Agent pursuant to Section 5.14
of the Sale and Servicing Agreement.
Trust: The trust created by this Agreement, the estate of which consists
of the Trust Property, which trust shall be known as "Green Tree Recreational,
Equipment & Consumer Trust 1997-D."
Trust Accounts: The Collection Account, the Spread Account, the Pre-
Funding Account, the Capitalized Interest Account, the Certificate Distribution
Account and the Note Distribution Account.
Trust Property: The property and proceeds of every description conveyed
pursuant to Section 2.5 hereof and Sections 2.01 and 2.03 of the Sale and
Servicing Agreement, together with the Trust Accounts (including all Eligible
Investments therein and all proceeds therefrom).
Underwriting Agreement: The Underwriting Agreement and related Terms
Agreement, dated December 8, 1997, by and between Merrill, Lynch, Pierce, Fenner
& Smith Incorporated and Green Tree.
Wilmington Trust: Wilmington Trust Company, a Delaware banking
corporation.
SECTION 1.2. Usage of Terms.
With respect to all terms used in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the terms "include" or "including" mean "include
without limitation" or "including without limitation." To the extent that
definitions are contained in this Agreement, or in any such certificate or other
document, such definitions shall control.
SECTION 1.3. Calculations.
All calculations of the amount of interest accrued on the Certificates
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
SECTION 1.4. Section References.
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All references to Articles, Sections, paragraphs, subsections, clauses,
exhibits and schedules shall be to such portions of this Agreement unless
otherwise specified.
SECTION 1.5. Action by or Consent of Certificateholders.
(a) Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by a majority of the
Certificateholders voting together. Except as expressly provided herein, any
written notice or consent of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Holders of the Certificates evidencing
not less than a majority of the Certificate Principal Balance represented by the
Certificates at the time of the delivery of such notice.
(b) Whenever any provision of this Agreement refers to action to be taken,
or consented to, by Certificateholders, such provision shall be deemed to refer
to Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. Solely for the purposes of any action to be taken, or
consented to, by Certificateholders, any Certificate owned by or registered in
the name of GTGP, Green Tree or any Affiliate thereof shall be deemed not to be
outstanding and the Certificate Principal Balance represented thereby shall not
be taken into account in determining whether the requisite percentage of the
Certificate Principal Balance necessary to effect any such action or consent has
been obtained; provided, however, that, solely for the purpose of determining
whether the Owner Trustee is entitled to rely upon any such action or consent,
only Certificates which the Owner Trustee knows to be so owned shall be so
disregarded.
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ARTICLE II
CREATION OF TRUST
-----------------
SECTION 2.1. Creation of Trust.
There is hereby formed a trust to be known as "Green Tree Recreational,
Equipment & Consumer Trust 1997-D," in which name the Trust may conduct
business, make and execute contracts and other instruments and sue and be sued.
SECTION 2.2. Office.
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner Trustee
may designate by written notice to the Certificateholders and the Depositor.
SECTION 2.3. Purposes and Powers.
The sole purpose of the Trust is to conserve the Trust Property and collect
and disburse the periodic income therefrom for the use and benefit of the Owners
and the Noteholders, and in furtherance of such purpose the Trust shall have the
power and authority to engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement and to sell the Notes and the Certificates;
(ii) with the proceeds of the sale of the Notes and the Certificates,
to fund the Capitalized Interest Account and the Pre-Funding Account, to
pay the organizational, start-up and transactional expenses of the Trust
and to pay the balance to the Seller pursuant to the Sale and Servicing
Agreement;
(iii) to purchase Subsequent Contracts from the Seller in accordance
with the terms of the Sale and Servicing Agreement; to assign, grant,
transfer, pledge, mortgage and convey the Trust Property, including the
Subsequent Contracts, to the Indenture Trustee pursuant to the Indenture
for the benefit of the Noteholders; and to hold, manage and distribute to
the Certificateholders pursuant to the terms of the Sale and Servicing
Agreement any portion of the Trust Property released from the lien of, and
remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Related
Documents to which it is or is to be a party;
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(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Related Documents, to engage in
such other activities as may be required in connection with conservation of
the Trust Property and the making of distributions to the Owners and the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities and any
activities that are necessary or incidental thereto. The Trust shall not engage
in any activity other than in connection with the foregoing or other than as
required or expressly authorized by the terms of this Agreement or the Related
Documents. Similarly, the Owner Trustee shall have no discretionary duties
other than performing those ministerial acts set forth above necessary to
accomplish the purpose of this Trust as set forth in the introductory sentence
of this Section.
SECTION 2.4. Appointment of Owner Trustee.
The Depositor hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers and duties set
forth herein and in the Business Trust Statute, and the Owner Trustee hereby
accepts such appointment.
SECTION 2.5. Initial Capital Contribution of Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to
the Owner Trustee, as of the date hereof, the sum of $10.00. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Trust Property
and shall be deposited in the Certificate Distribution Account. The Depositor
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust.
The Owner Trustee hereby declares that it will hold the Trust Property in
trust upon and subject to the conditions set forth herein for the use and
benefit of the Owners, subject to the interests and rights in the Trust Property
granted to other Persons by the Related Documents. It is the intention and
agreement of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. It is the intention and agreement of the
parties hereto that, solely for income and franchise tax purposes, the Trust
shall be treated as a partnership, with the assets of the partnership being the
Contracts and other assets held by the Trust, the partners of the partnership
being the Certificateholders and the General Partner, and the Notes being debt
of the partnership. None of the parties hereto shall make
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the election provided in Treasury Regulations (S) 301.7701-3(c) to have the
Trust classified as an association taxable as a corporation. The parties agree
that, unless otherwise required by appropriate tax authorities, the Trust will
file or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Trust as a partnership for
such tax purposes. On or before the date hereof, the Owner Trustee shall file
in the Office of the Secretary of State the Certificate of Trust required by
Section 3810(a) of the Business Trust Statute, to be effective on or before the
Closing Date. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.
SECTION 2.7. Liability of the Owners.
(a) The General Partner shall be liable directly to indemnify each
injured party for all actions, suits, losses, claims, damages, liabilities,
taxes and expenses of the Trust, to the extent not paid out of the Trust
Property, to the extent that such Person would be liable if the Trust were
a partnership under the Delaware Revised Uniform Limited Partnership Act
and such Person were a general partner; provided, however, that the General
Partner shall not be liable for any losses incurred by a Certificate Owner
in the capacity of an investor in the Certificates or a Note Owner in the
capacity of an investor in the Notes; provided, further, that the General
Partner shall not be liable to indemnify any injured party if such party
has agreed that its recourse against the Trust for any obligation or
liability of the Trust to such party shall be limited to the assets of the
Trust. In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the provisos to the preceding
sentence for which the General Partner shall not be liable) shall be deemed
third party beneficiaries of this paragraph.
(b) No Owner, other than to the extent set forth in paragraph (a),
shall have any personal liability for any liability or obligation of the
Trust or by reason of any action taken by the parties to this Agreement
pursuant to any provisions of this Agreement or any Related Document.
SECTION 2.8. Title to Trust Property.
(a) Legal title to all the Trust Property shall be vested at all
times in the Trust as a separate legal entity except where applicable law
in any jurisdiction requires title to any part of the Trust Property to be
vested in a trustee or trustees, in which case title shall be deemed to be
vested in the Owner Trustee, a co-trustee and/or a separate trustee, as the
case may be.
(b) The Owners shall not have legal title to any part of the Trust
Property. The Owners shall be entitled to receive distributions with
respect to their undivided ownership interest therein only in accordance
with Articles V and IX. No transfer,
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by operation of law or otherwise, of any right, title or interest by any
Certificateholder of its ownership interest in the Trust Property shall
operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any
part of the Trust Property.
SECTION 2.9. Situs of Trust.
The Trust will be located and administered in the State of Delaware. All
bank accounts maintained by the Owner Trustee on behalf of the Trust shall be
located in the State of Delaware or the State of Minnesota. The Trust shall not
have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee, the Servicer or any
agent of the Trust from having employees within or without the State of Delaware
or Minnesota. Payments will be received by the Trust only in Delaware or
Minnesota, and payments will be made by the Trust only from Delaware. The only
office of the Trust will be at the Corporate Trust Office in Delaware.
SECTION 2.10. Representations and Warranties of the Depositor and GTGP.
(a) By execution of this Agreement, the Depositor makes the following
representations and warranties with respect to itself on which the Owner
Trustee relies in accepting the Trust Property in trust and issuing the
Certificates.
(i) Organization and Good Standing. It has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties are
currently owned and as such business is currently conducted and is
proposed to be conducted pursuant to this Agreement and its Related
Documents.
(ii) Due Qualification. It is duly qualified to do business as
a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property, the conduct of its business and
the performance of its obligations under this Agreement and its
Related Documents require such qualification.
(iii) Power and Authority; Binding Obligations. It has the
power and authority to execute and deliver this Agreement and its
Related Documents and to perform its obligations pursuant thereto;
and the execution, delivery and performance of this Agreement and its
Related Documents have been duly authorized by all necessary
corporate action. When executed and delivered, this Agreement and its
Related Documents will constitute the legal, valid and binding
obligations of the Depositor enforceable in accordance with their
terms, except as enforcement of such terms may be limited by
bankruptcy,
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insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(iv) No Consent Required. No consent, license, approval or
authorization or registration or declaration with any Person or with
any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this
Agreement and its Related Documents, except for such as have been
obtained, effected or made.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and its Related Documents and the
fulfillment of its obligations under this Agreement and its Related
Documents shall not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice, lapse
of time or both) a default under, its certificate of incorporation or
bylaws, or any indenture, agreement, mortgage, deed of trust or other
instrument to which it is a party or by which it is bound, or result
in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, or violate any law, order, rule or
regulation applicable to it of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over it or its
properties (A) asserting the invalidity of this Agreement or any of
the Related Documents, (B) seeking to prevent the issuance of the
Certificates or the Notes or the consummation of any of the
transactions contemplated by this Agreement or any of the Related
Documents, (C) seeking any determination or ruling that might
materially and adversely affect its performance of its obligations
under, or the validity or enforceability of, this Agreement or any of
the Related Documents, or (D) seeking to adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates.
(b) By execution of this Agreement GTGP makes the following
representations and warranties with respect to itself on which the Owner
Trustee relies in accepting the Trust Property in trust and issuing the
Certificates.
(i) Organization and Good Standing. It has been duly organized
and is validly existing as a corporation in good standing under the
laws of the State of Minnesota, with power and authority to own its
properties and to conduct
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its business as such properties are currently owned and as such
business is currently conducted and is proposed to be conducted
pursuant to this Agreement and its Related Documents.
(ii) Due Qualification. It is duly qualified to do business as
a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property, the conduct of its business and
the performance of its obligations under this Agreement and its
Related Documents requires such qualification.
(iii) Power and Authority; Binding Obligation. It has the power
and authority to execute and deliver this Agreement and its Related
Documents and to perform its obligations pursuant thereto; and the
execution, delivery and performance of this Agreement and its Related
Documents have been duly authorized by all necessary corporate
action. When executed and delivered, this Agreement and its Related
Documents will constitute the legal, valid and binding obligations of
GTGP enforceable in accordance with their 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.
(iv) No Consent Required. No consent, license, approval or
authorization or registration or declaration with, any Person or with
any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance of this
Agreement and its Related Documents, except for such as have been
obtained, effected or made.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and its Related Documents and the
fulfillment of its obligations under this Agreement and its Related
Documents shall not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice, lapse
of time or both) a default under, its certificate or articles of
incorporation or bylaws, or any indenture, agreement, mortgage, deed
of trust or other instrument to which it is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any
of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, or violate
any law, order, rule or regulation applicable to it of any court or
of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over it or any
of its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory
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body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties (A)
asserting the invalidity of this Agreement or any of the Related
Documents, (B) seeking to prevent the issuance of the Certificates or
the Notes or the consummation of any of the transactions contemplated
by this Agreement or any of the Related Documents, (C) seeking any
determination or ruling that might materially and adversely affect
its performance of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents, or
(D) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Certificates.
SECTION 2.11. Federal Income Tax Allocations.
Net income of the Trust for any month as determined for Federal income tax
purposes (and each item of income, gain, loss and deduction entering into the
computation thereof) shall be allocated:
(a) among the Certificateholders as of the first Record Date
following the end of such month, in proportion to their ownership of the
Certificate Principal Balance on such date, an amount of net income up to
the sum of (i) the interest payable in respect of the Certificates for such
month pursuant to Section 5.2(a), and (ii) the portion of the market
discount on the Contracts accrued during such month that is allocable to
the excess of the Original Certificate Principal Balance over their initial
aggregate issue price; and
(b) next, to the General Partner to the extent of any remaining net
income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in clause (b). Net
losses of the Trust, if any, for any month as determined for Federal income tax
purposes (and each item of income, gain, loss and deduction entering into the
computation thereof) shall be allocated to the General Partner to the extent the
General Partner is reasonably expected to bear the economic burden of such net
losses, then net losses shall be allocated among the Certificateholders as of
the first Record Date following the end of such month in proportion to their
ownership of principal amount of Certificates on such Record Date until the
total amount of losses allocated to the Certificateholders pursuant to this
Section 2.11 plus the total principal amount distributed to the
Certificateholder(s) equals the Original Certificate Principal Balance of the
Certificates, and any remaining net losses shall be allocated to the General
Partner. The General Partner is authorized to modify the allocations in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to fairly reflect the economic income, gain or loss to the General
Partner, the Certificateholders, or to comply with the provisions of the Code
and the accompanying Treasury Regulations.
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SECTION 2.12. Covenants of the General Partner.
The General Partner agrees and covenants for the benefit of each Owner and
the Owner Trustee, during the term of this Agreement, and to the fullest extent
permitted by applicable law, that:
(a) it shall not sell, assign, transfer, give or encumber, by
operation of law or otherwise, in whole or in part, its general partnership
interest in the Trust;
(b) it shall not create, incur or suffer to exist any indebtedness or
engage in any business, except, in each case, as permitted by its articles
of incorporation and the Related Documents;
(c) it shall not, for any reason, institute proceedings for the Trust
to be adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against the Trust, or file a petition
seeking or consenting to reorganization or relief under any applicable
federal or state law relating to the bankruptcy of the Trust, or consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Trust or a substantial part of the
property of the Trust or cause or permit the Trust to make any assignment
for the benefit of creditors, or admit in writing the inability of the
Trust to pay its debts generally as they become due, or declare or effect a
moratorium on the debt of the Trust or take any action in furtherance of
any such action;
(d) it shall obtain from each counterparty to each Related Document
to which it or the Trust is a party and each other agreement entered into
on or after the date hereof to which it or the Trust is a party, an
agreement by each such counterparty that prior to the occurrence of the
event specified in Section 9.1(e) such counterparty shall not institute
against, or join any other Person in instituting against, it or the Trust,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United
States or any state of the United States; and
(e) it shall not, for any reason, withdraw or attempt to withdraw
from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition seeking
or consenting to reorganization or relief under any applicable federal or
state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of it or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability
to pay its debts generally as they become due, or declare or effect a
moratorium on its debt or take any action in furtherance of any such
action.
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SECTION 2.13. Covenants of the Certificate Owners.
Each Certificate Owner by becoming a beneficial owner of a Book-Entry
Certificate agrees:
(a) to be bound by the terms and conditions of the Certificates of
which such Owner is the beneficial owner and of this Agreement, including
any supplements or amendments hereto and to perform the obligations of an
Owner as set forth therein or herein, in all respects as if it were a
signatory hereto. This undertaking is made for the benefit of the Trust,
the Owner Trustee and all other Owners present and future.
(b) to hereby appoint the General Partner as such Owner's agent and
attorney-in-fact to sign any federal income tax information return filed on
behalf of the Trust and agree that, if requested by the Trust, it will sign
such federal income tax information return in its capacity as holder of an
interest in the Trust. Each Owner also hereby agrees that in its tax
returns it will not take any position inconsistent with those taken in any
tax returns filed by the Trust.
(c) if such Owner is other than an individual or other entity holding
its Certificate through a broker who reports securities sales on Form 1099-
B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within 30 days of the date of the transfer.
(d) until the completion of the events specified in Section 9.1(e),
not for any reason to institute proceedings for the Trust, the Seller or
the General Partner to be adjudicated a bankrupt or insolvent, or consent
to the institution of bankruptcy or insolvency proceedings against the
Trust, the Seller or the General Partner, or file a petition seeking or
consenting to reorganization or relief under any applicable federal or
state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust, the Seller or the General Partner or a substantial
part of any of their property, or cause or permit the Trust, the Seller or
the General Partner to make any assignment for the benefit of any of their
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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ARTICLE III
THE CERTIFICATES
----------------
SECTION 3.1. Initial Ownership.
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.5 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates.
Certificates, in an aggregate principal amount of $28,400,000, shall be
issued in denominations of $1,000 initial principal amount and integral
multiples thereof. The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of any authorized signatory of the Owner Trustee
having such authority under the Owner Trustee's seal imprinted or otherwise
affixed thereon and attested on behalf of the Owner Trustee by the manual or
facsimile signature of any authorized signatory of the Owner Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Owner Trustee shall be validly issued and entitled to the benefits of this
Agreement, notwithstanding that such individuals or any of them have ceased to
be so authorized prior to the authentication and delivery of such Certificates.
SECTION 3.3. Authentication of Certificates.
Simultaneously with the sale, assignment and transfer to the Trust of the
Contracts and the delivery to the Trust of the Contract Files and the other
Trust Property pursuant to the Sale and Servicing Agreement, the Owner Trustee
shall cause Certificates in authorized denominations in an aggregate principal
amount equal to the Certificate Principal Balance to be executed on behalf of
the Trust, authenticated and delivered to or upon the order of the Depositor.
No Certificate shall entitle its Holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit B
executed by the Owner Trustee or the Authentication Agent, by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Certificate shall have been duly authenticated and delivered
hereunder. Wilmington Trust Company is hereby initially appointed
Authentication Agent. All Certificates shall be dated the date of their
authentication.
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SECTION 3.4. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall maintain, or cause to be
maintained, at the office or agency maintained pursuant to Section 3.8, a
Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Owner Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as provided in
this Agreement. The Owner Trustee is hereby initially appointed Certificate
Registrar for the purpose of registering Certificates and transfers and
exchanges of Certificates as provided in this Agreement.
(b) Upon surrender for registration of transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8, the Owner Trustee
shall execute, authenticate and deliver (or shall cause the Authentication
Agent to authenticate and deliver), in the name of the designated
transferee or transferees, one or more new Certificates in authorized
denominations of a like class and aggregate proportion of Certificate
Principal Balance dated the date of authentication by the Owner Trustee or
any authenticating agent. At the option of a Holder, Certificates may be
exchanged for other Certificates of the same class in authorized
denominations of a like aggregate amount upon surrender of the Certificates
to be exchanged at the office or agency maintained pursuant to Section 3.8.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar duly executed by the Holder or his attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer or
exchange shall be canceled and subsequently disposed of by the Owner
Trustee in accordance with its customary practice.
(d) No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
(e) Except as provided in paragraph (g) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of the Book-
Entry Certificates may not be transferred by the Owner Trustee except to a
successor Depository designated pursuant to paragraph (f) below; (ii) the
Depository shall maintain book-entry records with respect to the
Certificate Owners and the Depository Participants and with respect to
ownership and transfers of such Certificates; (iii) ownership and transfers
of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the
Depository; (iv) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (v)
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the Owner Trustee shall deal with the Depository, Depository Participants
and indirect participating firms as representatives of the Certificate
Owners 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 Owner 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.
(f) If the Administrator, the Servicer or the Depository advises the
Owner Trustee in writing that the Depository is no longer willing or able
properly to discharge its duties as Depository, the Owner Trustee shall so
notify the Depository and demand the return of all Certificates held by the
Depository. The Certificate Registrar shall thereupon register the transfer
of such Certificates to a successor Depository named by the Seller and
acceptable to the Servicer and the Owner Trustee.
(g) If (x)(i) the Administrator, the Servicer or the Depository
advises the Owner Trustee in writing that the Depository is no longer
willing or able properly to discharge its responsibilities as Depository,
and (ii) the Administrator, the Seller or the Servicer is unable to locate
a qualified successor, (y) the Administrator at its sole option advises the
Owner Trustee in writing that it elects to terminate the book-entry system
through the Depository, or (z) upon the occurrence of a Servicer
Termination Event, Certificateholders representing a majority of the
Certificate Principal Balance advise the Owner Trustee through the
Depository that the continuation of a book-entry system is no longer in the
best interests of the Certificate Owners, the Owner Trustee shall notify
all Certificate Owners through the Depository of the occurrence of any such
event and of the availability of definitive, fully registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting the same.
Upon surrender to the Owner Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for
registration of transfer, the Owner Trustee shall issue the Definitive
Certificates in accordance with such instructions. Neither the Certificate
Registrar nor the Owner Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected
in relying on, such instructions. The Seller shall pay all expenses
incurred in connection with the notification of Certificate Owners and the
issuance of Definitive Certificates hereunder. Upon the issuance of
Definitive Certificates the Owner Trustee shall recognize the Holders of
the Definitive Certificates as Certificateholders hereunder.
(h) On or prior to the Closing Date, there shall be delivered by or
on behalf of the Trust to the Depository one or more typewritten
Certificates each registered in the name of the Depository's nominee, Cede
& Co. The total face
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amounts of the Certificates shall represent 100% of the Certificate
Principal Balance, as of the Cutoff Date. If, however, the aggregate
principal amount of the Certificates exceeds $200,000,000, Certificates
will be issued with respect to each $200,000,000 of principal amount and an
additional Certificate will be issued with respect to any remaining
principal amount in respect of the Certificates. Each such Certificate
registered in the name of the Depository'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 the
Owner Trustee or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co.
or in such other name as requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest
herein."
(i) The Certificates may not be acquired by or for the account of (i)
an employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that is
subject to the provisions of Title 1 of ERISA, (ii) a plan described in
Section 4975(e)(1) of the Internal Revenue Code of 1985, as amended, or
(iii) any entity whose underlying assets include plan assets by reason of a
plan's investment in the entity (each, a "Benefit Plan"). By accepting and
holding a Certificate, the Holder thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan.
(j) Notwithstanding anything contained herein to the contrary, the
Owner Trustee shall not be responsible for ascertaining whether any
transfer complies with the registration provisions or exemptions from the
Securities Act of 1933, as amended, the Securities and Exchange Act of
1934, as amended, applicable state securities law or the Investment Company
Act of 1940, as amended, or the exemption provisions of ERISA; provided,
however, that if a certificate is specifically required to be delivered to
the Owner Trustee by a purchaser or transferee of a Certificate, the Owner
Trustee shall be under a duty to examine the same to determine whether it
conforms to the requirements of this Agreement and shall promptly notify
the party delivering the same if such certificate does not so conform.
(k) Notwithstanding the preceding provisions of this Section, the
Owner Trustee shall not be required to make, and the Certificate Registrar
shall not be required to register, transfers or exchanges of Certificates
for a period of 15 days preceding the Distribution Date for any payment
with respect to the Certificate.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.
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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 Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Certificate Registrar or the Owner Trustee that such Certificate
has been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute, authenticate and deliver (or the Authentication Agent shall
authenticate and deliver), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor and
portion of Certificate Principal Balance. In connection with the issuance of
any new Certificate under this Section, the Owner Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Owner Trustee and the Certificate Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
SECTION 3.6. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee
or the Certificate Registrar may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.2 and for all other purposes whatsoever, and
neither the Owner Trustee, the Certificate Registrar nor any agent of the Owner
Trustee or the Certificate Registrar shall be affected by any notice to the
contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Servicer,
within 15 days after receipt by the Owner Trustee of a written request therefor,
a list, in such form as the Servicer may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date for
payment of distributions to Certificateholders. If Definitive Certificates have
been issued and three or more Certificateholders, or one or more
Certificateholders evidencing not less than 25% of the Certificate Principal
Balance (hereinafter referred to as "Applicants"), apply in writing to the Owner
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 that
such Applicants propose to transmit, then the Owner Trustee shall, within five
Business Days after the receipt of such application, afford such Applicants
access, during normal business hours, to the current list of
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Certificateholders. Every Certificateholder, by receiving and holding a
Certificate, agrees that none of the Servicer or the Owner Trustee, nor any
agent thereof, shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders under this
Agreement, regardless of the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency.
The Owner Trustee shall maintain in Wilmington, Delaware, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Certificates and the Related Documents may
be served. The Owner Trustee initially designates its Corporate Trust Office
for such purposes. The Owner Trustee shall give prompt written notice to the
Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office of agency.
SECTION 3.9. Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from
the Certificate Distribution Account pursuant to Section 5.2 and shall report
the amounts of such distributions to the Owner Trustee. Any Paying Agent shall
have the revocable power to withdraw funds from the Certificate Distribution
Account for the purpose of making the distributions referred to above. The
Owner Trustee may revoke such power and remove the Paying Agent if the Owner
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be Wilmington Trust. A Paying Agent may be
permitted to resign as Paying Agent upon 30 days' written notice to the Owner
Trustee. Upon the removal or resignation of the Paying Agent, the Owner Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company). The Owner Trustee shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Owner Trustee to execute and deliver to
the Owner Trustee an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Owner Trustee that as Paying Agent,
such successor Paying Agent or additional Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee, and upon removal of a Paying Agent, such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other Paying Agent appointed hereunder. Any
reference in
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this Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
------------------------
SECTION 4.1. Restriction on Power of Certificate Owner and
Certificateholder.
No Certificate Owner or Certificateholder shall have any right to vote or
in any manner otherwise control the operation and management of the Trust except
as expressly provided in this Agreement.
SECTION 4.2. Prior Notice to Certificateholders with Respect to Certain
Matters.
The Owner Trustee shall not take any of the following actions, unless at
least 30 days (or such shorter period as shall be required under the
circumstances) before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified the Owner Trustee in writing prior to
the 30th day after such notice is given that such Certificateholders have
withheld consent or provided alternative direction:
(a) the election by the Trust to file an amendment to the Certificate
of Trust unless such amendment is required to be filed under the Business
Trust Statute or unless such amendment would not materially and adversely
affect the interests of the Certificate Owners;
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required unless such
amendment would not materially and adversely affect the interests of the
Certificate Owners; or
(c) the amendment, change or modification of the Administration
Agreement, unless such amendment would not materially and adversely affect
the interests of the Certificate Owners.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Certificateholders and the delivery to the Owner Trustee by each
such Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
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SECTION 4.4. Restrictions on Certificateholders' Power.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to this Agreement or any
Related Document, unless the Certificateholders are the instructing party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement and unless Certificateholders evidencing
not less than 25% of the Certificate Principal Balance represented by the
Certificates shall have made written request upon the Owner Trustee to institute
such action, suit or proceeding in its own name as Owner Trustee under this
Agreement and shall have offered to the Owner Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Owner Trustee, for 30 days after its receipt of such
notice, request, and offer of indemnity, shall have neglected or refused to
institute any such action, suit, or proceeding, and during such 30-day period no
request or waiver inconsistent with such written request has been given to the
Owner Trustee pursuant to and in compliance with this Section or Section 6.3; it
being understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4, each and every
Certificateholder and the Owner Trustee shall be entitled to such relief as can
be given either at law or in equity.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
------------------------------------------
SECTION 5.1. Trust Accounts.
(a) On or prior to the Closing Date, the Depositor shall cause the
Servicer to establish the Certificate Distribution Account in the name of
the Owner Trustee for the benefit of the Certificateholders as provided in
Section 6.01(b) of the Sale and Servicing Agreement. The Certificate
Distribution Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Owner Trustee, so long as the
Owner Trustee is acting as Paying Agent under Section 3.9.
(b) The Owner Trustee shall possess all right, title and interest in
all funds on deposit from time to time in the Certificate Distribution
Account and in all proceeds thereof. If, at any time, the Certificate
Distribution Account ceases to be an Eligible Account, the Owner Trustee
shall within 5 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new
Certificate Distribution Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Certificate Distribution
Account.
(c) All amounts held in the Certificate Distribution Account shall,
to the extent permitted by applicable laws, rules and regulations, be
invested in Eligible Investments pursuant to the written instructions of
the Administrator that mature not later than one Business Day prior to the
Distribution Date for the Monthly Period to which such amounts relate.
Investments in Eligible Investments shall be made in the name of the Trust,
and such investments shall not be sold or disposed of prior to their
maturity. Any investment of funds in the Certificate Distribution Account
shall be made in Eligible Investments held by a financial institution with
respect to which (a) such institution has noted the Owner Trustee's
interest therein by book entry or otherwise and (b) a confirmation of the
Owner Trustee's interest has been sent to the Owner Trustee by such
institution, provided that such Eligible Investments are (i) specific
certificated securities, and (ii) either (A) in the possession of such
institution or (B) in the possession of a clearing corporation in New York
or Delaware, registered in the name of such clearing corporation, not
endorsed for collection or surrender or any other purpose not involving
transfer, not containing any evidence of a right or interest inconsistent
with the Owner Trustee's security interest therein, and held by such
clearing corporation in an account of such institution. Subject to the
other provisions hereof, the Owner Trustee shall have sole control over
each such investment and the income thereon, and any certificate or other
instrument evidencing any such investment, if any, shall be delivered
directly to the Owner Trustee or its agent, together with each document of
transfer, if any, necessary to transfer title to
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such investment to the Owner Trustee in a manner which complies with this
Section 5.1. All interest, dividends, gains upon sale and other income
from, or earnings on investment of funds in the Certificate Distribution
Account shall be distributed on the next Distribution Date pursuant to
Section 5.2(a). The Seller shall deposit in the Certificate Distribution
Account an amount equal to any net loss on such investments immediately as
realized.
SECTION 5.2. Application of Funds in Certificate Distribution Account.
(a) On each Distribution Date the Owner Trustee or the Paying Agent
will, based on the information contained in the Servicer's Certificate
delivered on the related Determination Date pursuant to Section 5.14 of the
Sale and Servicing Agreement, distribute to Certificateholders, on a pro
rata basis to the extent of the funds available, amounts deposited in the
Certificate Distribution Account in the amounts and in the priority set
forth below:
(i) the Certificate Interest Amount;
(ii) any Unpaid Certificate Interest Shortfall;
(iii) for application to the Certificate Principal Balance: on
any Distribution Date prior to the Distribution Date on which the
Notes are paid in full, zero; on any Distribution Date commencing on
the Distribution Date on which the Notes are paid in full, the amount
equal to the Class A-1:HE/HI Formula Principal Distribution Amount
minus on the Distribution Date on which the Notes are paid in full
that portion of the Class A-1:HE/HI Formula Principal Distribution
Amount paid to the Noteholders, but in no event more than the
outstanding Certificate Principal Balance;
(iv) any Unpaid Certificate Principal Shortfall;
(v) any Certificate Liquidation Loss Interest Amount;
(vi) any Unpaid Certificate Liquidation Loss Interest
Shortfall; and
(vii) any Unpaid Certificate Principal Liquidation Loss.
(b) On the Distribution Date following the date on which amounts
received in respect of the Seller's or the Servicer's exercise of its
option to purchase the corpus of the Trust pursuant to Section 8.01 of the
Sale and Servicing Agreement are deposited in the Certificate Distribution
Account, the Owner Trustee or the Paying
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Agent will distribute such amounts to Certificateholders on a pro rata
basis, taking into account any concurrent distribution made pursuant to
Section 5.2(a).
(c) On the Distribution Date on which Insolvency Proceeds are
deposited in the Certificate Distribution Account pursuant to Section 8.02
of the Sale and Servicing Agreement (or on the Distribution Date
immediately following such deposit if such proceeds are not deposited in
the Certificate Distribution Account on a Distribution Date), the Owner
Trustee will distribute the Insolvency Proceeds so deposited in the
Certificate Distribution Account to Certificateholders on a pro rata basis,
taking into account any concurrent distribution made pursuant to Section
5.2(a).
(d) On the Distribution Date following the date on which the
Indenture Trustee makes payments of money or property in respect of
liquidation of the Trust Property pursuant to Section 5.06 of the Indenture
and deposits funds received in connection with such liquidation in the
Certificate Distribution Account, the Owner Trustee will distribute such
funds to Certificateholders on a pro rata basis, taking into account any
concurrent distribution made pursuant to Section 5.2(a).
(e) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement required pursuant to Section 6.08 of the
Sale and Servicing Agreement.
(f) The Owner Trustee agrees, to the extent required by the Internal
Revenue Code, and applicable federal regulations promulgated thereunder, as
the same may be amended from time to time (collectively, the "Code"), to
withhold from each payment due hereunder or under any Certificate, United
States withholding taxes at the appropriate rate, and, on a timely basis,
to deposit such amounts with an authorized depository and make such
returns, filings and other reports in connection therewith as are required
of it under the Code. Any Certificateholder which is eligible for an
exemption from or reduction of withholding of United States federal income
taxes shall, from time to time, provide to the Owner Trustee in a timely
manner all appropriate and properly completed forms indicating such
eligibility, as may be necessary to permit the Owner Trustee not to
withhold taxes from payments due to such Certificateholder. In connection
with the foregoing, the Owner Trustee shall promptly furnish to each
Certificateholder in a timely fashion such U.S. Treasury forms as are
required by the Code to be furnished to such Certificateholder indicating
payment of any taxes withheld from any payments by the Owner Trustee to
such Certificateholder. The Owner Trustee and the Paying Agent shall be
fully protected in relying upon, and each Certificateholder by its
acceptance of a Certificate hereunder agrees to indemnify and hold the
Owner Trustee and the Paying Agent harmless against all claims or liability
of any kind arising in connection with or related to the Owner Trustee's or
the Paying Agent's reliance upon any documents, forms or information
provided by any Certificateholder to the Owner Trustee or the
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Paying Agent. In addition, if the Owner Trustee or the Paying Agent has not
withheld taxes on any payment made to any Certificateholder, and the Owner
Trustee or the Paying Agent is subsequently required to remit to any taxing
authority any such amount not withheld, such Certificateholder shall return
such amount to the Owner Trustee or the Paying Agent upon written demand by
the Owner Trustee or the Paying Agent. In no event shall the Owner Trustee
or the Paying Agent be liable for consequential damages to any
Certificateholder.
(g) Any funds remaining in the Certificate Distribution Account after
distribution of all amounts specified in this Section 5.2 shall be
distributed to the General Partner.
SECTION 5.3. Method of Payment.
Subject to Section 9.1(c), distributions required to be made to
Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence a denomination of not
less than $1,000,000 (or if such Certificateholder is a Depository or an
Affiliate thereof), or, if not, by check mailed to such Certificateholder at the
address of such holder appearing in the Certificate Register.
SECTION 5.4. No Segregation of Monies; No Interest.
Subject to Sections 5.1 and 5.2, monies received by the Owner Trustee or
the Paying Agent hereunder need not be segregated in any manner except to the
extent required by law or by the Sale and Servicing Agreement and may be
deposited under such general conditions as may be prescribed by law, and neither
the Owner Trustee nor the Paying Agent shall be liable for any interest thereon.
SECTION 5.5. Accounting; Reports; Tax Returns.
(a) The Administrator has agreed pursuant to the Administration
Agreement that the Administrator shall (i) maintain (or cause to be
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, (ii) deliver to each Owner and the General Partner,
as may be required by the Code and applicable Treasury Regulations, such
information as may be required (including Schedule K-1) to enable each
Owner and the General Partner to prepare its Federal and state income tax
returns, (iii) obtain a Federal tax identification number for the Trust,
and file or cause to be filed such tax returns relating to the Trust
(including a partnership information return, Form 1065), and direct the
Owner Trustee to make
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such elections as may from time to time be required or appropriate under
any applicable state or Federal statute or rule or regulation thereunder so
as to maintain the Trust's characterization as a partnership for Federal
income tax purposes, (iv) collect or cause to be collected any withholding
tax as described in and in accordance with Section 5.2(f) with respect to
income or distributions to Owners and (v) file or cause to be filed all
documents required to be filed by the Trust with the Commission and
otherwise take or cause to be taken all such actions as are notified by the
Servicer to the Administrator as being required for the Trust's compliance
with all applicable provisions of state and federal securities laws.
(b) The Owner Trustee shall make all elections pursuant to this
Section as directed in writing by the General Partner. The Owner Trustee
shall elect under Section 1278 of the Code to include in income currently
any market discount that accrues with respect to the Contracts. The Owner
Trustee shall not make the election provided under Section 754 of the Code.
(c) The Owner Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires an Owner or the
General Partner to sign such documents, in which case such documents shall
be signed by the General Partner. In signing any tax return of the Trust,
the Owner Trustee shall rely entirely upon, and shall have no liability
for, information or calculations provided by the General Partner.
(d) The General Partner shall be the "tax matters partner" of the
Trust pursuant to the Code.
(e) None of the parties hereto shall make the election provided in
Treasury Regulation (S) 301.7701-3(c) to have the Trust classified as an
association taxable as a corporation.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
-------------------------------------
SECTION 6.1. General Authority.
The Owner Trustee is authorized and directed to execute and deliver the
Related Documents to which the Trust is to be a party and each certificate or
other document attached as an exhibit to or contemplated by the Related
Documents to which the Trust is to be a party and any amendment thereto, and on
behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver
the Class A-1:HE/HI Notes in the aggregate principal amount of $167,923,639, the
Class A-1 Notes in the aggregate principal amount of $284,990,000, the Class A-2
Notes in the aggregate principal amount of $46,850,000, the Class A-3 Notes in
the aggregate principal amount of $22,720,000, and the Class A-4 Notes in the
aggregate principal amount of $17,040,000. In addition to the foregoing, the
Owner Trustee is authorized, but shall not be obligated, to take all actions
required of the Trust pursuant to the Related Documents. The Owner Trustee is
further authorized, on behalf of the Trust, to enter into the Administration
Agreement, to appoint a successor Administrator and to take from time to time
such action as the General Partner recommends with respect to the Related
Documents so long as such actions are consistent with the terms of the Related
Documents.
SECTION 6.2. General Duties.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged through the Administrator or such agents as shall be appointed) all
of its responsibilities pursuant to the terms of this Agreement and the Related
Documents and to administer the Trust in the interest of the Owners, subject to
the Related Documents and in accordance with the provisions of this Agreement.
The Owner Trustee undertakes to perform such duties, and only such duties, as
are specifically set forth in this Agreement or as it shall be directed in
writing by the instructing party. No implied covenants or agreements shall be
read into this Agreement. Notwithstanding the foregoing, the Owner Trustee
shall be deemed to have discharged its duties and responsibilities hereunder and
under the Related Documents to the extent the Administrator has agreed in the
Administration Agreement to perform any act or to discharge any duty of the
Owner Trustee hereunder or under any Related Document, and the Owner Trustee
shall not be liable for the default or failure of the Administrator to carry out
its obligations under the Administration Agreement.
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SECTION 6.3. Action upon Instruction.
(a) Subject to Article IV, the Certificateholders shall have the
exclusive right to direct the actions of the Owner Trustee in the
management of the Trust, so long as such instructions are not inconsistent
with the express terms set forth herein or in any Related Document. The
Certificateholders shall not instruct the Owner Trustee in a manner
inconsistent with this Agreement or the Related Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Related Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is contrary to the terms hereof or of any Related Document or is
otherwise contrary to law.
(c) No provision of this Agreement shall require the Owner Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds to believe that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) In accepting the trusts hereby created, the Owner Trustee acts
solely as trustee hereunder and not in its individual capacity. The Owner
Trustee agrees to disburse all moneys actually received by it constituting
part of the Trust Property upon the terms of this Agreement.
Notwithstanding anything in this Agreement to the contrary, the Owner
Trustee, when acting in such capacity, shall not be personally liable or
accountable to any Person, under any circumstances, except by reason of its
gross negligence, willful misconduct or breach of its representations,
warranties or covenants.
(e) The Owner Trustee shall be under no liability (except as provided
in (d) above) for any action taken by the Owner Trustee in good faith in
reliance upon any paper, order, list, demand, request, consent, affidavit,
notice, opinion, direction, endorsement, assignment, resolution, draft or
other document, believed by it to be genuine and to have been signed by the
proper party or parties or for the disposition of moneys or Trust Property
pursuant to this Agreement. As to any fact or matter, the manner of
ascertainment of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized
officer of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance
thereon.
(f) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Related
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Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction received from the Certificateholders, the Owner Trustee shall
not be liable on account of such action to any Person. If the Owner Trustee
shall not have received appropriate instruction within ten days of such
notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or the Related Documents, as
it shall deem to be in the best interests of the Owners, and shall have no
liability to any Person for such action or inaction.
(g) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Related Document or
any such provision is ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or in the event that
this Agreement permits any determination by the Owner Trustee or is silent
or is incomplete as to the course of action that the Owner Trustee is
required to take with respect to a particular set of facts, the Owner
Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction and, to the
extent that the Owner Trustee acts or refrains from acting in good faith in
accordance with any such instruction received, the Owner Trustee shall not
be liable, on account of such action or inaction, to any Person. If the
Owner Trustee shall not have received appropriate instruction within 10
days of such notice (or within such shorter period of time as reasonably
may be specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to, take or refrain from
taking such action, not inconsistent with this Agreement or the Related
Documents, as it shall deem to be in the best interests of the Owners, and
shall have no liability to any Person for such action or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions.
The Owner Trustee shall not have any duty or obligation to manage, make any
payment with respect to, register, record, sell, dispose of, or otherwise deal
with the Trust Property, or to otherwise take or refrain from taking any action
under, or in connection with, any document contemplated hereby to which the
Trust is a party, except as expressly provided by the terms of this Agreement
(including as provided in Section 6.2) or in any written instruction received by
the Owner Trustee pursuant to Section 6.3; and no implied duties or obligations
shall be read into this Agreement or any Related Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for preparing,
monitoring or filing any financing or continuation statements in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien granted to it hereunder or
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to record this Agreement or any Related Document; however, the Owner Trustee
will from time to time execute and deliver such financing or continuation
statements as are prepared by the Servicer and delivered to the Owner Trustee in
final execution form for its execution on behalf of the Trust for the purpose of
perfecting or maintaining the perfection of such a security interest or lien or
effecting such a recording. The Owner Trustee nevertheless agrees that it will,
at its own cost and expense (and not at the expense of the Trust), promptly take
all action as may be necessary to discharge any liens on any part of the Trust
Property that are attributable to claims against the Owner Trustee in its
individual capacity that are not related to the ownership or the administration
of the Trust Property.
SECTION 6.5. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or
otherwise deal with any part of, the Trust Property except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Related Documents and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6. Restrictions.
The Owner Trustee shall not take any action (a) that is inconsistent with
the purposes of the Trust set forth in Section 2.3 or (b) that, to the actual
knowledge of the Owner Trustee, would result in the Trust's becoming taxable as
a corporation for Federal income tax purposes. The Owners shall not direct the
Owner Trustee to take action that would violate the provisions of this Section.
SECTION 6.7. Administration Agreement.
(a) The Administrator is authorized to execute on behalf of the Trust
all documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Trust to prepare, file or deliver pursuant to
the Related Documents. Upon written request, the Owner Trustee shall
execute and deliver to the Administrator a power of attorney appointing the
Administrator its agent and attorney-in-fact to execute all such documents,
reports, filings, instruments, certificates and opinions.
(b) If the Administrator shall resign or be removed pursuant to the
terms of the Administration Agreement, the Owner Trustee may, and is hereby
authorized and empowered to, appoint or consent to the appointment of a
successor Administrator pursuant to the Administration Agreement.
(c) If the Administration Agreement is terminated, the Owner Trustee
may, and is hereby authorized and empowered to, appoint or consent to the
appointment of a Person to perform substantially the same duties as are
assigned to the Administrator
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in the Administration Agreement pursuant to an agreement containing
substantially the same provisions as are contained in the Administration
Agreement.
(d) The Owner Trustee shall promptly notify each Owner of any default
by or misconduct of the Administrator under the Administration Agreement of
which the Owner Trustee has received written notice or of which a
Responsible Officer has actual knowledge.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
----------------------------
SECTION 7.1. Acceptance of Trust and Duties.
The Owner Trustee accepts the trusts hereby created and agrees to perform
its duties hereunder with respect to such trusts but only upon the terms of this
Agreement. The Owner Trustee also agrees to disburse all monies actually
received by it constituting part of the Trust Property upon the terms of the
Related Documents and this Agreement. The Owner Trustee shall not be answerable
or accountable hereunder or under any Related Document under any circumstances,
except (i) for its own willful misconduct or gross negligence, (ii) in the case
of the inaccuracy of any representation or warranty contained in Section 7.3,
(iii) for liabilities arising from the failure of the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section 6.4
hereof, (iv) for any investments issued by the Owner Trustee or any branch or
affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee in connection with any of the transactions
contemplated by this Agreement or any Related Document. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
instructions of the Certificateholders;
(c) no provision of this Agreement or any Related Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any Related Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under this Agreement or any of the
Related Documents, including the principal of and interest on the
Certificates or the Notes;
(e) the Owner Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Agreement or for
the due execution hereof by the Depositor or the General Partner or for the
form, character, genuineness, sufficiency, value or validity of any of the
Trust Property or for or in
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respect of the validity or sufficiency of the Related Documents, other than
the certificate of authentication on the Certificates, and the Owner
Trustee shall in no event assume or incur any liability, duty, or
obligation to the Indenture Trustee, any Noteholder or to any Owner, other
than as expressly provided for herein and in the Related Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Indenture Trustee or the Servicer
under any of the Related Documents or otherwise and the Owner Trustee shall
have no obligation or liability to monitor the performance of or to perform
the obligations of the Trust under this Agreement or the Related Documents
that are required to be performed by the Administrator under the
Administration Agreement, the Indenture Trustee under the Indenture or the
Servicer under the Sale and Servicing Agreement;
(g) the Owner Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any Related Document, at the request, order
or direction of the Certificateholders, unless such Certificateholders have
offered to the Owner Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the
Owner Trustee therein or thereby. The right of the Owner Trustee to perform
any discretionary act enumerated in this Agreement or in any Related
Document shall not be construed as a duty, and the Owner Trustee shall not
be answerable for other than its gross negligence or willful misconduct in
the performance of any such act;
(h) The Owner Trustee shall not be under any obligation to appear in,
prosecute or defend any action, which in its opinion may require it to
incur any out-of-pocket expense or any liability unless it shall be
furnished with such reasonable security and indemnity against such expense
or liability as it may require in accordance with the terms hereof. The
Owner Trustee may, but shall be under no duty to, undertake such action as
it may deem necessary at any and all times to protect the Trust Property
and the respective rights and interests of the Noteholders and the
Certificate Owners pursuant to the terms of the Indenture and this
Agreement;
(i) The Owner Trustee may (at the expense of the Seller) consult with
counsel, and the written advice of counsel or any opinion of counsel shall
be full and complete authorization and protection in respect of any action
taken or omitted by the Owner Trustee in good faith reliance thereon; and
(j) Notwithstanding anything contained herein to the contrary,
neither Wilmington Trust nor the Owner Trustee shall be required to take
any action in any jurisdiction other than in the State of Delaware if the
taking of such action will (i) require the consent or approval or
authorization or order of or giving of notice to, or
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the registration with or the taking of any other action in respect of, any
state or other governmental authority or agency of any jurisdiction other
than the State of Delaware; (ii) result in any fee, tax or other
governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than the State
of Delaware becoming payable by Wilmington Trust; or (iii) subject
Wilmington Trust to personal jurisdiction in any jurisdiction other than
the State of Delaware for causes of action arising from acts unrelated to
the consummation of the transactions by Wilmington Trust or the Owner
Trustee as the case may be, contemplated hereby. The Owner Trustee shall be
entitled to obtain (at the expense of the Seller) an opinion of counsel to
determine whether any action required to be taken pursuant to this
Agreement results in the consequences described in clauses (i), (ii) and
(iii) of the preceding sentence. In the event that said counsel advises the
Owner Trustee that such action will result in such consequences, the Owner
Trustee will appoint an additional or separate trustee to proceed with such
action.
SECTION 7.2. Furnishing of Documents.
The Owner Trustee shall furnish to the Owners, promptly upon receipt of a
written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Owner Trustee under the Related Documents unless the Owners
have previously received such items.
SECTION 7.3. Representations and Warranties.
The Owner Trustee hereby represents and warrants to the Depositor and the
Owners that:
(a) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority and all franchises, grants,
authorizations, consents, orders and approvals from all governmental
authorities necessary to execute, deliver and perform its obligations under
this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement and each Related Document to
which the Trust is a party, and this Agreement and each Related Document
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will contravene
any Federal or Delaware law, governmental rule or regulation governing the
banking or trust powers of the Owner
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Trustee or any judgment or order binding on it, or constitute any default
under its charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound or result in the creation or imposition of any
lien, charge or encumbrance on the Trust Property resulting from actions by
or claims against the Owner Trustee individually which are unrelated to
this Agreement or the Related Documents.
SECTION 7.4. Reliance; Advice of Counsel.
---------------------------
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent,
order, certificate, report, opinion, bond, or other document or paper
believed by it to be genuine and believed by it to be signed by the proper
party or parties. The Owner Trustee may accept a certified copy of a
resolution of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolution has been duly
adopted by such body and that the same is in full force and effect. As to
any fact or matter the method of the determination of which is not
specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president
or by the treasurer or other authorized officers of the relevant party, as
to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them,
and the Owner Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been
selected by the Owner Trustee with reasonable care, and (ii) may consult
with counsel, accountants and other skilled persons to be selected with
reasonable care and employed by it. The Owner Trustee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel, accountants or
other such persons and not contrary to this Agreement or any Related
Document.
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SECTION 7.5. Not Acting in Individual Capacity.
Except as provided in this Article VII, in accepting the trusts hereby
created Wilmington Trust Company acts solely as Owner Trustee hereunder and not
in its individual capacity and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Related Document shall look only to the Trust Property for payment or
satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates, Notes or
Contracts.
The recitals contained herein and in the Certificates and the Notes (other
than the signature and counter-signature of the Owner Trustee on the
Certificates and the Notes) shall be taken as the statements of the Depositor,
and the Owner Trustee assumes no responsibility for the correctness thereof.
The Owner Trustee makes no representations as to the validity or sufficiency of
this Agreement, of any Related Document or of the Certificates (other than the
signature and counter-signature of the Owner Trustee on the Certificates) or the
Notes (other than the signature or countersignature of the Owner Trustee on the
Notes), or of any Contract or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Contract, or the perfection and priority of
any security interest created by any Contract in any Product or the maintenance
of any such perfection and priority of any security interest created by any
Contract in any Product, or for or with respect to the sufficiency of the Trust
Property or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Product; the existence and enforceability of any insurance thereon; the
existence and contents of any Contract or any computer or other record thereof;
the validity of the assignment of any Contract to the Trust or of any
intervening assignment; the completeness of any Contract; the performance or
enforcement of any Contract; the compliance by the Seller or the Servicer with
any warranty or representation made under any Related Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Servicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates or Notes and may deal with the Depositor, the
Seller, GTGP, the General Partner, the Indenture Trustee and the Servicer in
banking or other transactions with the same rights as it would have if it were
not Owner Trustee.
SECTION 7.8 Doing Business in Other Jurisdictions. Notwithstanding
anything contained herein to the contrary, neither Wilmington Trust nor the
Owner Trustee shall be required to take any action in any jurisdiction other
than in the State of Delaware if the
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taking of such action will (i) require the consent or approval or authorization
or order of or the giving of notice to, or the registration with or the taking
of any other action in respect of, any state or other governmental authority or
agency of any jurisdiction other than the State of Delaware; (ii) result in any
fee, tax or other governmental charge under the laws of any jurisdiction or any
political subdivisions thereof in existence on the date hereof other than the
State of Delaware becoming payable by Wilmington Trust; or (iii) subject
Wilmington Trust to personal jurisdiction in any jurisdiction other than the
State of Delaware for causes of action arising from acts unrelated to the
consummation of the transactions by Wilmington Trust or the Owner Trustee, as
the case may be, contemplated hereby. The Owner Trustee shall be entitled to
obtain advice of counsel (which advice shall be an expense of Green Tree) to
determine whether any action required to be taken pursuant to the Agreement
results in the consequences described in clauses (i), (ii) and (iii) of the
preceding sentence. In the event that said counsel advises the Owner Trustee
that such action will result in such consequences, the Owner Trustee will
appoint an additional trustee pursuant to Section 10.5 hereof to proceed with
such action.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
-----------------------------
SECTION 8.1. Owner Trustee's Fees and Expenses.
The Owner Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between
Green Tree and the Owner Trustee (or, with respect to any successor Owner
Trustee, reasonable compensation for all services rendered by it hereunder), and
the Owner Trustee shall be entitled to be reimbursed by Green Tree for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder; provided, however, that the Owner Trustee shall
only be entitled to reimbursement for expenses hereunder to the extent such
expenses (i) are fees of outside counsel engaged by the Owner Trustee in respect
of the performance of its obligations hereunder or (ii) relate to the
performance of its obligations pursuant to Section 5.5 hereof.
SECTION 8.2. Indemnification.
Green Tree shall be liable as primary obligor for, and shall indemnify the
Owner Trustee in its individual capacity and its successors, assigns, agents and
servants, and any co-trustee (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Related Documents, the Trust Property,
the administration of the Trust Property or the action or inaction of the Owner
Trustee hereunder, except only that Green Tree shall not be liable for or
required to indemnify the Owner Trustee from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement.
SECTION 8.3. Nonrecourse Obligations.
Notwithstanding anything in this Agreement or any Related Document,
the Owner Trustee agrees in its individual capacity and in its capacity as Owner
Trustee for the Trust that all obligations of the Trust to the Owner Trustee
individually or as Owner Trustee for the Trust shall be recourse to the Trust
Property only and specifically shall not be recourse to the assets of any Owner.
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ARTICLE IX
TERMINATION
-----------
SECTION 9.1. Termination of the Trust.
(a) Unless sooner terminated pursuant to Section 9.2, the respective
obligations and responsibilities of the Depositor, the General Partner and
the Owner Trustee created by this Agreement and the Trust created by this
Agreement shall terminate upon the later of (i) the maturity or other
liquidation of the last Contract (including the purchase as of any
Distribution Date by the Seller or the Servicer at its option of the corpus
of the Trust as described in Section 8.01 of the Sale and Servicing
Agreement) and the subsequent distribution of amounts in respect of such
Contracts as provided in the Related Documents, or (ii) the payment to
Certificateholders of all amounts required to be paid to them pursuant to
this Agreement. In any case, there shall be delivered to the Owner Trustee,
the Indenture Trustee and the Rating Agencies an Opinion of Counsel that
all applicable preference periods under federal, state and local
bankruptcy, insolvency and similar laws have expired with respect to the
payments pursuant to clause (ii); provided, however, that in no event shall
the trust created by this Agreement continue beyond the expiration of 21
years from the death of the last survivor of the descendants living on the
date of this Agreement of Rose Kennedy of the Commonwealth of
Massachusetts; and provided, further, that the rights to indemnification
under Section 8.2 shall survive the termination of the Trust. The Servicer
shall promptly notify the Owner Trustee of any prospective termination
pursuant to this Section 9.1. Except as provided in Section 9.2, the
bankruptcy, liquidation, dissolution, termination, resignation, expulsion,
withdrawal, death or incapacity of any Owner, shall not (x) operate to
terminate this Agreement or the Trust, nor (y) entitle such Owner's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of
the Trust or Trust Property nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the Depositor nor
any Certificate Owner shall be entitled to revoke or terminate the Trust.
(c) Within five Business Days of receipt of notice of final
distribution on the Certificates from the Seller or the Servicer given
pursuant to Section 8.01(b) of the Sale and Servicing Agreement, the Owner
Trustee shall mail written notice to the Certificateholders specifying (i)
the Distribution Date upon which final payment of the Certificates shall be
made upon presentation and surrender of Certificates at the office of the
Paying Agent therein specified, (ii) the amount of any such final payment,
and (iii) that the Record Date otherwise applicable to such Distribution
Date is not
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applicable, payments being made only upon presentation and surrender of the
Certificates at the office of the Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Registrar at the time
such notice is given to Certificateholders. In the event such notice is
given, the Indenture Trustee shall make deposits into the Certificate
Distribution Account in accordance with Section 6.06 of the Sale and
Servicing Agreement, or, in the case of an optional purchase of Contracts
pursuant to Section 8.01 of the Sale and Servicing Agreement, shall deposit
the amount specified in Section 8.01 of the Sale and Servicing Agreement.
Upon presentation and surrender of the Certificates, the Paying Agent shall
cause to be distributed to Certificateholders amounts distributable on such
Distribution Date pursuant to Section 5.2.
(d) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the
date specified in the above-mentioned written notice, the Owner Trustee
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 one year after the second
notice all the Certificates shall not have been surrendered for
cancellation, the Owner Trustee may 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 that remain subject
to this Agreement. Any funds which are payable to Certificateholders
remaining in the Trust after exhaustion of such remedies shall be
distributed by the Owner Trustee to The United Way (but only upon
termination of this Agreement), and the Certificateholders, by acceptance
of their Certificates, hereby waive any rights with respect to such funds.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.2. Dissolution Events with respect to General Partner.
In the event that a Dissolution Event shall occur with respect to the
General Partner, the Trust will terminate unless, within 90 days after the
occurrence of the Dissolution Event with respect to the General Partner, (x) the
Holders of a majority of the Certificate Principal Balance agree in writing to
continue the business of the Trust and to the appointment of a Person to become
the General Partner and to assume the liabilities incident thereto and (y) the
Owner Trustee requests and obtains an opinion of counsel acceptable to Green
Tree to the effect that the Trust will not thereafter be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes. Promptly after the occurrence of a Dissolution Event, (i) the General
Partner shall give the Indenture Trustee and the Owner
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Trustee written notice of the occurrence of such event, (ii) the Owner Trustee
shall, upon the receipt of such written notice, give prompt written notice to
the Certificateholders and the Indenture Trustee of the occurrence of such event
and (iii) the Indenture Trustee shall, upon receipt of written notice of the
occurrence of such event from the Owner Trustee or the Seller, give prompt
written notice to the Noteholders of the occurrence of such event; provided,
however, that any failure to give a notice required by this sentence shall not
prevent or delay, in any manner, a termination of the Trust pursuant to the
first sentence of this Section. Upon a termination pursuant to this Section,
the Owner Trustee shall direct the Indenture Trustee to sell the assets of the
Trust (other than the Trust Accounts) at one or more private or public sales
conducted in any manner permitted by law. The proceeds of such a sale of the
assets of the Trust shall be distributed as provided in Section 8.02 of the Sale
and Servicing Agreement.
9-3
<PAGE>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
------------------------------------------------------
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation (i) satisfying the
provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized to
exercise corporate trust powers; (iii) having a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by Federal or
State authorities; and (iv) having (or having a parent which has) a rating of at
least F-1 by Fitch or A-1 by Standard & Poor's or otherwise be acceptable to
Fitch and Standard & Poor's; and (v) shall not be an Affiliate of the Seller.
If such corporation shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Owner Trustee shall resign immediately in
the manner and with the effect specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the General Partner, the
Depositor and the Servicer at least 30 days before the date specified in such
instrument. Upon receiving such notice of resignation, the General Partner
shall promptly appoint a successor Owner Trustee meeting the qualifications set
forth in Section 10.1 by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Owner Trustee may petition any court of
competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by the General Partner or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the General Partner may remove the Owner Trustee. If the
General Partner shall remove the Owner Trustee under the authority of the
immediately preceding sentence, the General Partner shall promptly appoint a
successor Owner Trustee meeting the qualification requirements of Section 10.1
by written instrument, in duplicate, one copy of which
10-1
<PAGE>
instrument shall be delivered to the outgoing Owner Trustee so removed and one
copy to the successor Owner Trustee and payment of all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until all fees and expenses, including any indemnity
payments, due to the outgoing Owner Trustee have been paid and until acceptance
of appointment by the successor Owner Trustee pursuant to Section 10.3. The
General Partner shall provide notice of such resignation or removal of the Owner
Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee.
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge and deliver to the General Partner and to its predecessor
Owner Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall deliver
to the successor Owner Trustee all documents and statements and monies held by
it under this Agreement; and the General Partner and the predecessor Owner
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 Owner Trustee all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee, the Noteholders and
the Rating Agencies. If the Administrator shall fail to mail such notice within
10 days after acceptance of appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee.
Any corporation into which the Owner Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible
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<PAGE>
pursuant to Section 10.1, without the execution or filing of any instrument or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding, and provided further that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Property or any Product or real property securing a Home
Equity Contract or Home Improvement Contract may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Property, and to vest in such Person, in such capacity, such title to the
Trust, or any part thereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee shall have the power to
make such appointment. No co-trustee or separate trustee under this Agreement
shall be required to meet the terms of eligibility as a successor trustee
pursuant to Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.1.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not authorized
to act separately without the Owner Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular
act or acts are to be performed the Owner Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust Property or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
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<PAGE>
(iii) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or co-
trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
10-4
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.1. Amendment.
(a) This Agreement may be amended by the Depositor, the General
Partner and the Owner Trustee, without the consent of any of the
Certificateholders or Noteholders, (i) to cure any ambiguity, or (ii) to
correct, supplement or modify any provisions in this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any
Certificateholder or Noteholder.
(b) This Agreement may also be amended from time to time, by the
Depositor, the General Partner and the Owner Trustee with the consent of a
Certificate Majority of the Certificates and, if such amendment materially
and adversely affects the interests of Noteholders, the consent of a Note
Majority (which consent of any Holder of a Certificate or Note given
pursuant to this Section or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate or Note and of any Certificate or Note issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether
or not notation of such consent is made upon the Certificate or Note) for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates or Notes; 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 Contracts or distributions that shall be required to be made on
any Certificate or Note or the Certificate Pass-Through Rate, the Class A-
1:HE/HI Interest Rate, the Class A-1 Interest Rate, the Class A-2 Interest
Rate, the Class A-3 Interest Rate, or the Class A-4 Interest Rate, or (b)
reduce the aforesaid percentage required to consent to any such amendment
or any waiver hereunder, without the consent of the Holders of all
Certificates and Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the
General Partner shall furnish written notification of the substance of such
amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder and the Indenture
Trustee unless such parties have previously received such notification.
11-1
<PAGE>
(e) It shall not be necessary for the consent of Certificateholders
or Noteholders pursuant to Section 11.1(b) to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders and Noteholders
provided for in this Agreement) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe, including the
establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the
Owner Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties or immunities under
this Agreement or otherwise.
(g) The Depositor, the General Partner and the Owner Trustee may
amend this Agreement in order to effect a "financial asset securitization
investment trust" ("FASIT") election for all or a portion of the Trust;
provided, that (i) the Depositor delivers an Opinion of Counsel to the
Owner Trustee to the effect that such election will not adversely affect
the Federal or applicable state income tax characterization of any
outstanding Notes or Certificates or the taxability of the Trust under
Federal or applicable state income tax laws or otherwise have a material
adverse effect on the Certificates or Notes, and (ii) the requirements of
clauses (c), (d) and (f) above are met.
SECTION 11.2. No Recourse.
Each Certificateholder by accepting a Certificate acknowledges that such
Certificateholder's Certificates represent beneficial interests in the Trust
only and do not represent interests in or obligations of the Seller, the General
Partner, the Servicer, the Owner Trustee, the Indenture Trustee or any Affiliate
of any of the foregoing and no recourse may be had against such parties or their
assets, except as may be expressly set forth or contemplated in this Agreement,
the Certificates or the Related Documents.
SECTION 11.3. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the principles of conflicts of
laws thereof and the obligations, rights and remedies of the parties under this
Agreement shall be determined in accordance with such laws.
11-2
<PAGE>
SECTION 11.4. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.5. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the
Trust. The fractional undivided interests in the Trust represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and Certificates upon execution thereof by the Owner
Trustee pursuant to Section 3.3 are and shall be deemed fully paid.
SECTION 11.6. Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Except as
otherwise provided in this Agreement, no other Person shall have any right or
obligation hereunder.
SECTION 11.7. Counterparts.
For the purpose of facilitating its execution and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
SECTION 11.8. Notices.
All demands, notices and communications under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the GTGP or the Depositor, at the following address: c/o Green Tree
Financial Corporation, 1100 Landmark Towers, 345 St. Peter Street, St. Paul,
Minnesota 55102-1639, Attention: Chief Financial Officer, (b) in the case of
the Owner Trustee, at the Corporate Trust Office, and (c) in the case of each
Rating Agency, 1 State Street Plaza, New York, New York 10004 (for Fitch) and 26
Broadway, New York, New York 10004 (for Standard & Poor's), Attention: Asset-
Backed Surveillance or at such other address as shall be designated by any such
party in a written notice to the other parties. Notwithstanding the foregoing,
any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the
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<PAGE>
address of such Holder as shown in the Certificate Register, and any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
11-4
<PAGE>
IN WITNESS WHEREOF, the Depositor, GTGP and the Owner Trustee have caused
this Amended and Restated Trust Agreement to be duly executed by their
respective officers as of the day and year first above written.
GREEN TREE FINANCIAL CORPORATION,
as Depositor
By
--------------------------------
Name: Scott T. Young
Title: Senior Vice President and
Controller
GREEN TREE SECOND GP INC.
By
--------------------------------
Name: Joel H. Gottesman
Title: Senior Vice President and
Secretary
WILMINGTON TRUST COMPANY, as
Owner Trustee
By
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST 1997-D
THIS Certificate of Trust of GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST 1997-D (the "Trust"), dated as of December 1, 1997, is being duly
executed and filed by Wilmington Trust Company, a Delaware corporation, as
trustee, to form a business trust under the Delaware Business Trust Act (12 Del.
Code, (S) 3801 et seq.).
1. Name. The name of the business trust formed hereby is GREEN TREE
RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D.
2. Delaware Trustee. The name and business address of the trustee
of the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration.
3. This Certificate of Trust will be effective December ___, 1997.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has executed this Certificate of Trust as of the date first above
written.
WILMINGTON TRUST COMPANY,
as trustee
By
--------------------------------
Name:
Title:
A-1
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE NOTES TO THE EXTENT DESCRIBED IN THE
SALE AND SERVICING REFERRED TO HEREIN.
GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST 1997-D
7.25% ASSET-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below, the
property of which includes a pool of retail installment sale contracts and
promissory notes secured by new and used motorcycles, marine products (including
boats, boat trailers and outboard motors), keyboard instruments, horse trailers,
sport vehicles (including snowmobiles, personal watercraft and all-terrain
vehicles), trucks, personal aircraft, and recreational vehicles, and retail
installment contracts and promissory notes financing home improvements, and
closed-end home equity loans, all sold to the Trust by Green Tree Financial
Corporation.
This Certificate does not represent an obligation of, or an interest in, Green
Tree Financial Corporation or any affiliate thereof.
Certificate No. 1 Denomination: $28,400,000
Aggregate Denomination of all
Certificates: $28,400,000
Pass-Through Rate: 7.25%
First Distribution Date:
January 15, 1998 Final Scheduled Distribution Date:
March 15, 2029
Servicer:
Green Tree Financial Corporation CUSIP: 393533 ____
[Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York Corporation ("DTC") to the Owner Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
B-1
<PAGE>
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.]
THIS CERTIFIES THAT Cede & Co. is the registered owner of a nonassessable,
fully paid, fractional undivided interest in the Green Tree Recreational
Equipment & Consumer Trust 1997-D (the "Trust"). The Trust was created pursuant
to an Amended and Restated Trust Agreement, dated as of December 1, 1997 (the
"Trust Agreement"), among Green Tree Financial Corporation, as depositor (the
"Depositor"), Green Tree Second GP Inc. (the "General Partner"), and Wilmington
Trust Company, not in its individual capacity but solely as owner trustee (the
"Owner Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in the Trust Agreement or
the Sale and Servicing Agreement, dated as of December 1, 1997 (the "Sale and
Servicing Agreement"), between the Trust and Green Tree Financial Corporation
(the "Seller"), in its individual capacity and as servicer (the "Servicer").
This Certificate is one of the duly authorized Certificates designated as
"7.25% Asset-Backed Certificates" (herein called the "Certificates"). The Trust
has also issued under the Indenture, dated as of December 1, 1997, between the
Trust and First Trust National Association, as trustee, one class of floating
rate Notes designed as the Class A-1 Floating Rate Asset-Backed Notes and four
classes of fixed rate Notes designated as the Class A-1:HE/HI, Class A-2, Class
A-3 and Class A-4 Asset-Backed Notes (collectively, the "Notes"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (as more fully described in the
Trust Agreement) a pool of retail installment sale contracts and promissory
notes for new and used motorcycles, marine products (including boats, boat
trailers and outboard motors), keyboard instruments, horse trailers, sport
vehicles (including snowmobiles, personal watercraft and all-terrain vehicles),
trucks, personal aircraft, and recreational vehicles, and retail installment
sales contracts and promissory notes financing home improvements, and closed-end
home equity loans, which home equity loans and some of which home improvement
loans are secured by a lien on real property (collectively, the "Contracts"),
certain monies paid or due thereunder on or after the Cut-Off Date, or
Subsequent Cut-Off Date with respect to Subsequent Contracts, an assignment of
the Seller's security interests in the Products and real property liens, certain
bank accounts and property (including the right to receive Liquidation Proceeds)
securing the Contracts, and proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Distribution Date"), commencing on January 15, 1998 to the
person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding such Distribution Date (the "Record
Date"), such Certificateholder's fractional undivided
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<PAGE>
interest in the sum of (a) the Certificateholders' Interest Distributable Amount
and (b) the Certificateholders' Principal Distributable Amount to the extent of
the funds available therefor.
It is the intent and agreement of the Depositor, the General Partner, the
Servicer and the Certificateholders that, for purposes of Federal income, state
and local income and franchise and any other income taxes, the Trust will be
treated as a partnership and the Certificateholders will be treated as partners
in that partnership. The Certificateholders, by acceptance of a Certificate,
agree to treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as partnership interests in the Trust.
Each Certificateholder, by its acceptance of a Certificate, covenants and
agrees that such Certificateholder will not at any time institute against the
General Partner or join in any institution against the Depositor, the Trust or
the General Partner of any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Certificates, the Notes, the Trust Agreement or any of the Related
Documents.
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Owner Trustee or the Paying Agent by check or
money order mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the making
of any notation hereon. Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Owner Trustee of the pendency of such distribution
and only upon presentation and surrender of this Certificate at the office or
agency maintained for that purpose by the Owner Trustee. The Record Date
otherwise applicable to distributions shall not be applicable to such final
distribution.
The Certificates do not represent an obligation of, or an interest in, the
Seller, the Servicer, the Owner Trustee or any Affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Contracts, all as more specifically set forth in the
Trust Agreement. A copy of the Trust Agreement may, upon request, be examined
by any Certificateholder during normal business hours at the principal office of
the Seller and at such other places, if any, designated by the Seller.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor, the General Partner and the Owner
Trustee. In certain limited circumstances, the Trust Agreement may only be
amended with the consent of the Holders of Certificates evidencing not less than
a majority of the Certificate Principal Balance and, in certain circumstances,
100% of the Certificate Principal Balance. Any such consent by the Holder
B-3
<PAGE>
of this Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent is made upon this Certificate.
As provided in the Trust Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in Wilmington, Delaware accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate fractional undivided interest in the Trust issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Wilmington Trust Company.
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title 1
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding
this Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $1,000 and integral multiples thereof. As provided
in the Trust Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized denominations
of a like aggregate fractional undivided interest, as requested by the Holder
surrendering the same. No service charge will be made for any such registration
of transfer or exchange, but the Owner Trustee may require payment of a sum
sufficient to cover any tax or governmental charges payable in connection
therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and neither the Owner Trustee, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Trust Agreement and
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement and the
disposition of all property held as part of the Trust. The Servicer or the
Seller may at its option purchase the corpus of the Trust at a price specified
in the Sale and Servicing Agreement, and such purchase of the Contracts and
other property of the Trust will effect early retirement of the Certificates;
provided,
B-4
<PAGE>
however, such right of purchase is exercisable only as of a Record Date as of
which the Pool Scheduled Principal Balance is less than or equal to 10% of the
Cutoff Date Pool Principal Balance.
The recitals contained herein shall be taken as the statements of the
Depositor, the General Partner or the Servicer, as the case may be, and the
Owner Trustee assumes no responsibility for the correctness thereof. The Owner
Trustee makes no representations as to the validity or sufficiency of this
Certificate or of any Contract or related document.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Owner Trustee, by manual or facsimile signature,
this Certificate shall not entitle the Holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: December __, 1997 GREEN TREE RECREATIONAL,
EQUIPMENT & CONSUMER TRUST 1997-D
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By
--------------------------------
Name:
Title:
Attest:
---------------------------
Name:
Title:
B-5
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By
--------------------------------
as Authenticating Agent
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto __________________________________________________________________ (PLEASE
INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE)
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *
Signature Guaranteed:
*
*NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-7
<PAGE>
EXHIBIT 4.3
================================================================================
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D
_____________________________
INDENTURE
Dated as of December 1, 1997
_____________________________
FIRST TRUST NATIONAL ASSOCIATION
Trustee
================================================================================
<PAGE>
CROSS REFERENCE TABLE
TIA Indenture
Section Section
- --------- ----------
310(a)(1).................................................. 6.11
(a)(2)................................................... 6.11
(a)(3)................................................... 6.10
(a)(4)................................................... N.A.
(a)(5)................................................... 6.11
(b)...................................................... 6.08; 6.11
(c)...................................................... N.A.
311(a)..................................................... 6.12
(b)...................................................... 6.12
(c)...................................................... N.A.
312(a)..................................................... 7.01
(b)...................................................... 7.02
(c)...................................................... 7.02
313(a)..................................................... 7.04
(b)(1)................................................... 7.04
(b)(2)................................................... 7.04
(c)...................................................... 11.05
(d)...................................................... 7.04
314(a)..................................................... 7.03
(b)...................................................... 3.06
11.15
(c)(1)................................................... 11.01
(c)(2)................................................... 11.01
(c)(3)................................................... 11.01
(d)...................................................... 11.01
(e)...................................................... 11.01
(f)...................................................... 11.01
315(a)..................................................... 6.01
(b)...................................................... 6.05
11.05
(c)...................................................... 6.01
(d)...................................................... 6.01
(e)...................................................... 5.14
316(a)(last sentence)...................................... 1.01
(a)(1)(A)................................................ 5.12
(a)(1)(B)................................................ 5.13
(a)(2)................................................... N.A.
(b)...................................................... 5.08
(c)...................................................... N.A.
317(a)(1).................................................. 5.03
(a)(2)................................................... 5.03
(b)...................................................... 3.03
318(a)..................................................... 11.07
- -------------------
Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture. N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - Definitions and Incorporation by Reference......................... 1-1
SECTION 1.01. Definitions................................................... 1-1
SECTION 1.02. Incorporation by Reference of Trust Indenture Act............. 1-9
SECTION 1.03. Rules of Construction......................................... 1-10
ARTICLE II - The Notes......................................................... 2-1
SECTION 2.01. Form.......................................................... 2-1
SECTION 2.02. Execution, Authentication and Delivery........................ 2-1
SECTION 2.03. Temporary Notes............................................... 2-2
SECTION 2.04. Registration; Registration of Transfer and Exchange........... 2-2
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes.................... 2-4
SECTION 2.06. Person Deemed Owner........................................... 2-5
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest......... 2-5
SECTION 2.08. Cancellation.................................................. 2-6
SECTION 2.09. Book-Entry Notes.............................................. 2-6
SECTION 2.10. Notices to Depository......................................... 2-7
SECTION 2.11. Definitive Notes.............................................. 2-7
ARTICLE III - Covenants........................................................ 3-1
SECTION 3.01. Payment of Principal, Interest and Premium.................... 3-1
SECTION 3.02. Maintenance of Office or Agency............................... 3-1
SECTION 3.03. Money for Payments To Be Held in Trust........................ 3-1
SECTION 3.04. Existence..................................................... 3-3
SECTION 3.05. Protection of Trust Estate.................................... 3-3
SECTION 3.06. Opinions as to Trust Estate................................... 3-4
SECTION 3.07. Performance of Obligations; Servicing of Contracts............ 3-4
SECTION 3.08. Negative Covenants............................................ 3-5
SECTION 3.09. Annual Statement as to Compliance............................. 3-6
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Terms............ 3-6
SECTION 3.11. Successor or Transferee....................................... 3-8
SECTION 3.12. No Other Business............................................. 3-9
SECTION 3.13. No Borrowing.................................................. 3-9
SECTION 3.14. Servicer's Obligations........................................ 3-9
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities............. 3-9
SECTION 3.16. Capital Expenditures.......................................... 3-9
SECTION 3.17. Restricted Payments........................................... 3-9
SECTION 3.18. Notice of Events of Default................................... 3-10
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
SECTION 3.19. Further Instruments and Acts.................................. 3-10
SECTION 3.20. Compliance with Laws.......................................... 3-10
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement.................................................... 3-10
SECTION 3.22. Removal of Administrator...................................... 3-10
SECTION 3.23. Income Tax Characterization................................... 3-10
ARTICLE IV - Satisfaction and Discharge...................................... 4-1
SECTION 4.01. Satisfaction and Discharge of Indenture....................... 4-1
SECTION 4.02. Application of Trust Money.................................... 4-2
SECTION 4.03. Repayment of Moneys Held by Paying Agent...................... 4-2
SECTION 4.04. Release of Trust Estate....................................... 4-2
ARTICLE V - Remedies......................................................... 5-1
SECTION 5.01. Events of Default............................................. 5-1
SECTION 5.02. Rights upon Event of Default.................................. 5-2
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Trustee................................ 5-2
SECTION 5.04. Remedies...................................................... 5-4
SECTION 5.05. Optional Preservation of the Contracts........................ 5-5
SECTION 5.06. Priorities.................................................... 5-5
SECTION 5.07. Limitation of Suits........................................... 5-6
SECTION 5.08. Unconditional Rights of Noteholders To Receive Principal
and Interest................................................. 5-6
SECTION 5.09. Restoration of Rights and Remedies............................ 5-7
SECTION 5.10. Rights and Remedies Cumulative................................ 5-7
SECTION 5.11. Delay or Omission Not a Waiver................................ 5-7
SECTION 5.12. Control by Noteholders........................................ 5-7
SECTION 5.13. Waiver of Past Defaults....................................... 5-8
SECTION 5.14. Undertaking for Costs......................................... 5-8
SECTION 5.15. Waiver of Stay or Extension Laws.............................. 5-8
SECTION 5.16. Action on Notes............................................... 5-9
SECTION 5.17. Performance and Enforcement of Certain Obligations............ 5-9
ARTICLE VI - The Trustee....................................................... 6-1
SECTION 6.01. Duties of Trustee............................................. 6-1
SECTION 6.02. Rights of Trustee............................................. 6-3
SECTION 6.03. Individual Rights of Trustee.................................. 6-4
SECTION 6.04. Trustee's Disclaimer.......................................... 6-4
SECTION 6.05. Notice of Defaults............................................ 6-4
SECTION 6.06. Reports by Trustee to Holders................................. 6-4
SECTION 6.07. Compensation and Indemnity.................................... 6-4
SECTION 6.08. Replacement of Trustee........................................ 6-5
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 6.09. Successor Trustee by Merger................................... 6-7
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee................. 6-7
SECTION 6.11. Eligibility; Disqualification................................. 6-8
SECTION 6.12. Preferential Collection of Claims Against Issuer.............. 6-8
SECTION 6.13. Trustee to Cooperate.......................................... 6-9
SECTION 6.14. Certain Matters Relating to FHA Insurance...................... 6-10
ARTICLE VII - Noteholders' Lists and Reports................................... 7-1
SECTION 7.01. Issuer To Furnish Trustee Names and Addresses to Noteholders.. 7-1
SECTION 7.02. Preservation of Information; Communications to Noteholders.... 7-1
SECTION 7.03. Reports by Issuer............................................. 7-1
SECTION 7.04. Reports by Trustee............................................ 7-2
ARTICLE VIII - Accounts, Disbursements and Releases............................ 8-1
SECTION 8.01. Collection of Money........................................... 8-1
SECTION 8.02. Trust Accounts................................................ 8-1
SECTION 8.03. Pre-Funding Account........................................... 8-6
SECTION 8.04. General Provisions Regarding Accounts......................... 8-6
ARTICLE IX - Supplemental Indentures........................................... 9-1
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders........ 9-1
SECTION 9.02. Supplemental Indentures With Consent of Noteholders........... 9-2
SECTION 9.03. Execution of Supplemental Indentures.......................... 9-4
SECTION 9.04. Effect of Supplemental Indenture.............................. 9-4
SECTION 9.05. Conformity With Trust Indenture Act........................... 9-4
SECTION 9.06. Reference in Notes to Supplemental Indentures................. 9-4
ARTICLE X - Redemption of Notes................................................ 10-1
SECTION 10.01. Redemption................................................... 10-1
SECTION 10.02. Form of Redemption Notice.................................... 10-1
SECTION 10.03. Notes Payable on Redemption Date............................. 10-2
ARTICLE XI - Miscellaneous..................................................... 11-1
SECTION 11.01. Compliance Certificates and Opinions, etc.................... 11-1
SECTION 11.02. Form of Documents Delivered to Trustee....................... 11-3
SECTION 11.03. Acts of Noteholders.......................................... 11-3
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating Agencies........ 11-4
SECTION 11.05. Notices to Noteholders; Waiver............................... 11-5
SECTION 11.06. Alternate Payment and Notice Provisions...................... 11-5
SECTION 11.07. Conflict with Trust Indenture Act............................ 11-5
SECTION 11.08. Effect of Headings and Table of Contents..................... 11-6
SECTION 11.09. Successors and Assigns....................................... 11-6
SECTION 11.10. Severability................................................. 11-6
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
SECTION 11.11. Benefits of Indenture........................................ 11-6
SECTION 11.12. Legal Holidays............................................... 11-6
SECTION 11.13. Governing Law................................................ 11-6
SECTION 11.14. Counterparts................................................. 11-6
SECTION 11.15. Recording of Indenture....................................... 11-6
SECTION 11.16. Trust Obligation............................................. 11-7
SECTION 11.17. No Petition.................................................. 11-7
SECTION 11.18. Inspection................................................... 11-7
</TABLE>
Exhibit A-1 Form of Class A-1:HE/HI, Class A-2, Class A-3 and Class A-4 Note
Exhibit A-2 Form of Class A-1 Note
iv
<PAGE>
INDENTURE, dated as of December 1, 1997, between Green Tree
Recreational, Equipment & Consumer Trust 1997-D, a Delaware business trust (the
"Issuer"), and First Trust National Association, a national banking association
organized and existing under the laws of the United States of America, in its
capacity as trustee (the "Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's Class A-1:HE/HI
Fixed Rate Asset-Backed Notes (the "Class A-1:HE/HI Notes"), Class A-1 Floating
Rate Asset-Backed Notes (the "Class A-1 Notes"), Class A-2 Fixed Rate Asset-
Backed Notes (the "Class A-2 Notes"), Class A-3 Fixed Rate Asset-Backed Notes
(the "Class A-3 Notes"), and Class A-4 Fixed Rate Asset-Backed Notes (the "Class
A-4 Notes") (the Class A-1:HE/HI Notes, Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes are referred to collectively as the
"Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Indenture Collateral (as defined below) as collateral for the benefit of the
Trustee on behalf of the Noteholders.
GRANTING CLAUSE
The Issuer hereby Grants, transfers and assigns to the Trustee on the
Closing Date, on behalf of and for the benefit of the Noteholders, without
recourse, all of the Issuer's right, title and interest in and to: (a) the
Contracts (including but not limited to the Subsequent Contracts and the
Collateral Security), any and all rights to receive payments on or in respect of
the Contracts, excluding any payments due pursuant thereto prior to the Cutoff
Date, or Subsequent Cut-off Date in respect of the Subsequent Contracts; (b) the
Insurance Policies on any Products or real property securing a Contract for the
benefit of the creditor of such Contract and all blanket insurance policies to
the extent they relate to the Contracts; (c) all rights the Issuer or the Seller
may have against the originating dealer, contractor or lender with respect to
the Contracts not originated by the Seller; (d) the Errors and Omissions
Protection Policy as such policy relates to the Contracts; (e) all items
contained in the Contract Files; (f) the Trust Accounts (other than the
Certificate Distribution Account) and all funds on deposit therein from time to
time, and all investments and proceeds thereof (including all income thereon);
(g) the Sale and Servicing Agreement; (h) the Interest Rate Cap Agreement,
including all rights to payments thereunder; and (i) all present and future
claims, demands, causes and choses in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion, voluntary or involuntary, into cash or other liquid property,
all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and Contracts, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing
(collectively, the "Indenture Collateral").
1
<PAGE>
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Trustee, for the benefit of the Holders of the Notes acknowledges
such Grant. The Trustee on behalf of the Holders of the Notes accepts the
trusts under this Indenture in accordance with the provisions of this Indenture
and agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
2
<PAGE>
ARTICLE I
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.01. Definitions.
Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture. Except as otherwise defined herein, all terms
defined in any Related Document and not otherwise defined in this Indenture
shall have the meanings given them in such Related Document.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as of
December 1, 1997, among the Administrator, the Issuer and the Trustee, as the
same may be amended and supplemented from time to time.
"Administrator" means Green Tree Financial Servicing Corporation, a
Delaware corporation, or any successor Administrator under the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, 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" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter).
"Book-Entry Note" means any Note 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 Saturday, Sunday, legal holiday
or other day on which commercial banking institutions in Minneapolis, Minnesota,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee or successor Trustee are authorized or
obligated by law, executive order or governmental decree to remain closed.
1-1
<PAGE>
"Calculation Agent" means the Person who establishes LIBOR with respect to
each Interest Reset Period. The Calculation Agent shall be the Trustee unless
the Trustee is unable or unwilling so to act, in which case the Calculation
Agent shall be a financial institution appointed by the Issuer.
"Certificate of Trust" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit A to the Trust Agreement.
"Certificates" means the 7.25% Asset-Backed Certificates issued under the
Trust Agreement.
"Class A-1 Notes" means the Class A-1 Floating Rate Asset-Backed Notes
substantially in the form of Exhibit A-2.
"Class A-1:HE/HI Notes" means the Class A-1:HE/HI Fixed Rate Asset-Backed
Notes substantially in the form of Exhibit A-1.
"Class A-2 Notes" means the Class A-2 Fixed Rate Asset-Backed Notes
substantially in the form of Exhibit A-1.
"Class A-3 Notes" means the Class A-3 Fixed Rate Asset-Backed Notes
substantially in the form of Exhibit A-1.
"Class A-4 Notes" means the Class A-4 Fixed Rate Asset-Backed Notes
substantially in the form of Exhibit A-1.
"Closing Date" means December 15, 1997.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account established and maintained pursuant
to Section 6.01(a) of the Sale and Servicing Agreement.
"Company" means Green Tree Financial Corporation.
"Corporate Trust Office" means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered which
office at date of the execution of this Indenture is located at 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Corporate Trust Administration,
Structured Finance; or at such other address as the Trustee may designate from
time to time by notice to the Noteholders and the Issuer, or the principal
corporate trust office of any successor Trustee (and such successor Trustee will
notify the Noteholders and the Issuer of its address).
1-2
<PAGE>
"Custodian" means at any time an Eligible Institution, or a financial
institution organized under the laws of the United States or any State, which is
not an Affiliate of the Company, which is subject to supervision and examination
by Federal or State authorities and whose commercial paper or unsecured long-
term debt (or, in the case of a member of a bank holding company system, the
commercial paper or unsecured long-term debt of such bank holding company) has
been rated A-1 by Standard & Poor's and F-1 by Fitch in the case of commercial
paper, or BBB+ or higher by both Standard & Poor's and Fitch in the case of
unsecured long-term debt, as is acting at such time as Custodian of the Contract
Files pursuant to Section 6.01(k).
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.09.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of $167,923,639 in
aggregate principal amount of the Class A-1:HE/HI Notes, $284,990,000 in
aggregate principal amount of the Class A-1 Notes, $46,850,000 in aggregate
principal amount of the Class A-2 Notes, $22,720,000 in aggregate principal
amount of the Class A-3 Notes, and $17,040,000 in aggregate principal amount of
the Class A-4 Notes, as of the Closing Date, and any permitted successor
depository. The Depository shall at all times be a "clearing corporation" as
defined in the UCC of the State of New York.
"Depository Agreement" means the agreement among the Issuer, the Trustee,
the Administrator, and The Depository Trust Company, as the initial Depository,
dated as of the Closing Date, relating to the Notes, as it may be amended or
supplemented from time to time.
"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.
"Distribution Date" means the fifteenth day of each calendar month during
the term of this Indenture or if such day is not a Business Day, the next
succeeding Business Day, commencing in January 1998.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, any Responsible Officer, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
1-3
<PAGE>
"Final Scheduled Distribution Date" means March 15, 2029 (or, if such day
is not a Business Day, the next succeeding Business Day).
"General Partner" means each Certificateholder obligated to pay the
expenses of the Issuer pursuant to Section 2.7 of the Trust Agreement.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to this Indenture. A Grant of the Indenture Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Indenture Collateral and all
other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the Granting party or otherwise and
generally to do and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Indenture Collateral" has the meaning specified in the Granting Clause of
this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Company and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest
1-4
<PAGE>
or any material indirect financial interest in the Issuer, any such other
obligor, the Company or any Affiliate of any of the foregoing Persons and (c) is
not connected with the Issuer, any such other obligor, the Company or any
Affiliate of any of the foregoing Persons as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Trustee under the circumstances described in, and otherwise complying with,
the applicable requirements of Section 11.01, made by an Independent appraiser
or other expert appointed by an Issuer Order and approved by the Trustee in the
exercise of reasonable care, and such opinion or certificate shall state that
the signer has read the definition of "Independent" in this Indenture and that
the signer is Independent within the meaning thereof.
"Interest Rate" means the Class A-1:HE/HI Interest Rate, the Class A-1
Interest Rate, the Class A-2 Interest Rate, the Class A-3 Interest Rate or the
Class A-4 Interest Rate, as applicable.
"Issuer" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Trustee.
"Note" means a Class A-1:HE/HI Note, Class A-1 Note, Class A-2 Note, Class
A-3 Note or Class A-4 Note.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(a) of the Sale and Servicing
Agreement.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Depository,
or on the books of a Person maintaining an account with such Depository
(directly as a Depository participant or as an indirect participant, in each
case in accordance with the rules of such Depository) and with respect to any
Definitive Notes, the Holder.
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.04.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Trustee. Unless otherwise specified, any reference in this Indenture to an
Officer's Certificate shall be to an Officer's Certificate of any Authorized
Officer of the Issuer.
1-5
<PAGE>
"Opinion of Counsel" means one or more written opinions of counsel who may,
except as otherwise expressly provided in this Indenture, be employees of or
counsel to the Issuer and who shall be satisfactory to the Trustee and which
shall comply with any applicable requirements of Section 11.01, and shall be in
form and substance satisfactory to the Trustee.
"Original Class A-1:HE/HI Principal Balance" means $167,923,639.
"Original Class A-1 Principal Balance" means $284,990,000.
"Original Class A-2 Principal Balance" means $46,850,000.
"Original Class A-3 Principal Balance" means $22,720,000.
"Original Class A-4 Principal Balance" means $17,040,000.
"Original Note Principal Balance" means the sum of the Class A-1:HE/HI,
Class A-1, Class A-2,Class A-3, and Class A-4 Original Class Principal Balance.
"Outstanding" means, as of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor, satisfactory
to the Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a
bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Related Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Company or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that the Trustee knows to be so owned
shall be so disregarded. Notes so owned that have been pledged in good faith
may
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be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, any other obligor upon the Notes, the Company or any
Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
owner trustee under the Trust Agreement.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the distributions from the Note Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency" means each of Fitch and Standard & Poor's, so long as such
Persons maintain a rating on the Notes; and if either Fitch or Standard & Poor's
no longer maintains a rating on the Notes, such other nationally recognized
statistical rating organization selected by the Company.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Company, the Servicer, the Trustee, the
Owner Trustee and the Issuer in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Notes.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the last Business Day immediately preceding such
Distribution Date or Redemption Date.
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"Redemption Date" means in the case of a redemption of the Notes pursuant
to Section 10.01(a) or a payment to Noteholders pursuant to Section 10.01(b),
the Distribution Date specified by the Servicer or the Issuer pursuant to
Section 10.01(a) or 10.01(b), as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the principal amount of the
Notes redeemed plus accrued and unpaid interest on the principal amount of each
class of Notes at the respective Interest Rate for each such class of Notes
being so redeemed to but excluding the Redemption Date, or (b) in the case of a
payment made to Noteholders pursuant to Section 10.01(b), the amount on deposit
in the Note Distribution Account, but not in excess of the amount specified in
clause (a) above.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Related Documents" means the Trust Agreement, the Certificates, the Notes,
the Sale and Servicing Agreement, the Administration Agreement, the Note
Depository Agreement, the Interest Rate Cap Agreement and the Underwriting
Agreement. The Related Documents executed by any party are referred to herein
as "such party's Related Documents," "its Related Documents" or by a similar
expression.
"Responsible Officer" means, with respect to the Trustee, any officer of
the Trustee assigned by the Trustee to administer its corporate trust affairs
relating to the Trust Estate.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of December 1, 1997, among the Issuer, the Company and the Servicer as
the same may be amended or supplemented from time to time.
"Secured Obligations" means all amounts and obligations which the Issuer
may at any time owe to or on behalf of the Trustee for the benefit of the
Noteholders under this Indenture or the Notes.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Termination Date" means the date on which the Trustee shall have received
payment and performance of all Secured Obligations.
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of this
Indenture for the benefit of the Noteholders (including, without limitation, the
Indenture Collateral Granted to the Trustee), including all proceeds thereof.
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"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Trustee" means First Trust National Association, a national banking
association organized under the laws of the United States, as Trustee under this
Indenture, or any successor Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless otherwise specified:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
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(v) words in the singular include the plural and words in the plural
include the singular; and
(vi) references to Sections, Subsections, Schedules and Exhibits
shall refer to such portions of this Indenture.
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ARTICLE II
The Notes
---------
SECTION 2.01. Form. The Class A-1:HE/HI Notes, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes, in each case
together with the Trustee's certificate of authentication, shall be in
substantially the forms set forth in Exhibits A-1 and A-2 with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods all as determined by the officers
executing such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibits A-1 and A-2 are part of the terms of this Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of an Issuer Order, authenticate and
deliver Class A-1:HE/HI Notes in an aggregate principal amount of $167,923,639,
Class A-1 Notes in an aggregate principal amount of $284,990,000, Class A-2
Notes in an aggregate principal amount of $46,850,000, Class A-3 Notes in an
aggregate principal amount of $22,720,000, and Class A-4 Notes in an aggregate
principal amount of $17,040,000. The aggregate principal amount of Class A-
1:HE/HI Notes, Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes outstanding at any time may not exceed that amount except as
provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Trustee by the manual signature of one of its authorized signatories, and such
certificate upon any Note shall be conclusive
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evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to be
prepared without unreasonable delay. After the preparation of Definitive Notes,
the temporary Notes shall be exchangeable for Definitive Notes upon surrender of
the temporary Notes at the office or agency of the Issuer to be maintained as
provided in Section 3.02, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Notes, the Issuer shall execute and
the Trustee shall authenticate and deliver in exchange therefor a like principal
amount of Definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits under
this Indenture as Definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations, of a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are
so surrendered for
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exchange, the Issuer shall execute, and the Trustee shall authenticate and the
Noteholder shall obtain from the Trustee, the Notes which the Noteholder making
the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee and such security or indemnity as may be
required by them to hold the Issuer and the Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Trustee that such
Note has been acquired by a bona fide purchaser, the Issuer shall execute and
upon its request the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note; provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven days shall be due and
payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such
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Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer or
the Trustee may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Person Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the Class
A-1:HE/HI Note, the Class A-2 Note, the Class A-3 Note and the Class A-4 Note
set forth in Exhibit A-1 and the Class A-1 Note set forth in Exhibit A-2, and
such interest shall be payable on each Distribution Date as specified therein,
subject to Section 3.01. Any installment of interest or principal, if any,
payable on any Note which is punctually paid or duly provided for by the Issuer
on the applicable Distribution Date shall be paid to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the Record Date,
by check mailed first-class, postage prepaid to such Person's address as it
appears on the Note Register on such Record Date, except that, unless Definitive
Notes have been issued pursuant to Section 2.11, with respect to Notes
registered on the Record Date in the name of the nominee of the Depository,
payment will be made by wire transfer in immediately available funds to the
account designated by such nominee and except for (i) the final installment of
principal payable with respect to such Note on a Distribution Date and (ii) the
Redemption Price for any Note called for redemption pursuant to Section
10.01(a),
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which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the form of the Class A-1:HE/HI Note, the Class
A-2 Note, the Class A-3 Note and the Class A-4 Note set forth in Exhibit A-1 and
the Class A-1 Note set forth in Exhibit A-2. Notwithstanding the foregoing, the
entire unpaid principal amount of the Notes shall be due and payable, if not
previously paid, on the date on which an Event of Default shall have occurred
and be continuing and the Trustee or a Note Majority have declared the Notes to
be immediately due and payable in the manner provided in Section 5.02. All
principal payments on a class of Notes shall be made pro rata to the Noteholders
of such class entitled thereto. The Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date preceding
the Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be
mailed no later than five days prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in
connection with redemptions of Notes shall be mailed to Noteholders as provided
in Section 10.02.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it, provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository,
by, or on behalf of, the Issuer. Each such Note shall initially be registered
on the Note Register in the name of Cede & Co., the nominee of the initial
Depository, and no Note Owner will receive a Definitive Note representing such
Note Owner's interest in such Note, except as provided in Section 2.11. Unless
and until definitive, fully registered Notes (the "Definitive Notes") have been
issued to Note Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and effect;
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(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Note Owners and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until
Definitive Notes are issued pursuant to Section 2.11, the initial
Depository will make book-entry transfers among the Depository Participants
and receive and transmit payments of principal of and interest on the Notes
to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Depository
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Depository
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Trustee.
SECTION 2.10. Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Depository and shall have no
obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Administrator advises the
Trustee in writing that the Depository is no longer willing or able properly to
discharge its responsibilities with respect to the Notes, and the Administrator
is unable to locate a qualified successor, (ii) the Administrator at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Default, a
Note Majority advises the Depository in writing that the continuation of a book-
entry system through the Depository is no longer in the best interests of the
Note Owners, then the Depository shall notify all Note Owners and the Trustee of
the occurrence of any such event and of the availability of Definitive Notes to
Note Owners requesting the same. Upon surrender to the Trustee of the Note or
Notes representing the Book-Entry Notes by the Depository, accompanied by
registration instructions, the Issuer shall execute and the Trustee shall
authenticate the Definitive Notes in accordance with the
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instructions of the Depository. None of the Issuer, the Note Registrar or the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Trustee shall recognize the Holders
of the Definitive Notes as Noteholders.
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ARTICLE III
Covenants
---------
SECTION 3.01. Payment of Principal, Interest and Premium. The Issuer will
duly and punctually pay the principal and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
the Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Distribution Date in accordance with Section 8.02(c).
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will maintain
in St. Paul, Minnesota, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Trustee to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Trustee of the
location, and of any change in the location, of any such office or agency. If
at any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Trustee with the address thereof, such surrenders, notices
and demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Trustee as its agent to receive all such surrenders, notices
and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made pursuant to Section 8.02(c) from amounts withdrawn from the
Trust Accounts shall be made on behalf of the Issuer by the Trustee or by
another Paying Agent, and no amounts so withdrawn shall be paid over to the
Issuer.
On or before each Distribution Date and Redemption Date, the Issuer shall
deposit or cause to be deposited in the Note Distribution Account an aggregate
sum sufficient to pay the amounts then becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto and (unless the Paying
Agent is the Trustee) shall promptly notify the Trustee of its action or failure
so to act.
The Issuer will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee (and if the Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and pay such sums to such Persons as herein provided;
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(ii) give the Trustee notice of any default (of which it has actual
knowledge) by the Issuer (or any other obligor upon the Notes) in the
making of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which the sums were held by such Paying Agent; and upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money held
by the Trustee or any Paying Agent in trust for the payment of any amount due
with respect to any Note and remaining unclaimed for two years after such amount
has become due and payable shall be discharged from such trust and upon Issuer
Request shall be deposited by the Trustee in the Collection Account; and the
Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to or for the account of the
Issuer. The Trustee may also adopt and employ, at the expense of the Issuer,
any other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes have been
called but have not been surrendered for redemption or whose right to or
interest in moneys due and payable but not claimed is determinable from the
records of the Trustee or of any Paying Agent, at the last address of record for
each such Holder).
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SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Indenture Collateral and each
other instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer intends the security
interest Granted pursuant to this Indenture in favor of the Trustee to be prior
to all other liens in respect of the Trust Estate, and the Issuer shall take all
actions necessary to obtain and maintain, in favor of the Trustee, for the
benefit of the Noteholders, a first lien on and a first priority, perfected
security interest in the Trust Estate. The Issuer will from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(i) grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the Indenture Collateral;
(v) preserve and defend title to the Trust Estate and the rights of
the Trustee in such Trust Estate against the claims of all persons and
parties; or
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
SECTION 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the
Issuer shall furnish to the Trustee an Opinion of Counsel to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed
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and filed that are necessary to create and continue the Trustee's first priority
perfected security interest in the collateral for the benefit of the
Noteholders, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (ii) no such action
shall be necessary to perfect such security interest; and
(b) Within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cutoff
Date, the Issuer shall furnish to the Trustee an Opinion of Counsel, dated as of
a date during such 90-day period, to the effect that, in the opinion of such
counsel, either (i) all financing statements and continuation statements have
been executed and filed that are necessary to create and continue the Trustee's
first priority perfected security interest in the collateral for the benefit of
the Noteholders, and reciting the details of such filing or referring to prior
Opinions of Counsel in which such details are given, or (ii) no such action
shall be necessary to perfect such security interest.
SECTION 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in performing
its duties under this Indenture, and any performance of such duties by a Person
identified to the Trustee in an Officer's Certificate of the Issuer shall be
deemed to be action taken by the Issuer. Initially, the Issuer has contracted
with the Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Related Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement in accordance with and within the time periods
provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of an "Event of
Termination" under the Sale and Servicing Agreement, the Issuer shall promptly
notify the Trustee and the Rating Agencies thereof, and shall specify in such
notice the action, if any, the Issuer is taking with respect of such default.
If an "Event of Termination" shall arise from the failure of the Servicer to
perform any of its duties or obligations under the Sale and Servicing Agreement
with respect to the Contracts, the Issuer shall take all reasonable steps
available to it to remedy such failure.
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(e) If the Issuer has given notice of termination to the Servicer of the
Servicer's rights and powers pursuant to Section 7.02 of the Sale and Servicing
Agreement, as promptly as possible thereafter, a successor servicer shall be
appointed in accordance with Section 7.03 of the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the Trustee.
As soon as a successor Servicer is appointed, the Issuer shall notify the
Trustee of such appointment, specifying in such notice the name and address of
such successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer, the Trustee or the Company of their respective
duties under the Related Documents if the effect thereof would adversely affect
the Holders of the Notes.
SECTION 3.08. Negative Covenants. Until the Termination Date, the Issuer
shall not:
(i) except as expressly permitted by this Indenture or the Sale and
Servicing Agreement, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those included in the
Trust Estate, unless directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from the principal,
interest or premium payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien in favor of the Trustee created by this
Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture except as may be
expressly permitted hereby, (B) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance (other than the lien in
favor of the Trustee created by this Indenture) to be created on or extend
to or otherwise arise upon or burden the Trust Estate or any part thereof
or any interest therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law, in each
case on a Financed Product and arising solely as a result of an action or
omission of the related Obligor), (C) permit the lien in favor of the
Trustee created by this Indenture not to constitute a valid first priority
(other than with respect to any such tax, mechanics' or other lien)
security interest in the Trust Estate, or (D) amend, modify or fail to
comply with the provisions of the Related Documents without the prior
written consent of the Trustee.
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SECTION 3.09. Annual Statement as to Compliance. The Issuer will deliver
to the Trustee, within 120 days after the end of each fiscal year of the Issuer
(commencing with the fiscal year ended December 31, 1998), an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in the compliance of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form and substance satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this Indenture
and each other Related Document on the part of the Issuer to be performed
or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Trustee to the effect that
such transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Trustee by this Indenture shall have been
taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the actions
taken
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as required by clause (a)(v) of this Section 3.10 or that no such actions
will be taken) each stating that such consolidation or merger and such
supplemental indenture comply with this Article III and that all conditions
precedent herein provided for relating to such transaction have been
compiled with (including any filing required by the Exchange Act); and
(vii) the Issuer or the Person (if other than the Issuer) formed by
or surviving such consolidation or merger has a net worth, immediately
after such consolidation or merger, that is (a) greater than zero and (b)
not less than the net worth of the Issuer immediately prior to giving
effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of its
properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Indenture or the Sale and Servicing
Agreement), unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any State, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form and substance satisfactory
to the Trustee, the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every agreement
and covenant of this Indenture and each Related Document on the part of the
Issuer to be performed or observed, all as provided herein, (C) expressly
agree by means of such supplemental indenture that all right, title and
interest so conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense arising
under or related to this Indenture and the Notes and (E) expressly agree by
means of such supplemental indenture that such Person (or if a group of
Persons, then one specified Person) shall make all filings with the
Commission (and any other appropriate Person) required by the Exchange Act
in connection with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Trustee to the effect that
such transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
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(v) any action as is necessary to maintain the lien and security
interest created in favor of the Trustee by this Indenture shall have been
taken;
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel (which shall describe the actions
taken as required by clause (b)(v) of this Section 3.10 or that no such
actions will be taken) each stating that such conveyance or transfer and
such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act); and
(vii) the Person acquiring by conveyance or transfer the properties
or assets of the Issuer has a net worth, immediately after such conveyance
or transfer, that is (a) greater than zero and (b) not less than the net
worth of the Issuer immediately prior to giving effect to such conveyance
or transfer.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Trustee stating that the Issuer is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the Related Documents
and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Related Documents. The proceeds of the Notes and the
Certificates shall be used exclusively to fund the Issuer's purchase of the
Contracts and the other assets specified in the Sale and Servicing Agreement, to
fund the Spread Account and to pay the Issuer's organizational, transactional
and start-up expenses.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the Servicer
to fulfill its obligations under the Sale and Servicing Agreement.
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SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Sale and Servicing Agreement or this Indenture, the
Issuer shall not make any loan or advance or credit to, or guarantee (directly
or indirectly or by an instrument having the effect of assuming another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, any other interest in, or make any capital
contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Restricted Payments. Except as expressly permitted by this
Indenture or the Sale and Servicing Agreement, the Issuer shall not, directly or
indirectly, (i) make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Related Documents.
SECTION 3.18. Notice of Events of Default. The Issuer agrees to give the
Trustee and the Rating Agencies prompt written notice of each Event of Default
hereunder and each default on the part of the Servicer or the Company of its
obligations under the Sale and Servicing Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of the Trustee,
the Issuer will execute and deliver such further instruments and do such further
acts as may be reasonably necessary or proper to carry out more effectively the
purpose of this Indenture.
SECTION 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the noncompliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Related Document.
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 10.03 of the
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Trustee or the Holders of the Notes consent
to amendments thereto as provided therein.
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SECTION 3.22. Removal of Administrator. So long as any Notes are issued
and outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
SECTION 3.23. Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Notes as indebtedness of the Issuer. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Note Owner by its acceptance of an interest in the applicable Book-
Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
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ARTICLE IV
Satisfaction and Discharge
--------------------------
SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal, interest and premium, if any, thereon, (iv) Sections 3.03, 3.04,
3.05, 3.07, 3.08, 3.10, 3.12, 3.13, 3.20, 3.21 and 3.23, (v) the rights,
obligations and immunities of the Trustee hereunder (including the rights of the
Trustee under Section 6.07 and the obligations of the Trustee under Section
4.02) and (vi) the rights of Noteholders as beneficiaries hereof with respect to
the property so deposited with the Trustee payable to all or any of them, and
the Trustee, on demand of and at the expense of the Issuer, shall execute proper
instruments acknowledging satisfaction and discharge of this Indenture with
respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.05 and (ii) Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the Trustee for
cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at the Final Scheduled
Distribution Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as part of
the Trust Estate cash or direct obligations
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of or obligations guaranteed by the United States of America (which will
mature prior to the date such amounts are payable), in trust in an Eligible
Account in the name of the Trustee for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation when due to the Final
Scheduled Distribution Date or Redemption Date (if Notes shall have been
called for redemption pursuant to Section 10.01(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all Secured Obligations; and
(C) the Issuer has delivered to the Trustee an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA or the Trustee) an
Independent Certificate from a firm of certified public accountants,
each meeting the applicable requirements of Section 11.01(a) and each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with and the Rating Agency Condition has been satisfied .
SECTION 4.02. Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.01 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 4.04. Release of Trust Estate. The Trustee shall, on or after the
Termination Date, release any remaining portion of the Trust Estate from the
lien created by this Indenture, assign to the Issuer by instruments in
recordable form the Trustee's interest of record in any mortgage, deed of trust
or security deed securing any Home Equity Contract or Home Improvement Contract,
and deposit in the Collection Account any funds then on deposit in any other
Trust Account. The Trustee shall release property from the lien created by this
Indenture pursuant to this Section 4.04 only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and (if required
by the TIA)
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Independent Certificates in accordance with TIA (S)(S) 314(c) and 314(d)(1)
meeting the applicable requirements of Section 11.01.
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ARTICLE V
Remedies
--------
SECTION 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
five days; or
(ii) default in the payment of the principal of or any installment of
the principal of any Note when the same becomes due and payable; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere
in this Section specifically dealt with), or any representation or warranty
of the Issuer made in this Indenture or in any certificate or other writing
delivered pursuant hereto or in connection herewith proving to have been
incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or
warranty was incorrect shall not have been eliminated or otherwise cured,
for a period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer and the
Trustee by the Holders of at least 25% of the Outstanding Amount of the
Notes, a written notice specifying such default or incorrect representation
or warranty and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(iv) the commencement of an involuntary case against the Issuer under
any applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, and such case is not dismissed within 60 days;
or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law now
or hereafter in effect, the entry of an order for relief in an involuntary
case against the Issuer under any such law, the consent by the Issuer to
the entry of any such order for relief, the consent by the Issuer to the
appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for
any substantial part of the
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Trust Estate, the making by the Issuer of any general assignment for the
benefit of creditors, the failure by the Issuer generally to pay its debts
as such debts become due, or the taking of action by the Issuer in
furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after obtaining
knowledge of the occurrence thereof, written notice in the form of an Officer's
Certificate of any event which with the giving of notice and the lapse of time
would become an Event of Default under clause (iii), its status and what action
the Issuer is taking or proposes to take with respect thereto.
SECTION 5.02. Rights upon Event of Default.
If an Event of Default shall have occurred and be continuing, the Trustee
in its discretion may, or if so requested in writing by Holders holding Notes
representing at least 66-2/3% of the aggregate outstanding principal amount each
class of Notes shall, upon prior written notice to the Rating Agencies, declare
by written notice to the Issuer that the Notes become, whereupon they shall
become, immediately due and payable at par, together with accrued interest
thereon. Notwithstanding anything to the contrary in this Section, if an Event
of Default specified in Section 5.01(iv) or (v) shall occur and be continuing
the Notes shall become immediately due and payable at par, together with accrued
interest thereon. If an Event of Default shall have occurred and be continuing,
the Trustee may exercise any of the remedies specified in Section 5.04(a).
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Trustee.
(a) The Issuer covenants that if any Notes are accelerated following the
occurrence of an Event of Default, the Issuer will, upon demand of the Trustee,
pay to it, for the benefit of the Holders of such Notes, the whole amount then
due and payable on such Notes for principal and interest, with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest, at the applicable
Interest Rate and in addition thereto such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.
(b) If an Event of Default occurs and is continuing, the Trustee may, in
its discretion, proceed to protect and enforce its rights and the rights of the
Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
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(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, interest and premium, if any, owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for reimbursement
of all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence or
bad faith) and of the Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee or
the Holders of Notes allowed in any judicial proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
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(d) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(e) All rights of action and of asserting claims under this Indenture or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(f) In any Proceedings brought by the Trustee (including any Proceedings
involving the interpretation of any provision of this Indenture), the Trustee
shall be held to represent all the Holders of the Notes, and it shall not be
necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies. (a) If an Event of Default shall have occurred
and be continuing, the Trustee may (subject to Section 5.05):
(i) institute Proceedings in its own name and as or on behalf of a
trustee of an express trust for the collection of all amounts then payable
on the Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and any
other remedy available to the Trustee and take any other appropriate action
to protect and enforce the rights and remedies of the Trustee on behalf of
the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; provided, however, that the
Trustee may not sell or otherwise liquidate the Trust Estate following an
Event of Default unless (A) such Event of Default is of the type described
in Section 5.01(i) or (ii), or (B) either (I) the Holders of 100% of the
Outstanding Amount of the Notes consent thereto, (II) the proceeds of such
sale or liquidation distributable to the Noteholders will be sufficient to
discharge in full all amounts then due and
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unpaid upon such Notes for principal and interest, or (III) the Trustee
determines that the Trust Estate will not continue to provide sufficient
funds for the payment of principal of and interest on the Notes as they
would have become due if the Notes had not been declared due and payable,
and the Trustee provides prior written notice to the Rating Agencies and
obtains the consent of Holders of 66-2/3% of the Outstanding Amount of each
class of Notes. In determining such sufficiency or insufficiency with
respect to clause (II) or (III), the Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such proposed action
and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.05. Optional Preservation of the Contracts. If any Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.06. Priorities.
If the Trustee collects any money or property pursuant to this Article V,
including any money or property in respect of liquidation of the Trust Estate
pursuant to Section 5.04(a)(iv), the Trustee shall pay out the money or property
as promptly as practicable in the following order:
(i) amounts due and owing and required to be distributed to the
Servicer, pursuant to priorities (i) and (ii) of Section 6.06(a) of the
Sale and Servicing Agreement and not previously distributed, in the order
of such priorities and without preference or priority of any kind within
such priorities;
(ii) to the Holders of the Notes in accordance with Section 8.02(c)
(other than any deposits into the Spread Account or Reserve Account
required by Section 8.02(c)(3), (5), (7) and (8));
(iii) amounts due and unpaid on the Certificates for interest and
principal, to the Owner Trustee for distribution to Certificateholders in
accordance with Section 5.2(d) of the Trust Agreement;
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provided that any amounts collected from the Capitalized Interest Account, Class
A-2 Subaccount, Class A-3 Subaccount, Class A-4 Subaccount, or Reserve Account,
all Interest Rate Cap Payments, and the Pre-Funded Amount shall be applied in
accordance with Section 8.02(e).
SECTION 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Trustee to institute such
Proceeding in respect of such Event of Default in its own name as Trustee
hereunder;
(iii) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceedings;
and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority
of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent requests
and indemnity from two or more groups of Holders of Notes, each representing
less than a majority of the Outstanding Amount of the Notes, the Trustee in its
sole discretion may determine what action, if any, shall be taken,
notwithstanding any other provisions of this Indenture.
SECTION 5.08. Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture (or, in the case
of redemption, on or after the Redemption Date)
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and to institute suit for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of the
Trustee or any Holder of any Note to exercise any right or remedy accruing upon
any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Trustee or to the Noteholders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Noteholders, as the case
may be.
SECTION 5.12. Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Trustee
with respect to the Notes or exercising any trust or power conferred on the
Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.04, any direction to
the Trustee to sell or liquidate all or any portion of the Trust Estate
shall be by the Holders of Notes representing not less than 100% of the
Outstanding Amount of the Notes;
(iii) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction; provided, however,
that, subject to Section 6.01, the Trustee need not take any action that it
determines
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might involve it in liability or might materially adversely affect the
rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver of Past Defaults. The Holders of Notes of not less
than a majority of the Outstanding Amount of the Notes may waive any past
Default or Event of Default and its consequences except a Default (a) in payment
of principal of or interest on any of the Notes or (b) in respect of a covenant
or provision hereof which cannot be modified or amended without the consent of
the Holder of each Note. In the case of any such waiver, the Issuer, the
Trustee and the Holders of the Notes shall be restored to their former positions
and rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto. Upon any
such waiver, such Default shall cease to exist and be deemed to have been cured
and not to have occurred, and any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
SECTION 5.16. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Trustee or the Noteholders shall be impaired by the recovery of any
judgment by the Trustee against the Issuer or by the levy of any
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execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.
SECTION 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so and at the
Company's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Company or the Servicer, as applicable, of each of their obligations to the
Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Trustee, including the transmission of notices of default on the part of
the Company or the Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Company or the Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Trustee
may, and at the direction (which direction shall be in writing, including
facsimile) of the Holders of 66-2/3% of the Outstanding Amount of each class of
Notes shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Company or the Servicer under or in connection with the Sale
and Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by the Company or the Servicer of
each of their obligations to the Issuer thereunder and to give any consent,
request, notice, direction, approval, extension or waiver under the Sale and
Servicing Agreement, and any right of the Issuer to take such action shall be
suspended.
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ARTICLE VI
The Trustee
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SECTION 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture with the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture; however,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture and, if
applicable, the Trustee's other Related Documents.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Issuer.
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(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law or the terms of this Indenture or the
Sale and Servicing Agreement.
(g) No provision of this Indenture shall require the Trustee 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 it shall have reasonable grounds to believe that repayments of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
(i) In no event shall the Trustee be required to perform, or be responsible
for the manner of performance of, any of the obligations of the Servicer, or any
other party, under the Sale and Servicing Agreement unless and until appointed
successor Servicer in accordance with Section 7.03 thereof.
(j) The Trustee shall, and hereby agrees that it will, perform all of the
obligations and duties required of it under the Sale and Servicing Agreement.
(k) The Trustee shall maintain the Contract Files for the Home Equity
Contracts and Home Improvement Contracts at its office or with a duly appointed
Custodian, who shall act as the agent of the Trustee on behalf of the
Noteholders. The Trustee may release a Contract File for a Home Equity Contract
or Home Improvement Contract pursuant to Section 6.13.
(l) Without limiting the generality of this Section 6.01, the Trustee shall
have no duty (i) to see to any recording, filing or depositing of this Indenture
or any agreement referred to herein or any financing statement evidencing a
security interest in the Products, or to see to the maintenance of any such
recording or filing or depositing or to any recording, refiling or redepositing
of any thereof, (ii) to see to any insurance of the Products or Obligors or to
effect or maintain any such insurance, (iii) to see to the payment or discharge
of any tax, assessment or other governmental charge or any lien or encumbrance
of any kind owing with respect to, assessed or levied against any part of the
Trust, (iv) to confirm or verify the contents of any reports or certificates
delivered to the Trustee pursuant to this Indenture or the Sale and Servicing
Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties, or (v) to inspect the Products at any
time or ascertain or inquire as to the performance of observance of any of the
Issuer's, the Company's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as Servicer and as custodian
of the Contract Files under the Sale and Servicing Agreement.
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(m) 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.
SECTION 6.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate (with respect to factual matters) or an Opinion of
Counsel, as applicable. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on the Officer's Certificate or
Opinion of Counsel, as applicable, or as directed by the requisite amount of
Note Owners as provided herein.
(c) 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 or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes, pursuant to the
provisions of this Indenture, unless such Holders of Notes shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; provided, however, that the
Trustee shall, upon the occurrence of an Event of Default (that has not been
cured), exercise the rights and powers vested in it by this Indenture with
reasonable care and skill.
(g) 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,
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request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Holders of Notes evidencing not less than
25% of the Outstanding Amount thereof; 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 Indenture or the Sale and Servicing
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 Person making such request, or, if
paid by the Trustee, shall be reimbursed by the Person making such request upon
demand.
SECTION 6.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Notes and may otherwise
deal with the Issuer or its Affiliates with the same rights it would have if it
were not Trustee. Any Paying Agent, Note Registrar, co-registrar or co-paying
agent may do the same with like rights. However, the Trustee is required to
comply with Sections 6.11 and 6.12.
SECTION 6.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this
Indenture, the Trust Estate or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the mandatory redemption provisions of such
Note), the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
SECTION 6.06. Reports by Trustee to Holders. The Trustee shall deliver to
each Noteholder such information as may be required to enable such holder to
prepare its federal and state income tax returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall or shall cause
the Administrator to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall
or shall cause the Administrator to reimburse the Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including the costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Issuer
shall or shall cause the Administrator to indemnify the Trustee against any and
all loss, liability or expense (including attorneys'
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fees) incurred by it in connection with the administration of this trust and the
performance of its duties hereunder. The Trustee shall notify the Issuer and
the Administrator promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Issuer and the Administrator shall not
relieve the Issuer or the Administrator of its obligations hereunder. The
Issuer shall or shall cause the Administrator to defend any such claim, and the
Trustee may have separate counsel and the Issuer shall or shall cause the
Administrator to pay the fees and expenses of such counsel. Neither the Issuer
not the Administrator need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Trustee through the Trustee's own wilful
misconduct, negligence or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(iv) or (v) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Trustee. The Trustee may resign at any time
by so notifying the Issuer. The Issuer may remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Trustee in an involuntary case or proceeding under federal or state banking
or bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law,
shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Trustee or for any substantial
part of the Trustee's property, or ordering the winding-up or liquidation
of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now
or hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Trustee and such case is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, conservator, sequestrator (or
other similar official) for the Trustee or for any substantial part of the
Trustee's property, or makes any assignment for the benefit of creditors or
fails generally to pay its debts as such debts become due or takes any
corporate action in furtherance of any of the foregoing; or
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(v) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason (the Trustee in such event being referred to herein as
the retiring Trustee), the Issuer shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Issuer. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Noteholders. The
retiring Trustee shall promptly transfer to the successor Trustee all property
held by it as Trustee, including any Contracts and Contract Files. If the
Contracts are then held by a Custodian pursuant to a custodial agreement, the
predecessor Trustee and the Custodian shall amend such custodial agreement to
make the successor Trustee the successor to the predecessor Trustee thereunder;
and the Servicer, the Company and the predecessor Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations. If the predecessor Trustee is then the
lender of record for purposes of FHA Insurance (due to an Event of Termination),
the predecessor Trustee shall submit a report to FHA describing the transfer of
the FHA-Insured Contracts without recourse, in such form as is then required
under FHA Regulations to cause HUD to transfer to the successor Trustee the FHA
insurance reserves applicable to the FHA-Insured Contracts.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
this Section and payment of all fees and expenses owed to the outgoing Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the
retiring Trustee shall be entitled to payment or reimbursement of such amounts
as such Person is entitled pursuant to Section 6.07.
SECTION 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided that such
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corporation or banking association shall be otherwise qualified and eligible
under Section 6.11. The Trustee shall provide the Rating Agencies prompt notice
of any such transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust may at the time be located, the Trustee shall have the
power and may execute and deliver all instruments to appoint one or more Persons
to act as a co-trustee or co-trustees, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust Estate,
or any part hereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Trustee under Section
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations (including the holding of title to the Trust
or any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
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(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Indenture.
SECTION 6.11. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and shall not be an Affiliate of the
Company. The Trustee shall comply with TIA (S) 310(b), including the optional
provision permitted by the second sentence of TIA (S) 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA (S) 310(b)(1)
any indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met. The Trustee shall at all times be a Title I approved lender
pursuant to FHA Regulations.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA (S) 311(a), excluding any creditor relationship
listed in TIA (S) 311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S) 311(a) to the extent indicated.
SECTION 6.13. 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
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deposited in the Collection Account pursuant to Section 5.05 of the Sale and
Servicing Agreement 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 Account.
b. If the Servicer elects to submit a claim to FHA under the FHA
Insurance in respect of an FHA-Insured Contract and payment is received from
FHA, the Servicer shall notify the Trustee and the Company (if the Company is
not the Servicer) on the next succeeding 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 of the Sale and
Servicing Agreement have been so deposited) and shall request delivery of the
Contract and Contract File to the Servicer. Upon receipt of such delivery and
request, the Trustee shall promptly release or cause to be released such
Contract and Contract File to the Servicer.
c. From time to time as appropriate for servicing, foreclosing, and
making a claim for FHA Insurance coverage in connection with an FHA-Insured
Contract, the Trustee shall, upon written request of a Servicing Officer and
delivery to the Trustee of a receipt signed by such Servicing Officer, cause the
original Contract and the related Contract File to be released to the Servicer
and shall execute such documents as the Servicer shall deem necessary to the
prosecution of any such 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 Noteholders'
rights and remedies with respect to Contracts.
d. The Servicer's receipt of a Contract and/or Contract File shall
obligate the Servicer to return the original Contract and the related Contract
File to the Trustee when its need by the Servicer has ceased unless the Contract
shall be liquidated or repurchased as described in Section 3.05 or 8.06 of the
Sale and Servicing Agreement.
SECTION 6.14. Certain Matters Relating to FHA Insurance.
a. In the event the Company and the successor Servicer, if any, shall
fail to pay all FHA Insurance premiums with respect to the FHA-Insured Contracts
required by FHA
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Regulations, the Trustee shall pay such FHA Insurance premiums and shall be
entitled to reimbursement for such amounts pursuant to Section 6.06 of the Sale
and Servicing Agreement.
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.
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ARTICLE VII
Noteholders' Lists and Reports
------------------------------
SECTION 7.01. Issuer To Furnish Trustee Names and Addresses to
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee
(a) not more than five days after the earlier of (i) each Record Date and (ii)
three months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Trustee is the
Note Registrar, no such list shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA (S) 312(c).
SECTION 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Issuer may be required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission such
additional information, documents and reports with respect to compliance by
the Issuer with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
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(iii) supply to the Trustee (and the Trustee shall transmit by mail
to all Noteholders described in TIA (S) 313(c)) such summaries of any
information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.03(a) as may be required
by rules and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.04. Reports by Trustee. If required by TIA (S) 313(a), within
60 days after each March 31 beginning with March 31, 1998, the Trustee shall
mail to each Noteholder as required by TIA (S) 313(c) a brief report dated as of
such date that complies with TIA (S) 313(a). The Trustee also shall comply with
TIA (S) 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. The Issuer shall notify the Trustee if and when the
Notes are listed on any stock exchange.
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ARTICLE VIII
Accounts, Disbursements and Releases
------------------------------------
SECTION 8.01. Collection of Money. Except as otherwise expressly provided
herein, the Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Trustee pursuant to this Indenture. The Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of this Indenture
or the Notes, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article V.
SECTION 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Servicer to
establish and maintain, in the name of the Trustee, for the benefit of the
Noteholders and/or the Certificateholders, the Trust Accounts (other than the
Certificate Distribution Account) as provided in Section 6.01(a) of the Sale and
Servicing Agreement.
(b) All collections in respect of the Contracts will be deposited in the
Collection Account as provided in Section 6.02 of the Sale and Servicing
Agreement. The Trustee shall pay into the Collection Account as promptly as
practicable all proceeds of FHA Insurance claims with respect to FHA-Insured
Contracts received by the Trustee. On or before each Distribution Date, all
amounts, if any, required to be deposited in the Note Distribution Account
pursuant to Section 6.04 or 6.06 of the Sale and Servicing Agreement or Section
8.03 of this Indenture will be transferred from the Collection Account,
Capitalized Interest Account, Pre-Funding Account, Spread Account, or Reserve
Account, as applicable, to the Note Distribution Account.
(c) On each Distribution Date, the Trustee shall distribute all amounts on
deposit in the Note Distribution Account to Noteholders in respect of the Notes
to the extent of amounts due and unpaid on the Notes for principal and interest,
to the Class A-2 Subaccount, the Class A-3 Subaccount and the Class A-4
Subaccount, and to the Reserve Account, in accordance with the instructions of
the Servicer in the following order of priority (but subject to the limitations
imposed by Section 8.02(e):
1. Class A-1:HE/HI and Class A-1. To the Holders of the Class A-
1:HE/HI Notes and Class A-1 Notes the amounts, and in the priority, set
forth below:
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(i) the Class A-1:HE/HI Interest Amount and the Class A-1 Interest
Amount, or if the amount available is less than the sum of the
amounts specified in this clause (i), pro rata to the Holders of
the Class A-1:HE/HI Notes and the Class A-1 Notes based on the
amount payable to each Class pursuant to this clause (i);
(ii) any Unpaid Class A-1:HE/HI Interest Shortfall and any Unpaid
Class A-1 Interest Shortfall, or if the amount available is less
than the sum of the amounts specified in this clause (ii), pro
rata to the Holders of the Class A-1:HE/HI Notes and the
Class A-1 Notes based on the amount payable to each Class
pursuant to this clause (ii);
(iii) the Class A-1:HE/HI Formula Principal Distribution Amount, to be
applied to the Class A-1:HE/HI Principal Balance, but in no
event more than the outstanding Class A-1:HE/HI Principal
Balance, and the Class A-1 Percentage of the Formula Principal
Distribution Amount, to be applied to the Class A-1 Principal
Balance, but in no event more than the outstanding Class A-1
Principal Balance, or if the amount available is less than the
sum of the amounts specified in this clause (iii), pro rata to
the Holders of the Class A-1:HE/HI Notes and the Class A-1 Notes
based on the amount payable to each Class pursuant to this
clause (iii);
(iv) any Unpaid Class A-1:HE/HI Principal Shortfall and any Unpaid
Class A-1 Principal Shortfall, or if the amount available is
less than the sum of the amounts specified in this clause (iv),
pro rata to the Holders of the Class A-1:HE/HI Notes and the
Class A-1 Notes based on the amount payable to each Class
pursuant to this clause (iv).
2. Class A-2. After payment of the amounts specified in clause (1)
above, to the Holders of the Class A-2 Notes the amounts, and in the
priority, set forth below:
(i) the Class A-2 Interest Amount;
(ii) any Unpaid Class A-2 Interest Shortfall;
(iii) the Class A-2 Percentage of the Formula Principal
Distribution Amount, to be applied to the Class A-2
Principal Balance, but in no event more than the
outstanding Class A-2 Principal Balance;
(iv) any Unpaid Class A-2 Principal Shortfall;
(v) any Class A-2 Liquidation Loss Interest Amount;
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(vi) any Unpaid Class A-2 Liquidation Loss Interest Shortfall;
and
(vii) any Unpaid Class A-2 Principal Liquidation Loss.
3. Class A-2 Subaccount. After payment of the amounts specified in
clauses (1) and (2) above, if any amount has been withdrawn from the Class
A-2 Subaccount pursuant to Section 6.04 of the Sale and Servicing
Agreement, to the Class A-2 Subaccount the difference, if any, between the
aggregate amount of such withdrawals and the aggregate amounts deposited in
the Class A-2 Subaccount pursuant to this Section 8.02(c)(3) prior to such
Distribution Date (but in no event more than the amount necessary to cause
the amount on deposit in the Class A-2 Subaccount to equal the Class A-2
Subaccount Required Amount).
4. Class A-3. After payment of the amounts specified in clauses (1)
through (3) above, to the Holders of the Class A-3 Notes the amounts, and
in the priority, set forth below:
(i) the Class A-3 Interest Amount;
(ii) any Unpaid Class A-3 Interest Shortfall;
(iii) the Class A-3 Percentage of the Formula Principal Distribution
Amount, to be applied to the Class A-3 Principal Balance, but in
no event more than the outstanding Class A-3 Principal Balance;
(iv) any Unpaid Class A-3 Principal Shortfall;
(v) any Class A-3 Liquidation Loss Interest Amount;
(vi) any Unpaid Class A-3 Liquidation Loss Interest Shortfall; and
(vii) any Unpaid Class A-3 Principal Liquidation Loss.
5. Class A-3 Subaccount. After payment of the amounts specified in
clauses (1) through (4) above, if any amount has been withdrawn from the
Class A-3 Subaccount pursuant to Section 6.04 of the Sale and Servicing
Agreement, to the Class A-3 Subaccount the difference, if any, between the
aggregate amount of such withdrawals and the aggregate amounts deposited in
the Class A-3 Subaccount pursuant to this Section 8.02(c)(5) prior to such
Distribution Date (but in no event more than the amount necessary to cause
the amount on deposit in the Class A-3 Subaccount to equal the Class A-3
Subaccount Required Amount).
6. Class A-4. After payment of the amounts specified in clauses (1)
through (5) above, to the Holders of the Class A-4 Notes the amounts, and
in the priority, set forth below:
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(i) the Class A-4 Interest Amount;
(ii) any Unpaid Class A-4 Interest Shortfall;
(iii) the Class A-4 Percentage of the Formula Principal
Distribution Amount, to be applied to the Class A-4
Principal Balance, but in no event more than the
outstanding Class A-4 Principal Balance;
(iv) any Unpaid Class A-4 Principal Shortfall;
(v) any Class A-4 Liquidation Loss Interest Amount;
(vi) any Unpaid Class A-4 Liquidation Loss Interest Shortfall;
and
(vii) any Unpaid Class A-4 Principal Liquidation Loss.
7. Class A-4 Subaccount. After payment of the amounts specified in
clauses (1) through (6) above, if any amount has been withdrawn from the
Class A-4 Subaccount pursuant to Section 6.04 of the Sale and Servicing
Agreement, to the Class A-4 Subaccount the difference, if any, between the
aggregate amount of such withdrawals and the aggregate amounts deposited in
the Class A-4 Subaccount pursuant to this Section 8.02(c)(7) prior to such
Distribution Date (but in no event more than the amount necessary to cause
the amount on deposit in the Class A-4 Subaccount to equal the Class A-4
Subaccount Required Amount).
8. Reserve Account. After payment on any Distribution Date of the
amounts specified in clauses (1) through (7) above, if any amount has been
withdrawn from the Reserve Account pursuant to Section 6.04 of the Sale and
Servicing Agreement, to the Reserve Account the difference, if any, between
the aggregate amount of such withdrawals and the aggregate amounts
deposited in the Reserve Account pursuant to this Section 8.02(c) (8) prior
to such Distribution Date (but in no event more than the amount necessary
to cause the amount on deposit in the Reserve Account to equal the Reserve
Account Required Amount).
(d) If the Trustee shall not have received the applicable Monthly Report by
any Distribution Date, the Trustee shall distribute all funds then in the Note
Distribution Account to Noteholders in accordance with Section 8.02(c), to the
extent of such funds, on such Distribution Date.
(e) Notwithstanding the order of priority of payment set out in subsection
8.02(c):
(i) amounts transferred to the Note Distribution Account from the
Class A-2 Subaccount may only be used to pay the amounts
specified in Section 8.02(c)(2)(i), (ii), (v) and (vi);
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(ii) amounts transferred to the Note Distribution Account from the
Class A-3 Subaccount may only be used to pay the amounts
specified in Section 8.02(c)(4)(i), (ii), (v) and (vi);
(iii) amounts transferred to the Note Distribution Account from the
Class A-4 Subaccount may only be used to pay the amounts
specified in Section 8.02(c)(6)(i), (ii), (v) and (vi);
(iv) Interest Rate Cap Payments may only be used to pay the Class A-1
Interest Amount;
(v) the Pre-Funded Amount may be applied only to payment of the Class
A-1, Class A-2, Class A-3, and Class A-4 Principal Balance;
(vi) amounts transferred to the Note Distribution Account from the
Reserve Account may only be used to pay the amounts specified in
Section 8.02(c), excluding amounts described in clauses (3), (5),
(7) and (8) thereof; and
(vii) amounts transferred to the Note Distribution Account from the
Capitalized Interest Account may only be used to pay the amounts
specified in Sections 8.02(c)(1)(i) and (ii), 8.02(c)(2)(i) and
(ii), 8.02(c)(4)(i) and (ii) and 8.02(c)(6)(i) and (ii).
Since the Noteholders' entitlement to amounts withdrawn from the Note
Distribution Account may be limited by the preceding sentence depending on the
source of such amounts in the Note Distribution Account, the Trustee shall keep
and maintain a separate account of amounts deposited in the Note Distribution
Account, and described in the preceding sentence, for the purpose of justifying
any withdrawal of such amounts from the Note Distribution Account.
(h) The Trustee agrees, to the extent required by the Code, to withhold
from each payment due hereunder or under any Note, United States withholding
taxes at the appropriate rate, and, on a timely basis, to deposit such amounts
with an authorized depository and make such returns, filings and other reports
in connection therewith as are required of it under the Code. Any Noteholder
which is eligible for an exemption from or reduction of withholding of United
States federal income taxes shall, from time to time, provide to the Trustee in
a timely manner all appropriate and properly completed forms indicating such
eligibility, as may be necessary to permit the Trustee not to withhold taxes
from payments due to such Noteholder. In connection with the foregoing, the
Trustee shall promptly furnish to each Noteholder in a timely fashion such U.S.
Treasury forms as are required by the Code to be furnished to such Noteholder
indicating payment of any taxes withheld from any payments by the Trustee to
such Noteholder. The Trustee shall be fully protected in relying upon, and each
Noteholder by its acceptance of a Note hereunder agrees to indemnify and hold
the Trustee harmless against all claims or liability of any kind arising in
connection with or
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related to the Trustee's reliance upon any documents, forms or information
provided by any Noteholder to the Trustee. In addition, if the Trustee has not
withheld taxes on any payment made to any Noteholder, and the Trustee is
subsequently required to remit to any taxing authority any such amount not
withheld, such Noteholder shall return such amount to the Trustee upon written
demand by the Trustee. In no event shall the Trustee be liable for
consequential damages to any Noteholder.
SECTION 8.03. Pre-Funding Account. Amounts on deposit in the Pre-Funding
Account shall be withdrawn by the Trustee as follows:
(a) On any Subsequent Transfer Date, the Trustee shall withdraw an amount
equal to 100% of the Cut-off Date Principal Balance of each Subsequent Contract
transferred to the Trust on such Subsequent Transfer Date and pay such amount to
or upon the order of the Company upon satisfaction of the conditions set forth
in Section 2.03(b) with respect to such transfer and assignment.
(b) On the Post-Funding Distribution Date, the Trustee shall deposit into
the Note Distribution Account the Pre-Funded Amount, if any, for distribution on
such Distribution Date in accordance with Section 8.02. On the Post-Funding
Distribution Date, the Trustee shall release to the Company all investment
earnings in the Pre-Funding Account.
SECTION 8.04. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Trust Accounts (other than the
Certificate Distribution Account) shall be invested and reinvested in Eligible
Investments in accordance with the provisions of Section 6.01 of the Sale and
Servicing Agreement. All income or other gain from investments of moneys
deposited in such Trust Accounts (other than the Certificate Distribution
Account) shall be deposited by the Trustee in the Collection Account, and any
loss resulting from such investments shall be charged to the related Trust
Account. The Issuer will not direct the Trustee to make any investment of any
funds or to sell any investment held in any of the Trust Accounts (other than
the Certificate Distribution Account) unless the security interest Granted and
perfected in such account will continue to be perfected in such investment or
the proceeds of such sale, in either case without any further action by any
Person, and, in connection with any direction to the Trustee to make any such
investment or sale, if requested by the Trustee, the Issuer shall deliver to the
Trustee an Opinion of Counsel, acceptable to the Trustee, to such effect.
(b) Subject to Section 6.01(c), the Trustee shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts resulting
from any loss on any Eligible Investment included therein except for losses
attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms.
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(c) If (i) the Issuer shall have failed to give investment directions for
any funds on deposit in the Trust Accounts (other than the Certificate
Distribution Account) to the Trustee by 11:00 a.m., New York City time (or such
other time as may be agreed by the Issuer and Trustee), on any Business Day or
(ii) a Default or Event of Default shall have occurred and be continuing with
respect to the Notes but the Notes shall not have been declared due and payable
pursuant to Section 5.02 or (iii) if such Notes shall have been declared due and
payable following an Event of Default, amounts collected or receivable from the
Trust Estate are being applied in accordance with Section 5.05 as if there had
not been such a declaration, then the Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts (other than the
Certificate Distribution Account) in one or more Eligible Investments.
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ARTICLE IX
Supplemental Indentures
-----------------------
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies, the Issuer and the Trustee, when authorized by an Issuer
Order, at any time and from time to time, may enter into one or more indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Trustee any property subject or required to be subjected
to the lien created by this Indenture, or to subject to the lien created by
this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action shall
not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Trustee with respect to the Notes and to add to or
change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture
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<PAGE>
under the TIA or under any similar federal statute hereafter enacted and to
add to this Indenture such other provisions as may be expressly required by
the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order, may,
also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies, and with the consent of the Holders of not less
than a majority of the Outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal of
or interest on the Notes, or change any place of payment where, or the coin
or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of
this Indenture requiring the application of funds available therefor, as
provided in Article V, to the payment of any such amount due on the Notes
on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
<PAGE>
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Related Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien created by this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien created by this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security provided
by the lien created by this Indenture.
The Trustee may in its discretion determine whether or not any Notes would
be affected by any supplemental indenture, and any such determination shall be
conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Trustee shall not be liable for any
such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled
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to receive, and subject to Sections 6.01 and 6.02 shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture that affects the Trustee's own rights, duties, liabilities or
immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Trustee, the Issuer and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments, and all the terms and conditions of any such supplemental
indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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<PAGE>
ARTICLE X
Redemption of Notes
-------------------
SECTION 10.01. Redemption.
(a) In the event that the Company or the Servicer pursuant to Article VIII
of the Sale and Servicing Agreement purchases the corpus of the Trust, the Notes
are subject to redemption in whole, but not in part, on the Distribution Date on
which such repurchase occurs, for a purchase price equal to the Redemption
Price; provided, however, that the Issuer has available funds sufficient to pay
the Redemption Price. The Company, the Servicer or the Issuer shall furnish the
Rating Agencies notice of such redemption. If the Notes are to be redeemed
pursuant to this Section 10.01(a), the Servicer or the Issuer shall furnish
notice of such election to the Trustee not later than 25 days prior to the
Redemption Date, and the Issuer shall deposit with the Trustee in the Note
Distribution Account the Redemption Price of the Notes to be redeemed, whereupon
all such Notes shall be due and payable on the Redemption Date upon the
furnishing of a notice complying with Section 10.02 to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to Section
9.2 of the Trust Agreement, the proceeds of such sale shall be distributed as
provided in Section 5.06. If amounts are to be paid to Noteholders pursuant to
this Section 10.01(b), the Servicer or the Issuer shall, to the extent
practicable, furnish notice of such event to the Trustee not later than 25 days
prior to the Redemption Date whereupon all such amounts shall be payable on the
Redemption Date.
SECTION 10.02. Form of Redemption Notice.
-------------------------
(a) Notice of redemption under Section 10.01(a) shall be given by the
Trustee by first-class mail, postage prepaid, mailed not less than five days
prior to the applicable Redemption Date to each Holder of Notes, as of the close
of business on the Record Date with respect to the Distribution Date immediately
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for payment of
the Redemption Price (which shall be the office or agency of the Issuer to
be maintained as provided in Section 3.02).
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<PAGE>
Notice of redemption of the Notes shall be given by the Trustee in the name
and at the expense of the Issuer. Failure to give notice of redemption, or any
defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not required to be
given to Noteholders.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
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<PAGE>
ARTICLE XI
Miscellaneous
-------------
SECTION 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to take
any action under any provision of this Indenture, the Issuer shall furnish to
the Trustee (i) an Officer's Certificate stating that all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Indenture Collateral or other property
or securities with the Trustee that is to be made the basis for the release
of any property subject to the lien created by this Indenture, the Issuer
shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Indenture Collateral or other property or securities to be so
deposited.
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(ii) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall
also deliver to the Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the property to be so deposited
and of all other such property made the basis of any such withdrawal or
release since the commencement of the then-current fiscal year of the
Issuer, as set forth in the certificates delivered pursuant to clause (i)
above and this clause (ii), is 10% or more of the Outstanding Amount of the
Notes, but such a certificate need not be furnished with respect to any
property so deposited, if the fair value thereof to the Issuer as set forth
in the related Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in clause (A)
or (B) of Section 11.01(b)(v), whenever any property or securities are to
be released from the lien created by this Indenture, the Issuer shall also
furnish to the Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such person the proposed
release will not impair the security created by this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer shall
also furnish to the Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property or securities (other than property described in clauses (A) or (B)
of Section 11.01(b)(v)) released from the lien created by this Indenture
since the commencement of the then current fiscal year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals
10% or more of the Outstanding Amount of the Notes, but such certificate
need not be furnished in the case of any release of property or securities
if the fair value thereof as set forth in the related Officer's Certificate
is less than $25,000 or less than one percent of the then Outstanding
Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the Issuer
may, without compliance with the other provisions of this Section, (A)
collect, liquidate, sell or otherwise dispose of Contracts as and to the
extent permitted or required by the Related Documents (including as
provided in Section 5.06 of the Sale and Servicing Agreement) and (B) make
cash payments out of the Trust Accounts as and to the extent permitted or
required by the Related Documents.
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<PAGE>
SECTION 11.02. Form of Documents Delivered to Trustee. In any case where
several matters are required to be certified by, or covered by an opinion of,
any specified Person, it is not necessary that all such matters be certified by,
or covered by the opinion of, only one such Person, or that they be so certified
or covered by only one document, but one such Person may certify or give an
opinion with respect to some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, the
Company or the Issuer, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Company or the Issuer, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents 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 it is hereby expressly required, to the Issuer. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such
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<PAGE>
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and
the Issuer, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such instrument
or writing may be proved in any manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Trustee or
the Issuer in reliance thereon, whether or not notation of such action is made
upon such Note.
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating Agencies. Any
request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office,
(b) the Issuer by the Trustee or by any Noteholder shall be sufficient for
every purpose hereunder if made in writing and mailed, first-class, postage
prepaid, to the Issuer addressed to: Green Tree Recreational, Equipment &
Consumer Trust 1997-D, in care of Wilmington Trust Company, as Owner Trustee,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration or at any other address previously
furnished in writing to the Trustee by Issuer. The Issuer shall promptly
transmit any notice received by it from the Noteholders to the Trustee, or
(c) the Rating Agencies by the Issuer, the Trustee or the Owner Trustee
shall be sufficient for every purpose hereunder if made in writing, personally
delivered or mailed by certified mail, return receipt requested to (i) in the
case of Fitch I.B.C.A. Inc., at the following address: One State Street Plaza,
New York, New York 10004, Attention: ABS Surveillance Group and (ii) in the case
of Standard & Poor's, at the following address: Standard & Poor's Ratings
Services, 26 Broadway (15th Floor), New York, New York 10004, Attention of Asset
Backed Surveillance Department; or as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
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<PAGE>
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Trustee but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result of
a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event of Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure to
give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
SECTION 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices. The Issuer will furnish to the Trustee a copy of each such agreement
and the Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA (S)(S) 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
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<PAGE>
SECTION 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10. Severability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee,) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection
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herewith or therewith, against (i) the Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Trustee or the Owner Trustee in its individual capacity, any holder
of a beneficial interest in the Issuer, the Owner Trustee or the Trustee or of
any successor or assign of the Trustee or the Owner Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Trustee and the Owner Trustee have no such obligations in
their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. The Trustee, by entering into this Indenture,
and each Noteholder, by accepting a Note, hereby covenant and agree that they
will not at any time institute against the Company, the Issuer or any General
Partner, or join in any institution against the Company, the Issuer or any
General Partner of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the Related Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
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IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Indenture
to be duly executed by their respective officers, thereunto duly authorized, all
as of the day and year first above written.
GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST, 1997-D
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By
---------------------------------
Name:
Title:
FIRST TRUST NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Trustee
By
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT A-1
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D
CLASS [A-1:HE/HI][A-2][A-3][A-4] FIXED RATE ASSET-BACKED NOTE
REGISTERED $______________________
NO. R-_________________ CUSIP NO. ____________
Green Tree Recreational, Equipment & Consumer Trust 1997-D, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to Cede
& Co., or registered assigns, the principal sum of [
] payable on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is $167,923,639 by (ii) the
aggregate amount, if any, payable from the Note Distribution Account in respect
of principal on the Class [A-1:HE/HI][A-2][A-3][A-4] Notes pursuant to Section
3.01 of the Indenture; provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the earlier of the
__________________ Distribution Date (the "Final Scheduled Distribution Date")
and the Redemption Date, if any, pursuant to Section 10.01(a) or (b) of the
Indenture referred to on the reverse hereof.
The Issuer will pay interest on this Note at the Class [A-1:HE/HI][A-2][A-
3][A-4] Interest Rate on each Distribution Date until the principal of this Note
is paid or made available for payment, on the principal amount of this Note
outstanding on the preceding Distribution Date (after giving effect to all
payments of principal made on the preceding Distribution Date). Interest on
this Note will accrue for each Distribution Date from the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date or, if no interest has yet been paid, from December __, 1997.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Such
A-1-1
<PAGE>
principal of and interest and premium, if any, on this Note shall be paid in the
manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
A-1-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: _____________
GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST 1997-D
By WILMINGTON TRUST COMPANY not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By
---------------------------------
Name:
Title:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
FIRST TRUST NATIONAL ASSOCIATION, not in
its individual capacity but solely as
Trustee
By
-----------------------------------
Authorized Signatory
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class [A-1:HE/HI][A-2][A-3][A-4] Fixed Rate Asset-Backed Notes
(herein called the "Notes"), all issued under an Indenture dated as of December
1, 1997 (such indenture, as supplemented or amended, herein called the
"Indenture"), between the Issuer and First Trust National Association, as
trustee (the "Trustee," which term includes any successor Trustee under the
Indenture) to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Trustee and the Holders of the Notes. The Notes
are subject to all terms of the Indenture. All terms used in this Note that are
defined in the Indenture, as supplemented or amended, shall have the meanings
assigned to them in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1:HE/HI Notes, Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes (collectively, the "Notes") are and will be
equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class [A-1:HE/HI][A-2][A-3][A-4] Notes will be payable on
each Distribution Date in an amount described on the face hereof. "Distribution
Date" means the fifteenth day of each month, or, if any such date is not a
Business Day, the next succeeding Business Day, commencing January 15, 1998.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Scheduled Distribution Date and
the Redemption Date, if any, pursuant to Section 10.01(a) or 10.01(b) of the
Indenture. All principal payments on the Class [A-1:HE/HI][A-2][A-3][A-4] Notes
shall be made pro rata to the Class [A-1:HE/HI][A-2][A-3][A-4] Noteholders
entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) affected by any payments made
on any Distribution Date shall be binding upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected to
be available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify
A-1-5
<PAGE>
the Person who was the Registered Holder hereof as of the Record Date with
respect to the Distribution Date immediately preceding such Redemption Date by
notice mailed within five days of such Redemption Date and the amount then due
and payable shall be payable only upon presentation and surrender of this Note
at the Trustee's principal Corporate Trust Office or at the office of the
Trustee's agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class [A-1:HE/HI][A-2][A-3][A-4] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01(a) of the Indenture, in whole, but not in part, at the option of the
Company or the Servicer on any Distribution Date on or after the date on which
the Pool Scheduled Principal Balance is less than or equal to 10% of the Cutoff
Date Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the city in which the Corporate
Trust Office is located, or a member firm of a national securities exchange, and
such other documents as the Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
A-1-6
<PAGE>
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Company, the Issuer or any
General Partner, or join in any institution against the Company, the Issuer or
any General Partner of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Trustee, the Noteholders
and Note Owners that, for purposes of federal income, state and local income and
franchise and any other income taxes, the Notes will be treated as indebtedness
of the Issuer. Each Noteholder and Note Owner, by acceptance of this Note or,
in the case of a Note Owner, a beneficial interest in this Note, covenants and
agrees to treat this Note as indebtedness for such tax purposes and to take no
action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
A-1-7
<PAGE>
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-1-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
---------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated:
-----------------
**
Signature Guaranteed:
-----------------------------------------
- ----------------
**NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-1-9
<PAGE>
EXHIBIT A-2
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
GREEN TREE RECREATIONAL, EQUIPMENT & CONSUMER TRUST 1997-D
CLASS A-1 FLOATING RATE ASSET-BACKED NOTE
REGISTERED $____________________
NO. R-_________________ CUSIP NO. __________
Green Tree Recreational, Equipment & Consumer Trust 1997-D, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to Cede
& Co., or registered assigns, the principal sum of [
] payable on each Distribution Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is $[INSERT INITIAL PRINCIPAL
AMOUNT OF NOTE] and the denominator of which is $__________ by (ii) the
aggregate amount, if any, payable from the Note Distribution Account in respect
of principal on the Class A-1 Notes pursuant to Section 3.01 of the Indenture;
provided, however, that the entire unpaid principal amount of this Note shall be
due and payable on the earlier of the __________________ Distribution Date (the
"Final Scheduled Distribution Date") and the Redemption Date, if any, pursuant
to Section 10.01(a) or (b) of the Indenture referred to on the reverse hereof.
The Issuer will pay interest on this Note at the Class A-[1] Interest Rate
on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date). Interest on this Note will accrue for
each Distribution Date from the most recent Distribution Date on which interest
has been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from December __, 1997. Interest will be computed on the basis of
actual days
A-2-1
<PAGE>
elapsed and a year of 360 days. Such principal of and interest and premium, if
any, on this Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
A-2-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date:
---------------
GREEN TREE RECREATIONAL, EQUIPMENT &
CONSUMER TRUST 1997-D
By WILMINGTON TRUST COMPANY not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By
-----------------------------------
Name:
Title:
A-2-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the within-
mentioned Indenture.
FIRST TRUST NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Trustee
By
------------------------------------
Authorized Signatory
A-2-4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A-1 Floating Rate Asset-Backed Notes (herein called the
"Notes"), all issued under an Indenture dated as of December 1, 1997 (such
indenture, as supplemented or amended, herein called the "Indenture"), between
the Issuer and First Trust National Association, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture) to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Trustee and the Holders of the Notes. The Notes are subject to all terms of the
Indenture. All terms used in this Note that are defined in the Indenture, as
supplemented or amended, shall have the meanings assigned to them in or pursuant
to the Indenture, as so supplemented or amended.
The Class A-1:HE/HI Notes, the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes (collectively, the "Notes") are and will
be equally and ratably secured by the collateral pledged as security therefor as
provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Distribution Date
in an amount described on the face hereof. "Distribution Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing January 15, 1998.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Final Scheduled Distribution Date and
the Redemption Date, if any, pursuant to Section 10.01(a) or 10.01(b) of the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the Class A-1 Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of
this Note (or any one or more Predecessor Notes) affected by any payments made
on any Distribution Date shall be binding upon all future Holders of this Note
and of any Note issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not noted hereon. If funds are expected to
be available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Registered Holder hereof as of the Record Date with respect to the
A-2-5
<PAGE>
Distribution Date immediately preceding such Redemption Date by notice mailed
within five days of such Redemption Date and the amount then due and payable
shall be payable only upon presentation and surrender of this Note at the
Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-1 Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to Section
10.01(a) of the Indenture, in whole, but not in part, at the option of the
Company or the Servicer on any Distribution Date on or after the date on which
the Pool Scheduled Principal Balance is less than or equal to 10% of the Cutoff
Date Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the city in which the Corporate
Trust Office is located, or a member firm of a national securities exchange, and
such other documents as the Trustee may require, and thereupon one or more new
Notes of authorized denominations and in the same aggregate principal amount
will be issued to the designated transferee or transferees. No service charge
will be charged for any registration of transfer or exchange of this Note, but
the transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a
Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of
A-2-6
<PAGE>
the Indenture and such Note that such Noteholder or Note Owner will not at any
time institute against the Company, the Issuer or any General Partner, or join
in any institution against the Company, the Issuer or any General Partner of,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
Related Documents.
It is the intent and agreement of the Issuer, the Trustee, the Noteholders
and Note Owners that, for purposes of federal income, state and local income and
franchise and any other income taxes, the Notes will be treated as indebtedness
of the Issuer. Each Noteholder and Note Owner, by acceptance of this Note or,
in the case of a Note Owner, a beneficial interest in this Note, covenants and
agrees to treat this Note as indebtedness for such tax purposes and to take no
action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note, the
Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each class of Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
Notes representing specified percentages of the Outstanding Amount of each class
of Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one or more Predecessor Notes) shall be conclusive and
binding upon such Holders and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms
and conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the Issuer
under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as provided
in the Indenture, subject to certain limitations therein set forth.
A-2-7
<PAGE>
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
A-2-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- --------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
--------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: _________________
**
Signature Guaranteed:
---------------------------------------
- ---------------
**NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
A-2-9
<PAGE>
C-3, C-4, AND C-5 DELETED IN THEIR ENTIRETY
