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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): September 15, 1999
GREEN TREE FINANCIAL CORPORATION
as originator of Certificates for Home Improvement Loans
Series 1999-E
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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: (651) 293-3400
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 1. Changes in Control of Registrant.
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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 September 15, 1999, the Registrant sold Certificates for Home
Improvement Loans, Series 1999-E, evidencing beneficial ownership
interests in a trust consisting of home improvement loan contracts
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
2
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(c) Exhibits.
The following is filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
Exhibit No. Description
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4.1 Pooling and Servicing Agreement between Green Tree
Financial Corporation, as Seller and Servicer, and
U.S. Bank Trust National Association, as Trustee,
dated as of September 1, 1999, relating to
Certificates for Home Improvement Loans, Series
1999-E
8.1 Tax opinion of Briggs and Morgan Professional
Association, dated September 15, 1999, relating to
REMIC matters
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GREEN TREE FINANCIAL
CORPORATION
as originator of Certificates for
Home Improvement Loans Series 1999-E
By: /s/ Scott T. Young
------------------------------------
Scott T. Young
Senior Vice President and Controller
3
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INDEX TO EXHIBITS
Exhibit
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Number
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4.1 Pooling and Servicing Agreement between Green Tree
Financial Corporation, as Seller and Servicer, and
U.S. Bank Trust National Association, as Trustee,
dated as of September 1, 1999, relating to
Certificates for Home Improvement Loans, Series
1999-E
8.1 Tax opinion of Briggs and Morgan, Professional
Association, dated September 15, 1999, relating to
REMIC matters
4
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EXHIBIT 4.1
Certificates for Home Improvement Loans
Series 1999-E
POOLING AND SERVICING AGREEMENT
between
GREEN TREE FINANCIAL CORPORATION
Seller and Servicer
and
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
of
HOME IMPROVEMENT LOAN TRUST 1999-E
Dated as of September 1, 1999
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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
Section 1.03. Calculation of Interest on the Certificates.............1-25
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF LOANS................... 2-1
Section 2.01. Closing................................................. 2-1
Section 2.02. Conditions to the Closing............................... 2-1
Section 2.03. Conveyance of the Subsequent Loans...................... 2-2
Section 2.04. Acceptance by Trustee................................... 2-4
Section 2.05. REMIC Provisions........................................ 2-5
Section 2.06. Company Option to Substitute for Prepaid Loans.......... 2-6
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 Loan............................................... 3-2
Section 3.03. Representations and Warranties Regarding
the Loans in the Aggregate.............................. 3-5
Section 3.04. Representations and Warranties Regarding
the Loan Files.......................................... 3-7
Section 3.05. Repurchases of Loans for Breach of
Representations and Warranties.......................... 3-7
Section 3.06. No Repurchase Under Certain Circumstances............... 3-9
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION
OF SECURITY INTERESTS....................................... 4-1
Section 4.01. Transfer of Loans....................................... 4-1
Section 4.02. Costs and Expenses...................................... 4-1
ARTICLE V SERVICING OF LOANS.......................................... 5-1
Section 5.01. Responsibility for Loan Administration.................. 5-1
Section 5.02. Standard of Care........................................ 5-1
Section 5.03. Records................................................. 5-1
Section 5.04. Inspection.............................................. 5-1
Section 5.05. Certificate Account..................................... 5-2
Section 5.06. Enforcement............................................. 5-4
Section 5.07. Trustee to Cooperate.................................... 5-6
Section 5.08. Costs and Expenses...................................... 5-6
Section 5.09. Maintenance of Insurance................................ 5-9
Section 5.10. Merger or Consolidation of Servicer..................... 5-7
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ARTICLE VI REPORTS AND TAX MATTERS..................................... 6-1
Section 6.01. Monthly Reports......................................... 6-1
Section 6.02. Officer's Certificate................................... 6-1
Section 6.03. Other Data.............................................. 6-1
Section 6.04. Annual Report of Accountants............................ 6-1
Section 6.05. Statements to Certificateholders and the Class C
Certificateholders...................................... 6-1
Section 6.06. Payment Of Taxes........................................ 6-6
ARTICLE VII SERVICE TRANSFER............................................ 7-1
Section 7.01. Events of Termination................................... 7-1
Section 7.02. Transfer................................................ 7-1
Section 7.03. Trustee to Act; Appointment of Successor................ 7-2
Section 7.04. Notification to Certificateholders and Class C
Certificateholders...................................... 7-3
Section 7.05. Effect of Transfer...................................... 7-3
Section 7.06. Transfer of Certificate Account......................... 7-3
ARTICLE VIII PAYMENTS.................................................... 8-1
Section 8.01. Monthly Payments........................................ 8-1
Section 8.02. Advances................................................ 8-2
Section 8.03. Class B-2 Limited Guaranty.............................. 8-2
Section 8.04. Permitted Withdrawals from the Certificate
Account; Payments....................................... 8-3
Section 8.05. Reassignment of Repurchased and Replaced Loans.......... 8-7
Section 8.06. Servicer's Purchase Option.............................. 8-7
Section 8.07. Capitalized Interest Account............................ 8-8
Section 8.08. Pre-Funding Account..................................... 8-9
ARTICLE IX THE CERTIFICATES AND THE CLASS C CERTIFICATES............... 9-1
Section 9.01. The Certificates and the Class C Certificates........... 9-1
Section 9.02. Registration of Transfer and Exchange of Certificates
and the Class C Certificates............................ 9-1
Section 9.03. No Charge; Disposition of Void Certificates or Class C
Certificates............................................ 9-5
Section 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or
Class Certificates...................................... 9-5
Section 9.05. Persons Deemed Owners................................... 9-5
Section 9.06. Access to List of Certificateholders' and Class C
Certificateholders' Names and Addresses................. 9-6
Section 9.07. Authenticating Agents................................... 9-6
ARTICLE X INDEMNITIES.................................................10-1
Section 10.01. Real Estate.............................................10-1
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Section 10.02. Liabilities to Obligors.................................10-1
Section 10.03. Tax Indemnification.....................................10-1
Section 10.04. Servicer's Indemnities..................................10-1
Section 10.05. Operation of Indemnities................................10-1
Section 10.06. REMIC Tax Matters.......................................10-2
ARTICLE XI THE TRUSTEE.................................................11-1
Section 11.01. Duties of Trustee.......................................11-1
Section 11.02. Certain Matters Affecting the Trustee...................11-2
Section 11.03. Trustee Not Liable for Certificates, Class C
Certificates or Loans...................................11-3
Section 11.04. Trustee May Own Certificates............................11-3
Section 11.05. Rights of Certificateholders to Direct Trustee and
to Waive Events of Termination..........................11-3
Section 11.06. The Servicer to Pay Trustee's Fees and Expenses.........11-4
Section 11.07. Eligibility Requirements for Trustee....................11-4
Section 11.08. Resignation or Removal of Trustee.......................11-5
Section 11.09. Successor Trustee.......................................11-5
Section 11.10. Merger or Consolidation of Trustee......................11-6
Section 11.11. Tax Returns.............................................11-6
Section 11.12. Obligor Claims..........................................11-6
Section 11.13. Appointment of Co-Trustee or Separate Trustee...........11-7
Section 11.14. Trustee and U.S. Bancorp................................11-8
Section 11.15. Trustee Advances........................................11-8
Section 11.16. Certain Matters Relating to FHA Insurance...............11-9
ARTICLE XII MISCELLANEOUS...............................................12-1
Section 12.01. Servicer Not to Resign; Delegation of Servicing
Duties..................................................12-1
Section 12.02. Company Not to Engage in Certain Transactions with
Respect to the Trust....................................12-1
Section 12.03. Maintenance of Office or Agency.........................12-1
Section 12.04. Termination.............................................12-1
Section 12.05. Acts of Certificateholders and Class C
Certificateholders......................................12-3
Section 12.06. Calculations............................................12-4
Section 12.07. Assignment or Delegation by Company.....................12-4
Section 12.08. Amendment...............................................12-5
Section 12.09. Notices.................................................12-6
Section 12.10. Merger and Integration..................................12-7
Section 12.11. Headings................................................12-8
Section 12.12. Governing Law...........................................12-8
Exhibit A -- Form of Class A Certificate
Exhibit B -- Form of Class M-[1][2] Certificate
Exhibit C -- Form of Class B-[1] [2] Certificate
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Exhibit D -- Form of Assignment
Exhibit E -- Form of Certificate of Officer
Exhibit F -- Form of Opinion of Counsel for the Company
Exhibit G -- Form of Trustee's Acknowledgment
Exhibit H -- Form of Certificate of Servicing Officer
Exhibit I -- Form of Class C Certificate
Exhibit J-1 -- Form of Certificate Regarding Repurchased Loans
Exhibit J-2 -- Form of Certificate Regarding Substitute Loans
Exhibit J-3 -- Form of Certificate Regarding Substitution for Prepaid Loans
Exhibit K -- Form of Representation Letter
Exhibit L -- List of Loans
Exhibit M -- Form of Monthly Report
Exhibit N -- Form of Addition Notice
Exhibit O -- Form of Subsequent Transfer Instrument
Exhibit P -- Form of Officer's Certificate (Subsequent Transfer)
Exhibit Q -- List of FHA-Insured Loans
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AGREEMENT, dated as of September 1, 1999, between Green Tree Financial
Corporation, a corporation organized and existing under the laws of the State of
Delaware, as Seller and Servicer (the "Company"), and U.S. Bank Trust National
Association, a national banking association organized and existing under the
laws of the United States, not in its individual capacity but solely as Trustee
(the "Trustee") of Home Improvement Loan Trust 1999-E (the "Trust").
WHEREAS, in the regular course of its business, the Company purchases,
originates and services home improvement contracts and promissory notes, which
contracts and notes provide for installment payments by or on behalf of the
purchasers of the home improvements and grant mortgages, deeds of trust or
security deeds on the real estate that is the subject of the home improvements;
WHEREAS, the Company and the Trustee wish to set forth the terms and
conditions on which the Trustee, on behalf of the Certificateholders and Class C
Certificateholders (as defined herein) will acquire the Loans and the Company
will service the Loans;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Company and the Trustee agree as provided
herein:
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ARTICLE I
DEFINITIONS
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SECTION 1.01. General. For the purpose of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
"Addition Notice" means, with respect to the transfer of Subsequent
Loans to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit N, which shall be given not later than five
Business Days prior to the related Subsequent Transfer Date, of the Company's
designation of Subsequent Loans to be sold to the Trust and the aggregate
Cut-off Date Principal Balances of such Subsequent Loans.
"Additional Loan" means a Loan identified as such in the List of Loans
attached hereto as Exhibit L.
"Advance" means, with respect to any Payment Date, the amounts, if any,
deposited by the Servicer or the Trustee, as applicable, in the Certificate
Account for such Payment Date pursuant to Section 8.02.
"Advance Payment" means any payment by an Obligor in advance of the Due
Period in which it would be due under such Loan 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.
"Aggregate Certificate Principal Balance" means the sum of the Class
A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2, Class B-1 and Class
B-2 Principal Balances.
"Aggregate Liquidation Loss Principal Amount" means, for any Payment
Date, the excess, if any, of (a) the Aggregate Certificate Principal Balance
(after giving effect to all distributions of principal on the Certificates on
such Payment Date) over (b) the sum of the Pool Scheduled Principal Balance plus
the Pre-Funded Amount.
1-1
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"Agreement" means this Pooling and Servicing Agreement, as it may be
amended from time to time.
"Amount Available" means, for any Payment Date, an amount equal to:
(a) the sum of
(i) the amount on deposit in the Certificate Account
as of the close of business on the last day of the related Due
Period,
(ii) any Advances deposited in the Certificate
Account with respect to such Payment Date, and
(iii) any amount withdrawn from the Capitalized
Interest Account pursuant to Section 8.07 or the Pre-Funding
Account pursuant to Section 8.08 and deposited in the
Certificate Account, minus
(b) the sum of
(i) the Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee
from the Certificate Account pursuant to clauses (ii) through
(v) of Section 8.04(a), and
(iii) any amounts on deposit in the Certificate
Account as of the close of business on the last day of the
related Due Period representing collections in respect of
Principal Prepayments in Full (other than any amounts referred
to in Section 2.06(vii)) on Loans for which a substitution has
been made in accordance with Section 2.06.
"Amount Held for Future Distribution" means, for any Payment Date, the
total of the amounts held in the Certificate Account in respect of the Loans on
the last day of the preceding Due Period on account of Advance Payments in
respect of such Due Period.
"Applicants" has the meaning assigned in Section 9.06.
"Authenticating Agent" means any authenticating agent appointed
pursuant to Section 9.07.
"Average Sixty-Day Delinquency Ratio Test" means, to be considered
"satisfied" for any Payment Date, that the arithmetic average of the Sixty-Day
Delinquency Ratios for such Payment Date and for the two immediately preceding
Payment Dates is less than or equal to 2.5%.
1-2
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"Average Thirty-Day Delinquency Ratio Test" means, to be considered
"satisfied" for any Payment Date, that the arithmetic average of the Thirty-Day
Delinquency Ratios for such Payment Date and for the two immediately preceding
Payment Dates is less than or equal to 5.0%.
"Book-Entry Certificate" means any Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than (a) a Saturday or a Sunday, or
(b) another day on which banking institutions in the city in which the Person
taking action hereunder are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Capitalized Interest Account" means a separate trust account created
and maintained pursuant to Section 8.07 in the name of the Trust in an Eligible
Institution.
"Certificate" means a Certificate for Home Improvement Loans, Series
1999-E, Class A-1, Class A-2, Class A-3, Class A-4, Class M-1, Class M-2, Class
B-1 or Class B-2, executed and delivered by the Trustee substantially in the
form of Exhibit A, B or C, as applicable, but does not include the Class C
Certificates.
"Certificate Account" means a separate trust account created and
maintained pursuant to Section 5.05 in the name of the Trust in an Eligible
Institution.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate or, if Definitive Certificates have been issued,
Certificateholders.
"Certificate Register" means the register maintained pursuant to
Section 9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate or Class C Certificate is registered on the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request or
demand pursuant to this Agreement, any Certificate or Class C Certificate
registered in the name of the Company or any Affiliate shall be deemed not to be
outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite Percentage Interest necessary
to effect any such consent, request, waiver or demand has been obtained;
provided, however, that, solely for the purpose of determining whether the
Trustee is entitled to rely upon any such consent, waiver, request or demand,
only Certificates or Class C Certificates which the Trustee knows to be so owned
shall be so disregarded.
"Class," "Class A," "Class M," "Class B," or "Class C" means pertaining
to Class A Certificates, Class M Certificates, Class B Certificates, and/or
Class C Certificates, as the case may be.
1-3
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"Class A Certificates" means the Class A-1, Class A-2, Class A-3 and
Class A-4, Certificates, collectively.
"Class A Distribution Amount" means, for any Payment Date, the lesser
of (a) the Class A Formula Distribution Amount and (b) that portion of the
Amount Available eligible for distribution in respect of such amount in
accordance with the priorities set forth in Section 8.04(b), provided that,
after the Class A-4 Cross-over Date, the Class A Distribution Amount shall be
zero.
"Class A Formula Distribution Amount" means, for any Payment Date, an
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 15,
1999) at (1) the Class A-1 Pass-Through Rate on the Class A-1 Principal Balance,
(2) the Class A-2 Pass-Through Rate on the Class A-2 Principal Balance, (3) the
Class A-3 Pass-Through Rate on the Class A-3 Principal Balance, (4) the Class
A-4 Pass-Through Rate on the Class A-4 Principal Balance, in each case to be
calculated immediately prior to such Payment Date, (b) the aggregate of the
Unpaid Class A Interest Shortfalls, if any, with respect to each Class of Class
A Certificates, and (c)(i) if there is no Class A Principal Deficiency Amount
for such Payment Date, the Senior Percentage of the Formula Principal
Distribution Amount, or (ii) if there is a Class A Principal Deficiency Amount
for such Payment Date, the amount determined in accordance with Section
8.04(b)(6)(i); provided, however, that the aggregate of all amounts distributed
for all Payment Dates pursuant to clause (c) shall not exceed the aggregate of
the Original Class Principal Balances of the Class A Certificates.
"Class A Formula Interest Distribution Amount" means, as to each Class
of Class A Certificates and any Payment Date, the sum of (1) the amount
specified in clause (a)(1), (2), (3) or (4), as appropriate, of the definition
of the term "Class A Formula Distribution Amount" and (2) the Unpaid Class A
Interest Shortfall, if any, with respect to such Class.
"Class A Interest Shortfall" means, as to each Class of Class A
Certificates and any Payment Date, the amount, if any, by which the Class A
Formula Interest Distribution Amount for such Class exceeds the amount
distributed to Holders of such Class on such Payment Date pursuant to Section
8.04(b)(2).
"Class A Principal Balance" means, for any Payment Date, the sum of the
Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class A-3
Principal Balance and the Class A-4 Principal Balance.
"Class A Principal Deficiency Amount" means, for any Payment Date, the
excess, if any, of (a) the Class A Principal Balance for such Payment Date over
(b) the sum of the Pool Scheduled Principal Balance plus the Pre-Funded Amount
for the immediately preceding Payment Date.
"Class A-1 Certificate" means any one of the Class A-1 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
1-4
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"Class A-1 Cross-over Date" means the Payment Date on which the Class
A-1 Principal Balance (after giving effect to the distributions of principal on
the Class A-1 Certificates on such Payment Date) is reduced to zero.
"Class A-1 Distribution Amount" means, for any Payment Date, that
portion of the Class A Distribution Amount to be distributed to the Class A-1
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-1 Principal Balance" means, for any Payment Date, the Original
Class A-1 Principal Balance less all amounts previously distributed to Holders
of Class A-1 Certificates in respect of principal.
"Class A-2 Certificate" means any one of the Class A-2 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class A-2 Cross-over Date" means the Payment Date on which the Class
A-2 Principal Balance (after giving effect to the distributions of principal on
the Class A-2 Certificates on such Payment Date) is reduced to zero.
"Class A-2 Distribution Amount" means, for any Payment Date, that
portion of the Class A Distribution Amount to be distributed to the Class A-2
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-2 Principal Balance" means, for any Payment Date, the Original
Class A-2 Principal Balance less all amounts previously distributed to Holders
of Class A-2 Certificates in respect of principal.
"Class A-3 Certificate" means any one of the Class A-3 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class A-3 Cross-over Date" means the Payment Date on which the Class
A-3 Principal Balance (after giving effect to the distributions of principal on
the Class A-3 Certificates on such Payment Date) is reduced to zero.
"Class A-3 Distribution Amount" means, for any Payment Date, that
portion of the Class A Distribution Amount to be distributed to the Class A-3
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
1-5
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"Class A-3 Principal Balance" means, for any Payment Date, the Original
Class A-3 Principal Balance less all amounts previously distributed to Holders
of Class A-3 Certificates in respect of principal.
"Class A-4 Certificate" means any one of the Class A-4 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class A-4 Cross-over Date" means the Payment Date on which the Class
A-4 Principal Balance (after giving effect to the distributions of principal on
the Class A-4 Certificates on such Payment Date) is reduced to zero.
"Class A-4 Distribution Amount" means, for any Payment Date, that
portion of the Class A Distribution Amount to be distributed to the Class A-4
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-4 Principal Balance" means, for any Payment Date, the Original
Class A-4 Principal Balance less all amounts previously distributed to Holders
of Class A-4 Certificates in respect of principal.
"Class B Certificates" means the Class B-1 and Class B-2 Certificates,
collectively.
"Class B Cross-over Date" means the earlier of:
(a) the Class M-2 Cross-over Date, and
(b) the Payment Date occurring in October 2002.
"Class B Percentage" means 100% minus the Senior Percentage.
"Class B Principal Balance" means, for any Payment Date, the sum of the
Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B Principal Balance Test" means, to be considered "satisfied"
for any Payment Date, that the fraction, expressed as a percentage, the
numerator of which is the Class B Principal Balance for such Payment Date and
the denominator of which is the Pool Scheduled Principal Balance for the
immediately preceding Payment Date, is equal to or greater than 19.0%.
"Class B Principal Distribution Test" means, for any Payment Date, each
of the Average Sixty-Day Delinquency Ratio Test, the Average Thirty-Day
Delinquency Ratio Test, the Class B Principal Balance Test, the Cumulative
Realized Losses Test and the Current Realized Losses Test.
1-6
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"Class B-1 Adjusted Principal Balance" means, for any Payment Date, the
Class B-1 Principal Balance for that Payment Date minus the Class B-1
Liquidation Loss Principal Amount (if any) for the immediately preceding Payment
Date.
"Class B-1 Certificate" means any one of the Class B-1 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class B-1 Cross-over Date" means the Payment Date on which the Class
B-1 Principal Balance (after giving effect to the distributions of principal on
the Class B-1 Certificates on such Payment Date) is reduced to zero.
"Class B-1 Distribution Amount" means, for any Payment Date, the lesser
of (a) the Class B-1 Formula Distribution Amount and (b) that portion of the
Amount Available eligible for distribution in respect of such amount in
accordance with the priorities set forth in Section 8.04(b); provided that after
the Class B-1 Cross-over Date the Class B-1 Distribution Amount shall be zero.
"Class B-1 Formula Distribution Amount" means, for any Payment Date, an
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 15,
1999) at the Class B-1 Pass-Through Rate on the Class B-1 Adjusted Principal
Balance for such Payment Date, (b) any Unpaid Class B-1 Interest Shortfall, (c)
if such Payment Date is on or prior to the Class B-1 Cross-over Date, the Class
B Percentage of the Formula Principal Distribution Amount and (d) any Class B-1
Formula Liquidation Loss Interest Distribution Amount; provided, however, that
on the Class M-2 Crossover Date, the balance of any amounts that would have been
distributable on such date pursuant to clause (c) of the definition of the term
"Class M-2 Formula Distribution Amount" (assuming a sufficient Amount Available)
but for the operation of the second proviso in such definition shall instead be
included in clause (c) of this definition; and provided, further, that the
aggregate of all amounts distributed pursuant to clause (c) of this definition
shall not exceed the Original Class B-1 Principal Balance.
"Class B-1 Formula Interest Distribution Amount" means, for any Payment
Date, the sum of the amounts specified in clauses (a) and (b) of the definition
of the term "Class B-1 Formula Distribution Amount".
"Class B-1 Formula Liquidation Loss Interest Distribution Amount"
means, for any Payment Date, the sum of (a) the Class B-1 Liquidation Loss
Interest Amount, if any, and (b) the Unpaid Class B-1 Liquidation Loss Interest
Shortfall, if any.
"Class B-1 Interest Shortfall" means, for any Payment Date, the amount,
if any, by which (a) the Class B-1 Formula Interest Distribution Amount exceeds
(b) the amount distributed to Class B-1 Certificateholders on such Payment Date
pursuant to Section 8.04(b)(5).
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"Class B-1 Liquidation Loss Interest Amount" means, for any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding October 15, 1999)
at the Class B-1 Pass-Through Rate on the Class B-1 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class B-1 Liquidation Loss Interest Shortfall" means, for any Payment
Date, the amount, if any, by which (a) the Class B-1 Formula Liquidation Loss
Interest Distribution Amount exceeds (b) the amount distributed to Class B-1
Certificateholders on such Payment Date pursuant to Section 8.04(b)(12).
"Class B-1 Liquidation Loss Principal Amount" means, for any Payment
Date, the lesser of (a) the Class B-1 Principal Balance (after giving effect to
all distributions of principal on the Class B-1 Certificates on such Payment
Date) and (b) the excess, if any, of the Aggregate Liquidation Loss Principal
Amount over the Class B-2 Principal Balance (after giving effect to all
distributions of principal on the Class B-2 Certificates on such Payment Date).
"Class B-1 Principal Balance" means, for any Payment Date, the Original
Class B-1 Principal Balance less all amounts previously distributed to Holders
of Class B-1 Certificates in respect of principal.
"Class B-2 Certificate" means any one of the Class B-2 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class B-2 Distribution Amount" means, for any Payment Date, the lesser
of (a) the Class B-2 Formula Distribution Amount and (b) that portion of the
Amount Available eligible for distribution in respect of such amount in
accordance with the priorities set forth in Section 8.04(b).
"Class B-2 Formula Distribution Amount" means, for any Payment Date, an
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 15,
1999) at the Class B-2 Pass-Through Rate on the Class B-2 Principal Balance, (b)
any Unpaid Class B-2 Interest Shortfall, and (c) if such Payment Date is after
the Class B-1 Cross-over Date, the Class B Percentage of the Formula Principal
Distribution Amount; provided, however, that on the Class B-1 Cross-over Date,
the balance of any amounts that would have been distributable on such date
pursuant to clause (c) of the definition of the term "Class B-1 Formula
Distribution Amount" (assuming a sufficient Amount Available) but for the
operation of the second proviso in such definition shall instead be included in
clause (c) of this definition; and provided, further, that the aggregate of all
amounts distributed pursuant to clause (c) of this definition shall not exceed
the Original Class B-2 Principal Balance.
"Class B-2 Formula Interest Distribution Amount" means, for any Payment
Date, the sum of the amounts specified in clauses (a) and (b) of the definition
of the term "Class B-2 Formula Distribution Amount".
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"Class B-2 Guaranty Fee" means, for any Payment Date, the lesser of (a)
one-twelfth of the product of 3.00% and the sum of the Pool Scheduled Principal
Balance and the Pre-Funded Amount for the immediately preceding Payment Date
(or, in the case of the October 1999 Payment Date, the Cut-off Date), or (b)
that portion of the Amount Available eligible for distribution in respect of
such amount in accordance with the priorities set forth in Section 8.04(b).
"Class B-2 Guaranty Payment" means, for any Payment Date, the amount,
if any, by which (a) the sum of the Class B-2 Formula Distribution Amount and
the Class B-2 Liquidation Loss Principal Amount exceeds (b) the Class B-2
Distribution Amount; provided that the Class B-2 Guaranty Payment shall not
exceed the amount necessary to reduce the Class B-2 Principal Balance to zero.
"Class B-2 Interest Shortfall" means, for any Payment Date, the amount,
if any, by which (a) the Class B-2 Formula Interest Distribution Amount exceeds
(b) the sum of the amounts distributed to Class B-2 Certificateholders on such
Payment Date pursuant to clauses (i) and (ii) of Section 8.04(b)(13) and any
Class B-2 Guaranty Payment.
"Class B-2 Limited Guaranty" means the limited guaranty of the Company
provided pursuant to Section 8.03.
"Class B-2 Liquidation Loss Principal Amount" means, for any Payment
Date, the lesser of (a) the Class B-2 Principal Balance (after giving effect to
all distributions of principal on the Class B-2 Certificates on such Payment
Date) and (b) the Aggregate Liquidation Loss Principal Amount.
"Class B-2 Principal Balance" means, for any Payment Date, the Original
Class B-2 Principal Balance less all amounts previously distributed to Holders
of Class B-2 Certificates in respect of principal.
"Class C Certificateholder" means the person in whose name a Class C
Certificate is registered on the Certificate Register.
"Class C Certificate" means a Certificate for Home Improvement Loans,
Series 1999-E, bearing the designation Class C, executed and delivered by the
Trustee substantially in the form of Exhibit I, and evidencing an interest
designated as a "residual interest" in the Trust for purposes of the REMIC
Provisions.
"Class C Distribution Amount" means, for any Payment Date, the amount,
if any, distributable in respect of the Class C Certificates pursuant to Section
8.04(b).
"Class M Certificates" means the Class M-1 and Class M-2 Certificates,
collectively.
"Class M Principal Balance" means, for any Payment Date, the sum of the
Class M-1 Principal Balance and the Class M-2 Principal Balance.
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"Class M-1 Adjusted Principal Balance" means, for any Payment Date, the
Class M-1 Principal Balance for that Payment Date minus the Class M-1
Liquidation Loss Principal Amount (if any) for the immediately preceding Payment
Date.
"Class M-1 Certificate" means any one of the Class M-1 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class M-1 Cross-over Date" means the Payment Date on which the Class
M-1 Principal Balance (after giving effect to the distributions of principal on
the Class M-1 Certificates on such Payment Date) is reduced to zero.
"Class M-1 Distribution Amount" means, for any Payment Date, the lesser
of (a) the Class M-1 Formula Distribution Amount and (b) that portion of the
Amount Available eligible for distribution in respect of such amount in
accordance with the priorities set forth in Section 8.04(b); provided that after
the Class M-1 Cross-over Date the Class M-1 Distribution Amount shall be zero.
"Class M-1 Formula Distribution Amount" means, for any Payment Date, an
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 15,
1999) at the Class M-1 Pass-Through Rate on the Class M-1 Adjusted Principal
Balance for such Payment Date, (b) any Unpaid Class M-1 Interest Shortfall, (c)
if such Payment Date is after the Class A-4 Cross-over Date, but on or prior to
the Class M-1 Cross-over Date, the Senior Percentage of the Formula Principal
Distribution Amount and (d) any Class M-1 Formula Liquidation Loss Interest
Distribution Amount; provided, however, that on the Class A-4 Cross-over Date,
the balance of any amounts that would have been distributable on such date
pursuant to clause (c) of the definition of the term "Class A Formula
Distribution Amount" (assuming a sufficient Amount Available) but for the
operation of the proviso in such definition shall instead be included in clause
(c) of this definition; and provided, further, that the aggregate of all amounts
distributed for all Payment Dates pursuant to clause (c) of this definition
shall not exceed the Original Class M-1 Principal Balance.
"Class M-1 Formula Interest Distribution Amount" means, for any Payment
Date, the sum of the amounts specified in clauses (a) and (b) of the definition
of the term "Class M-1 Formula Distribution Amount."
"Class M-1 Formula Liquidation Loss Interest Distribution Amount"
means, for any Payment Date, the sum of (a) the Class M-1 Liquidation Loss
Interest Amount, if any, and (b) the Unpaid Class M-1 Liquidation Loss Interest
Shortfall, if any.
"Class M-1 Interest Shortfall" means, for any Payment Date, the amount,
if any, by which (a) the Class M-1 Formula Interest Distribution Amount exceeds
(b) the amount distributed to Class M-1 Certificateholders on such Payment Date
pursuant to Section 8.04(b)(3).
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"Class M-1 Liquidation Loss Interest Amount" means, for any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding October 15, 1999)
at the Class M-1 Pass-Through Rate on the Class M-1 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class M-1 Liquidation Loss Interest Shortfall" means, for any Payment
Date, the amount, if any, by which (a) the Class M-1 Formula Liquidation Loss
Interest Distribution Amount exceeds (b) any amount distributed to Class M-1
Certificateholders on such Payment Date pursuant to Section 8.04(b)(10).
"Class M-1 Liquidation Loss Principal Amount" means, for any Payment
Date, the lesser of (a) the Class M-1 Principal Balance (after giving effect to
all distributions of principal on the Class M-1 Certificates on such Payment
Date) and (b) the excess, if any, of the Aggregate Liquidation Loss Principal
Amount over the aggregate of the Class M-2 Principal Balance and the Class B
Principal Balance (after giving effect to all distributions of principal on the
Class M-2 and Class B Certificates on such Payment Date).
"Class M-1 Principal Balance" means, for any Payment Date, the Original
Class M-1 Principal Balance less all amounts previously distributed to Holders
of Class M-1 Certificates in respect of principal.
"Class M-2 Adjusted Principal Balance" means, for any Payment Date, the
Class M-2 Principal Balance for that Payment Date minus the Class M-2
Liquidation Loss Principal Amount (if any) for the immediately preceding Payment
Date.
"Class M-2 Certificate" means any one of the Class M-2 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Trust for purposes of the
REMIC Provisions.
"Class M-2 Cross-over Date" means the Payment Date on which the Class
M-2 Principal Balance (after giving effect to the distributions of principal on
the Class M-2 Certificates on such Payment Date) is reduced to zero.
"Class M-2 Distribution Amount" means, for any Payment Date, the lesser
of (a) the Class M-2 Formula Distribution Amount and (b) that portion of the
Amount Available eligible for distribution in respect of such amount in
accordance with the priorities set forth in Section 8.04(b); provided that after
the Class M-2 Cross-over Date the Class M-2 Distribution Amount shall be zero.
"Class M-2 Formula Distribution Amount" means, for any Payment Date, an
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 15,
1999) at the Class M-2 Pass-Through Rate on the Class M-2 Adjusted Principal
Balance for such Payment Date, (b) any Unpaid Class M-2 Interest Shortfall, (c)
if such Payment Date is after the Class M-1 Cross-over Date, but on or prior to
the
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Class M-2 Cross-over Date, the Senior Percentage of the Formula Principal
Distribution Amount and (d) any Class M-2 Formula Liquidation Loss Interest
Distribution Amount; provided, however, that on the Class M-1 Cross-over Date,
the balance of any amounts that would have been distributable on such date
pursuant to clause (c) of the definition of the term "Class M-1 Formula
Distribution Amount" (assuming a sufficient Amount Available) but for the
operation of the second proviso in such definition shall instead be included in
clause (c) of this definition; and provided, further, that the aggregate of all
amounts distributed for all Payment Dates pursuant to clause (c) of this
definition shall not exceed the Original Class M-2 Principal Balance.
"Class M-2 Formula Interest Distribution Amount" means, for any Payment
Date, the sum of the amounts specified in clauses (a) and (b) of the definition
of the term "Class M-2 Formula Distribution Amount."
"Class M-2 Formula Liquidation Loss Interest Distribution Amount"
means, for any Payment Date, the sum of (a) the Class M-2 Liquidation Loss
Interest Amount, if any, and (b) the Unpaid Class M-2 Liquidation Loss Interest
Shortfall, if any.
"Class M-2 Interest Shortfall" means, for any Payment Date, the amount,
if any, by which (a) the Class M-2 Formula Interest Distribution Amount, exceeds
(b) the amount distributed to Class M-2 Certificateholders on such Payment Date
pursuant to Section 8.04(b)(4).
"Class M-2 Liquidation Loss Interest Amount" means, for any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding October 15, 1999)
at the Class M-2 Pass-Through Rate on the Class M-2 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class M-2 Liquidation Loss Interest Shortfall" means, for any Payment
Date, the amount, if any, by which the Class M-2 Formula Liquidation Loss
Interest Distribution Amount exceeds any amount distributed to Class M-2
Certificateholders on such Payment Date pursuant to Section 8.04(b)(11).
"Class M-2 Liquidation Loss Principal Amount" means, for any Payment
Date, the lesser of (a) the Class M-2 Principal Balance (after giving effect to
all distributions of principal on the Class M-2 Certificates on such Payment
Date) and (b) the excess, if any, of the Aggregate Liquidation Loss Principal
Amount over the Class B Principal Balance (after giving effect to all
distributions of principal on the Class B Certificates on such Payment Date).
"Class M-2 Principal Balance" means, for any Payment Date, the Original
Class M-2 Principal Balance less all amounts previously distributed to Holders
of Class M-2 Certificates in respect of principal.
"Class Principal Balance" means any of the Class A-1, Class A-2, Class
A-3, Class A-4, Class M-1, Class M-2, Class B-1 or Class B-2 Principal Balances.
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"Closing Date" means September 15, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Combined LTV" means, with respect to any Loan, the percentage obtained
by dividing (i) the sum of (a) the original principal balance of such Loan, plus
(b) the outstanding principal balance, as of the date of origination of such
Loan, of any loan secured by a prior lien on the property which secures the Loan
(the "Collateral"), by (ii) the lesser of (a) the appraised value of the
Collateral based on an appraisal made for the originator of the Loan by an
independent fee appraiser (or by an employee of the Company who is a licensed
appraiser) at the time of origination of the Loan, and (b) the sales price of
the Collateral at the time of origination of the Loan; provided that, in the
case of a Loan the proceeds of which were used to refinance an existing mortgage
loan, the amount described in clause (ii)(a) shall be the amount to be used for
purposes of clause (ii).
"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Loans and which was used by the Company in
selecting the Loans, and includes the master file and the history file.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 12.09.
"Counsel for the Company" means Briggs and Morgan, P.A., or other legal
counsel for the Company.
"Cumulative Realized Loss Ratio" means, for any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the Cumulative
Realized Losses for that Payment Date, and the denominator of which is the
Cut-off Date Pool Principal Balance.
"Cumulative Realized Losses" means, for any Payment Date, the sum of
the Realized Losses for that Payment Date and each preceding Payment Date since
the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied"
for any Payment Date, that the Cumulative Realized Loss Ratio for such Payment
Date is less than or equal to 10.0%.
"Current Realized Loss Ratio" means, for any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate Realized
Losses for such Payment Date and each of the five immediately preceding Payment
Dates, multiplied by two, and the denominator of which is the arithmetic average
of the Pool Scheduled Principal Balance as of the sixth preceding Payment Date
and the Pool Scheduled Principal Balance for such Payment Date.
"Current Realized Losses Test" means, to be considered "satisfied" for
any Payment Date, that the Current Realized Loss Ratio for such Payment Date is
less than or equal to 2.5%.
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"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 S&P and F1 by Fitch in the case of commercial paper, or
BBB+ or higher by both S&P and Fitch in the case of unsecured long-term debt, as
is acting at such time as Custodian of the Loan Files pursuant to Section 4.01.
"Cut-off Date" means with respect to each Loan (other than a Subsequent
Loan), July 31, 1999 (or the date of origination, if later).
"Cut-off Date Pool Principal Balance" means the aggregate of the
Cut-off Date Principal Balances of all Loans.
"Cut-off Date Principal Balance" means, (i) as to any Initial and
Additional Loan, the unpaid principal balance thereof at the Cut-off Date after
giving effect to all installments of principal due prior thereto, and (ii) as to
any Subsequent Loan, the unpaid principal balance thereof at the related
Subsequent Cut-off Date, after giving effect to all installments of principal
due prior thereto.
"Defaulted Loan" means a Loan with respect to which the Servicer
commenced foreclosure proceedings, made a sale of such Loan to a third party for
foreclosure or enforcement, or in the case of an FHA-Insured Loan, submitted a
claim to FHA, or as to which there was a Delinquent Payment 180 or more days
past due.
"Definitive Certificates" has the meaning assigned in Section 9.02(e).
"Delinquent Payment" means, as to any Loan, with respect to any Due
Period, any payment or portion of a payment that was originally scheduled to be
made during such Due Period under such Loan (after giving effect to any
reduction in the principal amount deemed owed on such Loan by the Obligor) and
was not received or applied during such Due Period and deposited in the
Certificate Account, whether or not any payment extension has been granted by
the Servicer; provided, however, that with respect to any Liquidated Loan, the
payment scheduled to be made in the Due Period in which such Loan became a
Liquidated Loan shall not be deemed a Delinquent Payment.
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of (i) one
Class A-1 Certificate evidencing $200,000,000 in Original Class A-1 Principal
Balance and one Class A-1 Certificate evidencing $16,000,000 in Original Class
A-1 Principal Balance, (ii) one Class A-2 Certificate evidencing $42,000,000 in
Original Class A-2 Principal Balance, (iii) one Class A-3 Certificate evidencing
$124,000,000 in Original Class A-3 Principal Balance, (iv) one Class A-4
Certificate evidencing $84,500,000 in Original Class A-4 Principal Balance, (v)
one Class M-1 Certificate evidencing $48,000,000 in Original Class M-1 Principal
Balance, (vi) one Class M-2 Certificate evidencing $28,500,000 in Original Class
M-2 Principal Balance,(vii) one Class B-1 Certificate evidencing
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$18,000,000 in Original Class B-1 Principal Balance, and (viii) one Class B-2
Certificate evidencing $39,000,000 in Original Class B-2 Principal Balance, and
any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(5) of the Uniform Commercial
Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" means the third Business Day preceding each
Payment Date during the term of this Agreement.
"Disqualified Organization" has the meaning assigned in Section
9.02(b)(3).
"Due Period" with respect to any Payment Date means the preceding
calendar month, except that the Due Period with respect to the October 1999
Payment Date means August and September, 1999.
"Electronic Ledger" means the electronic master record of promissory
notes of the Company.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) an
account or accounts the deposits in which are fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation; (iii) a trust account (which shall be a "segregated trust
account") maintained with the corporate trust department of a federal or state
chartered depository institution subject to regulations regarding fiduciary
funds on deposit similar to federal regulations or trust company with trust
powers and acting in its fiduciary capacity for the benefit of the Trustee
hereunder, which depository institution or trust company shall have capital and
surplus of not less than $50,000,000; or (iv) an account that will not cause S&P
or Fitch to downgrade or withdraw its then-current rating assigned to the
Certificates, as evidenced in writing by S&P and Fitch.
"Eligible Institution" means any depository institution (which may be
the Trustee or an Affiliate of the Trustee) organized under the laws of the
United States or any State, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or State authorities and whose
short-term deposits have been rated A-1+ by S&P and F1+ by Fitch (if rated by
Fitch) or whose unsecured long-term debt has been rated in one of the two
highest rating categories by both S&P and Fitch (if rated by Fitch).
"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means the Company or any Person qualified to act as
Servicer of the Loans under applicable federal and state laws and regulations,
which Person is a Title I approved lender under FHA Regulations and services not
less than an aggregate of $100,000,000 in
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outstanding principal amount of FHA-insured home improvement contracts and
promissory notes, manufactured housing conditional sales contracts and
installment loan agreements and home equity loans.
"Eligible Substitute Loan" means, as to (1) any Replaced Loan for which
an Eligible Substitute Loan is being substituted pursuant to Section 3.05(b),
and (2) any Prepaid Loan for which an Eligible Substitute Loan is being
substituted pursuant to Section 2.06, a Loan that (a) as of the date of its
substitution, satisfies all of the representations and warranties (which, except
when expressly stated to be as of origination, shall be deemed to be made as of
the date of its substitution rather than as of the Cut-off Date or the Closing
Date) in Section 3.02 and does not cause any of the representations and
warranties in Section 3.03, after giving effect to such substitution, to be
incorrect, (b) after giving effect to the scheduled payment due in the month of
such substitution, has a Scheduled Principal Balance that is not greater than
the Scheduled Principal Balance of such Replaced Loan or, but for such Principal
Prepayment in Full, the Scheduled Principal Balance of such Prepaid Loan, as the
case may be, (c) has a Loan Interest Rate that is at least equal to the Loan
Interest Rate of such Replaced Loan or Prepaid Loan, as the case may be, (d) has
a remaining term to scheduled maturity that is not greater than the remaining
term to scheduled maturity of the Replaced Loan or Prepaid Loan, as the case may
be, (e) the loan to value ratio of such Loan is not more than 100 basis points
higher than the loan to value ratio of the Replaced Loan or Prepaid Loan, as the
case may be, (f) as of the date of its origination, was identified by the
Company under its standard underwriting criteria as the same credit grade as the
Replaced Loan or Prepaid Loan, as the case may be, and (g) the mortgage securing
such Loan is in a lien position that is the same or better than the mortgage
securing the Replaced Loan or Prepaid Loan, as the case may be.
"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 Loans comprising a
portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
"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 Contract of
Insurance.
"FHA-Insured Loans" means those Loans that have been or are being
reported to FHA as eligible for FHA Insurance, a list of which is attached to
this Agreement as Exhibit Q.
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"FHA Regulations" means the regulations promulgated by HUD relating to
Title I home improvement loans, currently found at 24 C.F.R. ss. 201.
"FICO Score" means a credit score derived on the basis of a methodology
developed by Fair Isaac and Company, a consulting firm specializing in creating
default predictive models through scoring mechanisms. The credit scores, which
are based on information obtained from national credit reporting organizations,
are numerical representations of borrowers' estimated default probability, and
can range from a low of 250 to a high of 900.
"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 Loans comprising a portion of the corpus of the Trust.
"Final Payment Date" means the Payment Date on which the final
distribution in respect of Certificates will be made pursuant to Section 12.04.
"Fitch" means Fitch IBCA, Inc., or any successor thereto; provided
that, if Fitch no longer has a rating outstanding on any Class of the
Certificates, then references herein to "Fitch" shall be deemed to refer to the
NRSRO then rating any Class of the Certificates (or, if more than one such NRSRO
is then rating any Class of the Certificates, to such NRSRO as may be designated
by the Servicer), and references herein to ratings by or requirements of Fitch
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Formula Principal Distribution Amount" means, for any Payment Date,
the sum of:
(a) all scheduled payments of principal due on each
outstanding Loan during the prior Due 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
(b) all Partial Principal Prepayments applied and all
Principal Prepayments in Full received during the prior Due Period with
respect to the Loans; plus
(c) the aggregate Scheduled Principal Balance of all Loans
that became Liquidated Loans during the prior Due Period plus the
amount of any reduction in principal balance of any Loan during the
prior Due Period pursuant to bankruptcy proceedings involving the
related Obligor; plus
(d) the aggregate Scheduled Principal Balance of all Loans
repurchased, and all amounts deposited in lieu of the repurchase of any
Loan, during the prior Due Period pursuant to Section 3.05(a) or, in
the event of a substitution of a Loan in accordance with Section
3.05(b), any amount required to be deposited by the Company in the
Certificate Account during the prior Due Period pursuant to Section
3.05(b)(vi); plus
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(e) any amount described in clauses (a) through (d) above that
was not previously distributed because of an insufficient amount of
funds available in the Certificate Account if (1) the Payment Date
occurs on or after the Payment Date on which the Class B-2 Principal
Balance has been reduced to zero, or (2) such amount was not covered by
a Class B-2 Guaranty Payment and corresponding reduction in the Class
B-2 Principal Balance; plus
(f) on the Payment Date on or after the last day of the
Pre-Funding Period, the Pre-Funded Amount.
"GNMA" means the Government National Mortgage Association, or any
successor thereto.
"HUD" means the United States Department of Housing and Urban
Development, or any successor thereto.
"Independent" means, when used with respect to any specified Person,
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 Loan" means a Loan identified as such on the List of Loans
attached hereto with an aggregate Cut-off-Date Prncipal Balance of
$298,642,838.05.
"Liquidated Loan" means, with respect to any Due Period, either
(1) a Defaulted Loan as to which (a) the Servicer has received
from the Obligor, or a third party purchaser of the Loan, all amounts
which the Servicer reasonably and in good faith expects to recover from
or on account of such Loan, or (b) in the case of an FHA- Insured Loan,
either (i) FHA has paid the claim or (ii) the Servicer has determined
in good faith that FHA will not pay the claim, or
(2) a Loan (a) upon which all or a portion of the first
payment of interest due by the Obligor was added to principal, and (b)
on which the Obligor failed to pay the full amount of principal due on
the Loan, as computed by the Servicer;
provided, however, that any Loan which the Company is obligated to repurchase
pursuant to Section 3.05, and did so repurchase or substitute therefor an
Eligible Substitute Loan in accordance with Section 3.05, shall be deemed not to
be a Liquidated Loan; and provided, further, that with respect to Due Periods
beginning on or after September 2028, a Liquidated Loan also means any Loan as
to which the Servicer has commenced foreclosure proceedings, or made a sale of
the Loan to a third
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party for foreclosure or enforcement, or, in the case of an FHA-Insured Loan,
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 Loan, 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)
received in connection with the liquidation of Defaulted Loans, whether through
repossession, foreclosure sale or otherwise.
"List of Loans" means the lists identifying each Loan constituting part
of the Trust Fund and attached either to this Agreement as Exhibit L or to a
Subsequent Transfer Instrument, as such lists may be amended from time to time
pursuant to Section 2.06 or Section 3.05(b) to add Eligible Substitute Loans and
delete Replaced Loans or Prepaid Loans, as the case may be. Each List of Loans
shall set forth as to each Loan identified on it (i) the Cut-off Date Principal
Balance, (ii) the amount of monthly payments due from the Obligor, (iii) the
Loan Interest Rate and (iv) the maturity date.
"Loan" means each home improvement contract and promissory note
identified in the List of Loans and includes, without limitation, all related
mortgages, deeds of trust and security deeds and any and all rights to receive
payments due pursuant thereto after the Cut-off Date, or Subsequent Cut-off Date
with respect to a Subsequent Loan.
"Loan File" means, as to each Loan, (a) the original promissory note,
(b) the original or a copy of the mortgage, deed of trust or security deed or
similar evidence of a lien on the related improved property and evidence of due
recording of such mortgage, deed of trust or security deed, if available, (c) if
such Loan was not originated by the Company, the original or a copy of an
assignment of the mortgage, deed of trust or security deed by the originating
contractor to the Company, (d) an assignment of the mortgage, deed of trust or
security deed to the Trustee or in blank, and (e) any extension, modification or
waiver agreements.
"Loan Interest Rate" means, as to any Loan, the annual rate of interest
specified in the Loan.
"Monthly Report" has the meaning assigned in Section 6.01.
"Monthly Servicing Fee" means, for any Payment Date, with respect to
the Loans, one-twelfth of the product of .50% and the Pool Scheduled Principal
Balance for the preceding Payment Date (or, in the case of the first Payment
Date, the Cut-off Date).
"Net Liquidation Loss" means, as to a Liquidated Loan, the difference
between (a) the Repurchase Price of such Loan, and (b) the Net Liquidation
Proceeds with respect to such Liquidated Loan, where such difference is a
positive number.
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"Net Liquidation Proceeds" means, as to a Liquidated Loan, the proceeds
received, or, for Loans which become Liquidated Loans pursuant to the last
proviso in the definition of "Liquidated Loan," the estimated proceeds to be
received, as of the last day of the Due Period in which such Loan became a
Liquidated Loan, from the Obligor, from a third party purchaser of the Loan,
under FHA Insurance, under insurance other than FHA Insurance, or otherwise, net
of Liquidation Expenses.
"NRSRO" means any nationally recognized statistical rating
organization.
"Obligor" means the person who owes payments under a Loan.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board, President or any Vice President of the Company and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may,
except as expressly provided herein, be salaried counsel for the Company or the
Servicer, as applicable, acceptable to the Trustee and the Company.
"Original Aggregate Certificate Principal Balance" means $600,000,000.
"Original Class Principal Balance" means as to each Class of
Certificates, the amount set forth with respect to such Class in Section
2.05(b).
"Original Pre-Funded Amount" means the amount deposited in the
Pre-Funding Account pursuant to Section 2.02(l).
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the proviso in Section 3.05(a) or pursuant to
Section 3.05(b).
"Pass-Through Rate" means with respect to each Class of Certificates,
the rate set forth for such Class in Section 2.05(b).
"Paying Agent" has the meaning assigned in Section 8.01(c).
"Payment 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 October 1999.
"Percentage Interest" means, as to any Certificate or the Class C
Certificates, the percentage interest evidenced thereby in distributions made on
the related Class, such percentage interest being equal to: (i) as to any
Certificate, the percentage (carried to eight places) obtained from dividing the
denomination of such Certificate by the Original Class Principal Balance of the
related Class, and (ii) as to any Class C Certificate, the percentage specified
on the face of such Certificate. The
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aggregate Percentage Interests for each Class of Certificates and the Class C
Certificates shall equal 100%, respectively.
"Permitted Transferee" means, in the case of a transfer of the Class C
Certificates, a Person that is not a Plan or a Disqualified Organization, except
as permitted by Sections 9.02(b)(2) and (3), respectively.
"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.
"Plan" has the meaning assigned in Section 9.02(b)(2).
"Pool Factor" means, at any time, the percentage derived from a
fraction, the numerator of which is the Aggregate Certificate Principal Balance
at such time and the denominator of which is the Original Aggregate Certificate
Principal Balance.
"Pool Scheduled Principal Balance" means, for any Payment Date, the
aggregate Scheduled Principal Balance for such Payment Date of all Loans that
were outstanding during the immediately preceding Due Period.
"Post-Funding Payment Date" means the Payment Date on, or the first
Payment Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means, with respect to any date of determination,
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Loans to the Trust on such date.
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 8.08.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000.00, or (b) the close of business on
December 10, 1999, or (c) the date on which an Event of Termination occurs.
"Prepaid Loan" has the meaning assigned in Section 2.06.
"Principal Prepayment" means a payment or other recovery of principal
on a Loan (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
prepayment, upon the next scheduled payment date on such Loan) to reduce the
outstanding principal amount due on such Loan prior to the date or dates on
which such principal amount is due.
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<PAGE>
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Loan.
"Realized Losses" means, for any Payment Date, the aggregate Net
Liquidation Losses for all Loans that became Liquidated Loans during the
immediately preceding Due Period.
"Record Date" means, with respect to any Payment Date, the Business Day
immediately preceding such Payment Date.
"REMIC" means a "real estate mortgage investment conduit" as defined in
Section 860D of the Code.
"REMIC Provisions" means the provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"Replaced Loan" has the meaning assigned in Section 3.05(b).
"Repurchase Price" means, with respect to a Loan to be repurchased
pursuant to Section 3.05 or which becomes a Liquidated Loan, an amount equal to
(a) the remaining principal amount outstanding on such Loan (without giving
effect to any Advances paid by the Servicer or the Trustee, as applicable, with
respect to such Loan pursuant to Section 8.02), plus (b) interest at the
Weighted Average Pass-Through Rate on such Loan from the end of the Due Period
with respect to which the Obligor last made a scheduled payment (without giving
effect to any Advances paid by the Servicer or the Trustee, as applicable, with
respect to such Loan pursuant to Section 8.02) through the date of such
repurchase or liquidation.
"Responsible Officer" means, with respect to the Trustee, the chairman
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"Retained Certificates" means the Certificates retained by the Company
on the Closing Date; i.e., the Class B-1 and Class B-2 Certificates.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto; provided that, if S&P no
longer has a rating outstanding on any Class of the Certificates, then
references herein to "S&P" shall be deemed to refer to the
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<PAGE>
NRSRO then rating any Class of the Certificates (or, if more than one such NRSRO
is then rating any Class of the Certificates, to such NRSRO as may be designated
by the Servicer), and references herein to ratings by or requirements of S&P
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Scheduled Principal Balance" means, with respect to any Loan and any
Payment Date, the Cut-off Date or any Subsequent Cut-off Date, the principal
balance of such Loan as of the due date in the Due Period immediately preceding
such Payment Date, 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 Loan the Cut-off Date is the date of origination of the Loan, its Scheduled
Principal Balance as of the Cut-off Date is the principal balance of the Loan on
its date of origination.
"Senior Percentage" means, with respect to the Certificates:
(a) for any Payment Date prior to the Class B Cross-over Date,
100%;
(b) for any Payment Date on or after the Class B Cross-over
Date but on or prior to the Class M-2 Cross-over Date, and on which any
Class B Principal Distribution Test is not satisfied, 100%;
(c) for any Payment Date on or after the Class B Cross-over
Date but on or prior to the Class M-2 Cross-over Date, and on which
each Class B Principal Distribution Test is satisfied, a fraction,
expressed as a percentage, the numerator of which is the sum of the
Class A Principal Balance and the Class M Principal Balance for such
Payment Date, and the denominator of which is the Pool Scheduled
Principal Balance for the immediately preceding Payment Date; and
(d) for any Payment Date after the Class M-2 Cross-over Date,
0%.
"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.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in a letter furnished to the Trustee by
the Company, as the same may be amended from time to time.
"Sixty-Day Delinquency Ratio" means, for any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Loans that
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were delinquent 60 days or more as of the end of the prior Due Period (including
Loans in respect of which the related real estate has been foreclosed upon but
is still in inventory), and the denominator of which is the Pool Scheduled
Principal Balance for such Payment Date.
"Step-up Rate Loan" means any Loan bearing interest during an initial
period or periods at a fixed rate or fixed rates that are lower than the fixed
rate borne thereafter.
"Subsequent Cut-off Date" means, with respect to a Subsequent Loan, the
last day of the calendar month in which the related Subsequent Transfer Date
occurs.
"Subsequent Loan" means a Loan sold by the Company to the Trust
pursuant to Section 2.03, such Loan being identified in the Subsequent Transfer
Instrument.
"Subsequent Transfer Date" means, with respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Loans 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 O, by which the Company sells
Subsequent Loans to the Trust.
"Thirty-Day Delinquency Ratio" means, for any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Loans that were delinquent 30 days or more as of the
end of the prior Due Period (including Loans in respect of which the related
real estate has been foreclosed upon but is still in inventory), and the
denominator of which is the Pool Scheduled Principal Balance for such Payment
Date.
"Trust" means Home Improvement Loan Trust 1999-E.
"Trust Fund" means the corpus of the Trust created by this Agreement
which consists of (i) all the rights, benefits and obligations arising from and
in connection with the Loans, including without limitation all related
mortgages, deeds of trust and security deeds and any and all rights to receive
payments on or with respect to the Loans due after the Cut-off Date, or
Subsequent Cut-off Date with respect to Subsequent Loans, (ii) all rights under
FHA Insurance in respect of each FHAInsured Loan, (iii) all rights under any
hazard, flood or other individual insurance policy on the real estate securing a
Loan for the benefit of the creditor of such Loan, (iv) all rights the Company
may have against the originating contractor with respect to Loans not originated
by the Company, (v) all rights under the Errors and Omissions Protection Policy
and the Fidelity Bond as such policy and bond relate to the Loans, (vi) all
rights under any title insurance policies, if applicable, on any of the
properties securing Loans, (vii) all documents contained in the Loan Files,
(viii) the Class B-2 Limited Guaranty, (ix) amounts in the Certificate Account,
any Capitalized Interest Account and any Pre-Funding Account (including all
proceeds of investments) and (x) all proceeds and products of the foregoing.
"Trustee Advance" has the meaning assigned in Section 11.15.
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<PAGE>
"Underwriters" means Lehman Brothers Inc., Chase Securities Inc., First
Union Capital Markets and Merrill Lynch, Pierce Fenner & Smith Incorporated.
"Unpaid Class A Interest Shortfall" means, as to each Class of Class A
Certificates and any Payment Date, the amount, if any, of the Class A Interest
Shortfall applicable to such Class for the prior Payment Date, plus one month's
interest thereon (to the extent payment thereof is legally permissible) at the
related Pass-Through Rate.
"Unpaid Class B-1 Interest Shortfall" means, with respect to the Class
B-1 Certificates and any Payment Date, the amount, if any, of the Class B-1
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class B-1
Pass-Through Rate.
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, with
respect to the Class B-1 Certificates and any Payment Date, the amount, if any,
of the Class B-1 Liquidation Loss Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class B-1 Pass-Through Rate.
"Unpaid Class B-2 Interest Shortfall" means, with respect to the Class
B-2 Certificates and any Payment Date, the amount, if any, of the Class B-2
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class B-2
Pass-Through Rate.
"Unpaid Class M-1 Interest Shortfall" means, with respect to the Class
M-1 Certificates and any Payment Date, the amount, if any, of the Class M-1
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class M-1
Pass-Through Rate.
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, with
respect to the Class M-1 Certificates and any Payment Date, the amount, if any,
of the Class M-1 Liquidation Loss Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class M-1 Pass-Through Rate.
"Unpaid Class M-2 Interest Shortfall" means, with respect to the Class
M-2 Certificates and any Payment Date, the amount, if any, of the Class M-2
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class M-2
Pass-Through Rate.
"Unpaid Class M-2 Liquidation Loss Interest Shortfall" means, with
respect to the Class M-2 Certificates and any Payment Date, the amount, if any,
of the Class M-2 Liquidation Loss Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class M-2 Pass-Through Rate.
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<PAGE>
"Weighted Average Debt Consolidation Percentage" means the weighted
average, by Scheduled Principal Balance, of Loans that were used by borrowers
for the purpose of debt consolidation.
"Weighted Average Loan Rate" means, for any Payment Date, the weighted
average (determined by Scheduled Principal Balance) of the Loan Interest Rates
for all Loans that were outstanding during the immediately preceding month.
"Weighted Average Pass-Through Rate" means, for any Payment Date, with
respect to any Loan, the sum of (i) the weighted average (expressed as a
percentage and rounded to four decimal places) of the Class A-1, Class A-2,
Class A-3, Class A-4, Class M-1, Class M-2, Class B-1 and Class B-2 Pass-Through
Rates, weighted on the basis of the respective Class A-1, Class A-2, Class A-3,
Class A-4, Class M-1, Class M-2, Class B-1 and Class B-2 Principal Balances
immediately prior to such Payment Date.
SECTION 1.03. Calculation of Interest on the Certificates. Interest on
the Certificates shall be computed on the basis of a 360-day year of twelve
30-day months.
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ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF LOANS
-----------------------------------------
SECTION 2.01. Closing.
a. There is hereby created, by the Company as settlor, a separate trust
which shall be known as Home Improvement Loan Trust 1999-E. The Trust shall be
administered pursuant to the provisions of this Agreement for the benefit of the
Certificateholders and the Class C Certificateholders.
b. The Company hereby transfers, assigns, sets over and otherwise
conveys to the Trustee on behalf of the Trust, by execution and delivery of an
assignment substantially in the form of Exhibit D hereto, all the right, title
and interest of the Company in and to the Loans, including all rights to receive
payments on or with respect to the Loans due after the Cut-off Date, or
Subsequent Cut-off Date in respect of the Subsequent Loans, and all other assets
now or hereafter included in the Trust Fund. Such transfer and assignment is
intended by the Company to be a sale of such assets for all purposes, including,
without limitation, the Federal Bankruptcy Code, to the end that all such assets
will hereafter cease to be the property of the Company and would not be
includable in the estate of the Company for purposes of Section 541 of the
Federal Bankruptcy Code.
c. Although the parties intend that each conveyance pursuant to this
Agreement of the Company's right, title and interest in and to the Loans
(including the Subsequent Loans) shall constitute a purchase and sale and not a
loan, if such conveyances are deemed to be loans, the parties intend that the
rights and obligations of the parties to such loans shall be established
pursuant to the terms of this Agreement. If the conveyances are deemed to be
loans, the parties further intend and agree that the Company shall be deemed to
have granted to the Trustee, and the Company does hereby grant to the Trustee, a
perfected first-priority security interest in the Trust Fund, 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 Certificate or Class C Certificate, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
SECTION 2.02. Conditions to the Closing. On or before the Closing Date,
the Company shall deliver or cause to be delivered the following documents to
the Trustee:
a. The List of Loans attached to this Agreement as Exhibit L,
certified by the Chairman of the Board, President or any Vice President
of the Company.
b. A certificate of an officer of the Company substantially in
the form of Exhibit E hereto.
c. An Opinion of Counsel for the Company substantially in the
form of Exhibit F hereto.
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<PAGE>
d. A letter acceptable to the Underwriters from
PricewaterhouseCoopers LLP or another nationally recognized accounting
firm, stating that such firm has reviewed the Initial Loans on a
statistical sampling basis and setting forth the results of such
review.
e. Copies of resolutions of the board of directors of the
Company or of the executive committee of the board of directors of the
Company approving the execution, delivery and performance of this
Agreement and the transactions contemplated hereunder, certified in
each case by the secretary or an assistant secretary of the Company.
f. Officially certified recent evidence of due incorporation
and good standing of the Company under the laws of the State of
Delaware.
g. An Officer's Certificate listing the Servicer's Servicing
Officers.
h. Evidence of continued coverage of the Company under the
Errors and Omissions Protection Policy.
i. Evidence of deposit in the Certificate Account of all funds
received with respect to the Loans from the Cut-off Date to the Closing
Date, other than principal due on or before the Cut-off Date, together
with an Officer's Certificate to the effect that such amount is
correct.
j. An Officer's Certificate confirming that the Company has
reviewed the original or a copy of each Initial and Additional Loan and
each related Loan File, that each such Loan and Loan File conforms in
all material respects with the List of Loans and that each such Loan
File is complete and has been delivered to the Trustee (or its
custodian).
k. The executed acknowledgment of the Trustee in the form of
Exhibit G, acknowledging receipt of the Loans and Loan Files.
l. Evidence of the deposit of $120,029,377.35 in the
Pre-Funding Account.
m. Evidence of the deposit of $2,500,000 in the Capitalized
Interest Account.
SECTION 2.03. Conveyance of the Subsequent Loans.
a. Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery 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 the right, title and interest
of the Company in and to the Subsequent Loans identified on the List of Loans
attached to the Subsequent Transfer Instrument, including all rights to receive
payments on or with respect to the Subsequent Loans due after the related
Subsequent Cut-off Date, and all items with respect to such Subsequent Loans in
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<PAGE>
the related Loan Files. The transfer to the Trustee by the Company of the
Subsequent Loans shall be absolute and is intended by the Company, the Trustee,
the Certificateholders and the Class C Certificateholders to constitute and to
be treated as a sale of the Subsequent Loans by the Company to the Trust.
The purchase price paid by the Trustee shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balances of such Subsequent
Loans. The purchase price shall be paid solely with amounts in the Pre-Funding
Account. This Agreement shall constitute a fixed price contract in accordance
with Section 860G(a)(3)(A)(ii) of the Code.
b. The Company shall transfer to the Trustee the Subsequent Loans, and
the Trustee shall release funds from the Pre-Funding Account, only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Company shall have provided the 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 Trustee with respect to the Subsequent Loans;
(ii) the Company shall have delivered the related Loan File
for each Subsequent Loan to the Trustee at least two Business Days
prior to the Subsequent Transfer Date;
(iii) the Company shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument substantially in the form of
Exhibit O, which shall include a List of Loans identifying the related
Subsequent Loans;
(iv) 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;
(v) such sale and transfer shall not result in a material
adverse tax consequence to the Trust, the Trust (excluding the
Capitalized Interest Account and the Pre-Funding Account) as a REMIC,
the Certificateholders or Class C Certificateholders;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Company shall have delivered to the Trustee an
Officer's Certificate, substantially in the form attached hereto as
Exhibit P, 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;
(viii) the Company shall have delivered to the Trustee
Opinions of Counsel addressed to S&P, Fitch and the Trustee with
respect to the transfer of the Subsequent Loans substantially in the
form of the Opinions of Counsel delivered to the Trustee on the Closing
Date regarding certain bankruptcy, corporate and tax matters; and
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<PAGE>
(ix) No Subsequent Loan will have a Combined LTV greater than
100%.
c. Before the last day of the Pre-Funding Period, the Company shall
deliver to the Trustee:
(i) A letter from PricewaterhouseCoopers LLP or another
nationally recognized accounting firm retained by the Company (with
copies provided to S&P, Fitch, the Underwriters and the Trustee) that
is in form, substance and methodology the same as that delivered under
Section 2.02(d) of this Agreement, except that it shall address the
Subsequent Loans and their conformity in all material respects to the
characteristics described in Sections 2.03 (b)(ix) and 3.03(b) of this
Agreement.
(ii) Evidence that, as a result of the purchase by the Trust
of the Subsequent Loans, none of the ratings assigned to the Class A
Certificates as of the Closing Date by S&P or Fitch will be reduced,
withdrawn or qualified.
(iii) Evidence that the aggregate Cut-off Date Principal
Balances of the Subsequent Loans, not specifically identified as
Subsequent Loans as of the Closing Date, do not exceed 25% of the
Original Aggregate Certificate Principal Balance.
SECTION 2.04. Acceptance by Trustee.
a. On the Closing Date and each Subsequent Transfer Date, if the
conditions set forth in Section 2.02 and 2.03, respectively, have been
satisfied, the Trustee shall deliver a certificate to the Company substantially
in the form of Exhibit G hereto (an "Acknowledgment") acknowledging conveyance
of the Loans identified on the applicable List of Loans and the related Loan
Files to the Trustee and declaring that the Trustee, directly or through a
Custodian, will hold all Loans that have been delivered in trust, upon the
trusts herein set forth, for the use and benefit of all Certificateholders and
the Class C Certificateholders and shall issue, on the Closing Date, to or upon
the order of the Company, the Certificates and the Class C Certificates
representing, in the aggregate, ownership of the entire beneficial interest in
the Trust.
b. The Trustee or a Custodian shall review each Loan File, as described
in Exhibit G, within 60 days of the Closing Date or later receipt by it of the
Loan File. If, in its review of the Loan Files as described in Exhibit G, the
Trustee or a Custodian discovers a breach of the representations or warranties
set forth in Sections 2.03, 3.02, 3.03 or 3.04 of this Agreement, or in the
Officer's Certificates delivered pursuant to Section 2.02(j) or 2.03(b)(vii) of
this Agreement, the Trustee or Custodian, as the case may be, shall notify the
Company and the Company shall cure such breach or repurchase or replace such
Loan pursuant to Section 3.05.
SECTION 2.05. REMIC Provisions.
a. The Company, as Servicer, and the Class C Certificateholders, by
acceptance thereof, each agrees that, in accordance with the requirements of
Section 860D(b)(1) of the Code, the federal
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tax return of the Trust for its first taxable year shall provide that the
segregated pools of assets comprising the Trust (excluding the Pre-Funding
Account and the Capitalized Interest Account) shall elect to be treated as a
REMIC under the Code for such taxable year and all subsequent taxable years, and
the Trustee shall sign such return. In furtherance of the foregoing, the Trustee
(at the direction of the Company or the Servicer), the Company and the Servicer
shall take, or refrain from taking, all such action as is necessary to maintain
the status of the Trust (excluding the Capitalized Interest Account and
Pre-Funding Account) as a REMIC under the REMIC Provisions of the Code,
including, but not limited to, the taking of such action as is necessary to cure
any inadvertent termination of REMIC status. For purposes of the REMIC election,
the Certificates shall be designated as the "regular interests" in the REMIC and
the Class C Certificates shall be designated as the sole class of "residual
interests" in the REMIC. The Trustee shall not permit the creation of any
"interests" in the REMIC (within the meaning of Section 860G of the Code) other
than the interests represented by the Certificates and the Class C Certificates.
b. The Certificates are being issued in eight classes. The following
terms of the Certificates are irrevocably established as of the Closing Date:
<TABLE>
<CAPTION>
Original Class
Class Pass-Through Rate Per Annum Principal Balance
- ---------------------------- ------------------------------------------------------- ----------------------
<S> <C> <C>
Class A-1 6.32% $216,000,000
Class A-2 6.91% $42,000,000
Class A-3 7.18% $124,000,000
Class A-4 7.64% $84,500,000
Class M-1 a floating rate equal to the Weighted Average Loan $48,000,000
Rate, but in no event greater than 8.13%
Class M-2 a floating rate equal to the Weighted Average Loan $28,500,000
Rate, but in no event greater than 9.45%
Class B-1 a floating rate equal to the Weighted Average Loan $18,000,000
Rate, but in no event greater than 10.34%
Class B-2 a floating rate equal to the Weighted Average Loan $39,000,000
Rate, but in no event greater than 11.01%
</TABLE>
The latest possible maturity of the Certificates is in August 2030 (calculated
using a prepayment assumption of 0% and assuming no defaults or delinquencies on
the Loans).
c. The Closing Date, which is the day on which the Trust will issue all
of its regular and residual interests, is hereby designated as the "startup day"
of the REMIC constituted by the Trust within the meaning of Section 860G(a)(9)
of the Code.
d. After the Closing Date, neither the Trustee, the Company nor any
Servicer shall (i) accept any contribution of assets to the Trust, (ii) dispose
of any portion of the Trust other than as provided in Sections 3.05, 3.06 and
8.06, (iii) engage in any transaction that would result in the imposition of tax
on "prohibited transactions," as defined in Section 860F(a)(1) of the Code, (iv)
accept any contribution after the Closing Date that is subject to the tax
imposed by Section 860G(d)
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of the Code or (v) engage in any activity or enter into any agreement that would
result in the receipt by the Trust of any "net income from foreclosure property"
as defined in Section 860G(c)(2) of the Code, unless, prior to any such action
set forth in clauses (i), (ii), (iii), (iv) or (v), the Trustee shall have
received an unqualified Opinion of Counsel, which opinion shall not be an
expense of the Trust, stating that such action will not, directly or indirectly,
(A) adversely affect the status of the Trust (excluding the Capitalized Interest
Account and Pre-Funding Account) as a REMIC, the status of the Certificates and
Class C Certificates as "regular interests" and the sole class of "residual
interests," respectively, therein for federal income tax purposes, (B) affect
the distributions payable hereunder to the Certificateholders or the Class C
Certificateholders or (C) result in the imposition of any lien, charge or
encumbrance upon the Trust.
e. Upon the acquisition of any real property (including interests in
real property), or any personal property incident thereto, in connection with
the default of a Loan, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, unless the Servicer and the
Trustee receive an Opinion of Counsel to the effect that the holding by the
Trust of such property subsequent to the period then permitted by the Code will
not result in the imposition of any taxes on "prohibited transactions" of the
Trust, as defined in Section 860F of the Code, or cause the Trust (excluding the
Capitalized Interest Account and Pre-Funding Account) to fail to qualify as a
REMIC at any time that the Certificates or Class C Certificates are outstanding.
The Servicer shall manage, conserve, protect and operate such real property, or
any personal property incident thereto, so that such property will not fail to
qualify as "foreclosure property," as defined in Section 860G(a)(8) of the Code,
and that the management, conservation, protection and operation of such property
will not result in the receipt by the Trust of any income attributable to any
asset which is neither a qualified mortgage nor a permitted investment within
the meaning of the REMIC Provisions.
SECTION 2.06. Company Option to Substitute for Prepaid Loans. The
Company may, at its option, substitute new loans for Loans as to which a
Principal Prepayment in Full has been received by the Servicer prior to December
1, 1999 ("Prepaid Loans"), up to a maximum of 5% of the Cut-Off Date Pool
Principal Balance, upon satisfaction of the following conditions:
(i) the Company shall have conveyed to the Trustee the Loan to
be substituted for the Prepaid Loan and the Loan File related to such
Loan and the Company shall have marked the Electronic Ledger indicating
that such Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute Loan
and the Company delivers an Officers' Certificate, substantially in the
form of Exhibit J-3 hereto, to the Trustee certifying that such Loan is
an Eligible Substitute Loan;
(iii) the Company shall have delivered to the Trustee evidence
of filing of a UCC- 1 financing statement executed by the Company as
debtor, naming the Trustee as secured party and filed in Minnesota,
listing such Loan to be substituted as collateral;
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(iv) the Company shall have delivered to the Trustee an
executed assignment to the Trustee on behalf of the Trust in recordable
form for the mortgage securing such Loan to be substituted;
(v) such substitution shall be accomplished prior to the
Determination Date immediately following the calendar month in which
the Principal Prepayment in Full was received by the Servicer, and no
such substitution shall take place after December 10, 1999;
(vi) the Company shall have delivered to the Trustee an
Opinion of Counsel (a) to the effect that the substitution of such Loan
for such Prepaid Loan will not cause the Trust (excluding the
Capitalized Interest Account and Pre-Funding Account) to fail to
qualify as a REMIC at any time under then applicable REMIC Provisions
or cause any "prohibited transaction" that will result in the
imposition of a tax under such REMIC Provisions and (b) to the effect
of paragraph 9 of Exhibit F hereto; and
(vii) if the Principal Prepayment received in respect of such
Prepaid Loan is greater than the Scheduled Principal Balance of the
Loan to be substituted, such excess shall be distributed to
Certificateholders on the related Payment Date as a prepayment of
principal.
Upon satisfaction of such conditions, the Trustee shall add to the List
of Loans such Loan to be substituted and delete from the List of Loans the
Prepaid Loan.
Any substitutions pursuant to this Section 2.06 may be accomplished on
a loan-by-loan basis or on an aggregate basis as to all Prepaid Loans with
respect to a given calendar month.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company makes the following representations and warranties. The
Trustee will rely on the representations and warranties in accepting the Loans
in trust and issuing the Certificates and the Class C Certificates on behalf of
the Trust. The repurchase or substitution and indemnification obligations of the
Company set forth in Section 3.05 constitute the sole remedies available to the
Trust, the Certificateholders or the Class C Certificateholders for a breach of
a representation or warranty of the Company set forth in Sections 2.03, 3.02,
3.03 or 3.04 of this Agreement, or in the Officer's Certificates delivered
pursuant to Sections 2.02(j) or 2.03(b)(vii) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company. The
Company represents and warrants to the Certificateholders and the Class C
Certificateholders, effective on the Closing Date and each Subsequent Transfer
Date, that:
a. Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or other) of the
Company.
b. Authorization; Binding Obligations. The Company has the
power and authority to make, execute, deliver and perform this
Agreement and all of the transactions contemplated under this
Agreement, and to create the Trust and cause it to make, execute,
deliver and perform its obligations under this Agreement and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and to cause the Trust to be created.
When executed and delivered, this Agreement will constitute the legal,
valid and binding obligation of the Company enforceable in accordance
with its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
c. No Consent Required. The Company is not required to obtain
the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement.
d. No Violations. The execution, delivery and performance of
this Agreement by the Company will not violate any provision of any
existing law or regulation or any order or decree of any court or the
Certificate of Incorporation or Bylaws of the Company, or
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<PAGE>
constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Company is a party or by which the Company
may be bound.
e. Litigation. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Company threatened, against the
Company or any of its properties or with respect to this Agreement, the
Certificates or the Class C Certificates which, if adversely
determined, would in the opinion of the Company have a material adverse
effect on the transactions contemplated by this Agreement.
f. Licensing. The Company is duly licensed in each state in
which Loans were originated to the extent the Company is required to be
licensed by applicable law in connection with the origination and
servicing of the Loans.
SECTION 3.02. Representations and Warranties Regarding Each Loan. The
Company represents and warrants to the Certificateholders and the Class C
Certificateholders, as of the Closing Date with respect to each Loan identified
on the List of Loans attached to this Agreement as Exhibit L and as of each
Subsequent Transfer Date with respect to each Subsequent Loan identified on the
List of Loans attached to the related Subsequent Transfer Instrument:
a. List of Loans. The information set forth in the List of
Loans is true and correct as of its date.
b. Payments. No scheduled payment due under any Initial Loan
was delinquent over 59 days as of the Cut-off Date and no Additional or
Subsequent Loan was delinquent over 31 days as of the related Cut-off
Date or Subsequent Cut-off Date.
c. Costs Paid and No Waivers. The terms of the Loan have not
been waived, altered or modified in any respect, except by instruments
or documents identified in the Loan File. All costs, fees and expenses
incurred in making, closing and perfecting the lien of the Loan have
been paid. The subject real property has not been released from the
lien of such Loan.
d. Binding Obligation. The Loan 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 Loan 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 Loan or the
exercise of any right thereunder will not render the Loan 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.
3-2
<PAGE>
f. Insurance Coverage. The Company has been named as an
additional insured party under any hazard insurance on the property
described in the Loan, to the extent required by the Company's
underwriting guidelines. If upon origination of the Loan, the property
securing the Loan was in an area identified in the Federal Register by
the Federal Emergency Management Agency as having special flood hazards
(and if flood insurance was required by federal regulation and such
flood insurance has been made available in the locale where the
property is located), the property is covered by a flood insurance
policy of the nature and in an amount which is consistent with the
servicing standard set forth in Section 5.02.
g. Combined LTV. The Combined LTV for the Loan is not greater
than 100%.
h. FHA Insurance. If the Loan is an FHA-Insured Loan, such
Loan 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 Loan to the Trustee, the Trustee on
behalf of the Trust will be entitled to the full benefits of the FHA
Insurance. If the Loan is an FHA-Insured Loan purchased from Empire
Funding Corp., as of the Closing Date no claim for FHA Insurance has
been made with respect to the Loan.
i. Lawful Assignment. The Loan was not originated in and is
not subject to the laws of any jurisdiction whose laws would make the
transfer of the Loan under this Agreement or pursuant to transfers of
the Certificates or Class C Certificates unlawful or render the Loan
unenforceable. The Company has duly executed a valid blanket assignment
of the Loans transferred to the Trust, and has transferred all its
right, title and interest in such Loans, including all rights the
Company may have against the originating lender with respect to Loans
originated by a lender other than the Company, to the Trust. The
blanket assignment, any and all documents executed and delivered by the
Company pursuant to Sections 2.01(b) and 2.03(b), and this Agreement
each constitutes the legal, valid and binding obligation of the Company
enforceable in accordance with its respective terms.
j. Compliance with Law. At the date of origination of the
Loan, all requirements of any federal and state laws, rules and
regulations applicable to the Loan, including, without limitation,
usury and truth in lending laws and (if such Loan is an FHAInsured
Loan) the FHA Regulations have been complied with, and the Company
shall for at least the period of this Agreement, maintain in its
possession, available for the Trustee's inspection, and shall deliver
to the Trustee upon demand, evidence of compliance with all such
requirements.
k. Loan in Force. The Loan has not been satisfied or
subordinated in whole or in part or rescinded, and the real estate
securing such Loan has not been released from the lien of such Loan in
whole or in part.
l. Valid Lien. The Loan 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 180 days, and
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<PAGE>
constitutes a valid and perfected first, second, third or fourth
priority lien on the real estate described in such Loan.
m. Capacity of Parties. The signature(s) of the Obligor(s) on
the Loan are genuine and all parties to the Loan had full legal
capacity to execute the Loan.
n. Good Title. The Company is the sole owner of the Loan and,
if such Loan is an FHA-Insured Loan, because the Trustee is a lender
approved by HUD to originate and purchase Title I loans under a valid
Title I contract of insurance, has the authority to sell, transfer and
assign such Loan to the Trust under the terms of this Agreement. There
has been no assignment, sale or hypothecation of the Loan by the
Company except the usual past hypothecation of the Loan in connection
with the Company's normal banking transactions in the conduct of its
business, which hypothecation terminates upon sale of the Loan to the
Trust. The Company has good and marketable title to the Loan, free and
clear of any encumbrance, equity, loan, pledge, charge, claim, lien or
encumbrance of any type and has full right to transfer the Loan to the
Trust.
o. No Defaults. As of the Cut-off Date or Subsequent Cut-off
Date, as applicable, there was no default, breach, violation or event
permitting acceleration existing under the Loan 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 Loan (except payment delinquencies permitted by
clause (b) above). The Company has not waived any such default, breach,
violation or event permitting acceleration except payment delinquencies
permitted by clause (b) above.
p. Equal Installments. The Loan, unless it is a Step-up Rate
Loan, has a fixed Loan Interest Rate and provides for monthly payments
which fully amortize the loan over its term.
q. Enforceability. Each Loan 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 lien provided thereby.
r. One Original. There is only one original executed Loan,
which Loan has been delivered to the Trustee or its Custodian on or
before the Closing Date or Subsequent Transfer Date if a Subsequent
Loan.
s. Genuine Documents. All documents submitted are genuine, and
all other representations as to each Loan, including the List of Loans,
are true and correct. Any copies of documents provided by the Company
are accurate and complete (except that, with respect to each Loan that
was originated by a lender other than the Company, the Company makes
such representation and warranty only to the best of the Company's
knowledge).
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<PAGE>
t. Origination. Each Loan was originated by a home improvement
contractor in the ordinary course of such contractor's business or
either originated directly or purchased by the Company in the ordinary
course of its business.
u. Underwriting Guidelines. Each Loan was originated or
purchased in accordance with the Company's then-current underwriting
guidelines.
v. Good Repair. The property described in the Loan is, to the
best of the Company's knowledge, free of damage and in good repair.
w. Qualified Mortgage. The Loan represents a "qualified
mortgage" within the meaning of the REMIC Provisions. The Company
represents and warrants that, either as of (i) the date of origination
(within the meaning of the REMIC Provisions) or (ii) the Closing Date
or, if a Subsequent Loan, the Subsequent Transfer Date, the fair market
value of the interest in real property securing each Loan was not less
than 80% of the "adjusted issue price" (in each case within the meaning
of the REMIC Provisions) of such Loan.
x. Interest Rate and Payment Amount Adjustments. With respect
to each Loan which does not provide for a fixed interest rate over the
life of the Loan, the Loan Interest Rate and monthly payment have been
adjusted in accordance with the terms of the Loan. All required notices
of interest rate and payment amount adjustments have been sent to the
Obligor on a timely basis and the computations of such adjustments were
properly calculated. All Loan Interest Rate adjustments have been made
in strict compliance with state and federal law and the terms of the
related Loan.
SECTION 3.03. Representations and Warranties Regarding the Loans in the
Aggregate. The Company represents and warrants to the Certificateholders and the
Class C Certificateholders, as of the Closing Date with respect to the Initial
Loans and Additional Loans, and as of each Subsequent Transfer Date with respect
to the related Subsequent Loans, that:
a. Amounts. As of the Closing Date, the sum of the Cut-off
Date Pool Principal Balance, plus the Original Pre-Funded Amount,
equals at least the Original Aggregate Certificate Principal Balance.
By Cut-off Date Principal Balance, the Initial and Additional Loans,
plus the Subsequent Loans specifically identified as of the Closing
Date, represent at least 75% of the Original Aggregate Certificate
Principal Balance.
b. Characteristics.
The Loans have the following characteristics: (i) 100% are
secured by a mortgage, deed of trust or security deed on the related
real estate; (ii) none has an original term to maturity of more than
360 months; (iii) none has a final scheduled payment date later than
December 2029; and (iv) no Initial or Additional Loan has a Loan
Interest Rate less than 6.00%.
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<PAGE>
The Loans have the following characteristics as of the
Post-Funding Payment Date:
LTV. The weighted average (by Scheduled Principal Balance)
loan to value ratio of the Loans is not more than 200 basis points more
than such ratio with respect to the Initial Loans;
Loan Interest Rates. The weighted average (by Scheduled
Principal Balance) of the Loan Interest Rates of the Loans is not more
than 10 basis points less than the weighted average of the Loan
Interest Rates of the Initial Loans;
Debt Consolidation. The Weighted Average Debt Consolidation
Percentage is not more than 38%;
FICO Scores. The weighted average (by Scheduled Principal
Balance) FICO Score of the Loans is not less than 638 and the
percentage (by Scheduled Principal Balance) of the Loans with a FICO
Score less than 620 is no more than 200 basis points more than such
percentage of Initial Loans with a FICO Score less than 620;
Lien Priority. The percentage (by Scheduled Principal Balance)
of the Loans secured by a third mortgage is not more than 20% and by a
fourth mortgage is not more than 0.5%; and
FHA-Insured Loans. The Scheduled Principal Balance of the
FHA-Insured Loans is not more than $60,974,252.94.
c. Geographic Concentrations.
By Cut-off Date Principal Balance, 16.93% of the Initial and
Additional Loans are secured by property located in California, 7.85%
in New York, 5.81% in New Jersey, 5.63% in Pennsylvania and 5.44% in
Michigan. No other state represents more than 5% of the aggregate
Cut-off Date Principal Balances of the Initial and Additional Loans. As
of the Post-Funding Payment Date, such percentage of Loans in any state
is not more than 200 basis points higher than such percentage with
respect to the Initial Loans.
No more than 1% of the Loans by Cut-off Date Principal Balance
are secured by property located in an area with the same five-digit zip
code.
d. Marking Records. The Company has caused the portions of the
Electronic Ledger relating to the Loans to be clearly and unambiguously
marked to indicate that such Loans constitute part of the Trust and are
owned by the Trust in accordance with the terms of the Trust created
hereunder.
e. No Adverse Selection. No adverse selection procedures have
been employed in selecting the Loans.
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<PAGE>
f. Lender Concentration. No more than 5.0% of the Loans, by
Cut-off Date Principal Balance, were originated by any one contractor.
SECTION 3.04. Representations and Warranties Regarding the Loan Files.
The Company represents and warrants to the Certificateholders and the Class C
Certificateholders that:
a. Possession. On the Closing Date, the Trustee or a Custodian
will have possession of each original and Additional Initial Loan and
the related Loan File. On each Subsequent Transfer Date, the Company
will have possession of each original Subsequent Loan being transferred
to the Trust on that Subsequent Transfer Date and the related Loan
File. There are and there will be no custodial agreements or servicing
contracts 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 Loans and the Loan 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. Repurchases of Loans for Breach of Representations and
Warranties.
a. Subject to Section 3.06, the Company shall repurchase a Loan, at its
Repurchase Price, not later than 90 days after the day on which the Company, the
Servicer or the Trustee first discovers or should have discovered a breach of a
representation or warranty of the Company set forth in Sections 2.03, 3.02, 3.03
or 3.04, or in the Officer's Certificates delivered pursuant to Sections 2.02(j)
or 2.03(b) (vii), that materially and adversely affects the Trust's, the
Certificateholders' or the Class C Certificateholders' interest in such Loan and
which breach has not been cured within such time; provided, however, that (i) in
the event that a party other than the Company first becomes aware of such
breach, such discovering party shall notify the Company in writing within 5
Business Days of the date of such discovery and (ii) with respect to any Loan
incorrectly described on the List of Loans with respect to Cut-off Date
Principal Balance, which the Company would otherwise be required to repurchase
pursuant to this Section, the Company may, in lieu of repurchasing such Loan,
deposit in the Certificate Account within 90 days from the date of such
discovery cash in an amount sufficient to cure such deficiency or discrepancy.
Any such cash so deposited shall be distributed to Certificateholders and the
Class C Certificateholders on the immediately following Payment Date as a
collection of principal or interest on such Loan, according to the nature of the
deficiency or discrepancy. Notwithstanding any other provision of this
Agreement, the obligation of the Company under this Section shall not terminate
upon a Service Transfer pursuant to Article VII.
b. On or prior to the date that is the second anniversary of the
Closing Date, the Company may, at its election, substitute an Eligible
Substitute Loan for a Loan that it is obligated to repurchase pursuant to
Section 3.05(a) (such Loan being referred to as the "Replaced Loan") upon
satisfaction of the following conditions:
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(i) the Company shall have conveyed to the Trustee the Loan to
be substituted for the Replaced Loan and the Loan File related to such
Loan and the Company shall have marked the Electronic Ledger indicating
that such Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute Loan
and the Company delivers an Officers' Certificate, substantially in the
form of Exhibit J-2 hereto, to the Trustee certifying that such Loan is
an Eligible Substitute Loan;
(iii) the Company shall have delivered to the Trustee evidence
of filing of a UCC- 1 financing statement executed by the Company as
debtor, naming the Trustee as secured party and filed in Minnesota,
listing such Loan to be substituted as collateral;
(iv) the Company shall have delivered to the Trustee an
executed assignment to the Trustee on behalf of the Trust in recordable
form for the mortgage securing such Loan to be substituted;
(v) the Company shall have delivered to the Trustee an Opinion
of Counsel (a) to the effect that the substitution of such Loan for
such Replaced Loan will not cause the Trust (excluding the Capitalized
Interest Account and Pre-Funding Account) to fail to qualify as a REMIC
at any time under then applicable REMIC Provisions or cause any
"prohibited transaction" that will result in the imposition of a tax
under such REMIC Provisions and (b) to the effect of paragraph 9 of
Exhibit F hereto; and
(vi) if the Scheduled Principal Balance of such Replaced Loan
is greater than the Scheduled Principal Balance of the Loan to be
substituted, the Company shall have deposited in the Certificate
Account the amount of such excess and shall have included in the
Officers' Certificate required by clause (ii) above a certification
that such deposit has been made.
Upon satisfaction of such conditions, the Trustee shall add such Loan
to be substituted to, and delete such Replaced Loan from, the List of Loans.
Such substitution shall be effected prior to the first Determination Date that
occurs more than 90 days after the Company becomes aware, or should have become
aware, or receives written notice from the Trustee, of the breach referred to in
Section 3.05(a). Promptly after any such substitution of a Loan, the Company
shall give written notice of such substitution to S&P and Fitch.
c. If the Company is required to repurchase a Loan under Section
3.05(a) or has elected to substitute an Eligible Substitute Loan for a Loan
under Section 3.05(b), and if the reason for such repurchase or substitution is
that the Company has failed to deliver to the Trustee the Loan File for the Loan
to be repurchased or substituted for (except in the case of a failure to deliver
evidence of the lien on the related improved property and evidence of due
recording of such mortgage, deed of trust or security deed, if available), then,
notwithstanding the time periods set out in Sections 3.05(a) and 3.05(b), the
Company shall either (i) repurchase such Loan, at its respective Repurchase
Price, within 30 days of the Closing Date, or (ii) substitute an Eligible
Substitute Loan for the Loan within 90 days of the Closing Date.
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<PAGE>
d. The Company shall defend and indemnify the Trustee, the
Certificateholders, and the Class C Certificateholders against all costs,
expenses, losses, damages, 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 any third-party action arising out of any breach of any such
representation and warranty.
SECTION 3.06. No Repurchase Under Certain Circumstances.
Notwithstanding any provision of this Agreement to the contrary, no repurchase
or substitution pursuant to Section 3.05 shall be made unless the Company (at
its own expense) obtains for the Trustee an Opinion of Counsel addressed to the
Trustee that any such repurchase or substitution would not, under the REMIC
Provisions, (i) cause the Trust (excluding the Capitalized Interest Account and
Pre-Funding Account) to fail to qualify as a REMIC while any regular interest in
such REMIC is outstanding, (ii) result in a tax on prohibited transactions
within the meaning of Section 860F(a)(2) of the Code or (iii) constitute a
contribution after the startup day subject to tax under Section 860G(d) of the
Code. The Company diligently shall attempt to obtain such Opinion of Counsel. In
the case of a repurchase or deposit pursuant to Section 3.05(a) or 3.05(b), the
Company shall, notwithstanding the absence of such opinion as to the imposition
of any tax as the result of such purchase or deposit, repurchase such Loan or
make such deposit and shall guarantee the payment of such tax by paying to the
Trustee the amount of such tax not later than five Business Days before such tax
shall be due and payable to the extent that amounts previously paid over to and
then held by the Trustee pursuant to Section 6.06 are insufficient to pay such
tax and all other taxes chargeable under Section 6.06. Pursuant to Section 6.06,
the Servicer is hereby directed to withhold, and shall withhold and pay over to
the Trustee, an amount sufficient to pay such tax and any other taxes imposed on
"prohibited transactions" under Section 860F(a)(i) of the Code or imposed on
"contributions after startup date" under Section 860G(d) of the Code from
amounts otherwise distributable to the Class C Certificateholders. The Servicer
shall give notice to the Trustee at the time of such repurchase of the amounts
due from the Company pursuant to the guarantee of the Company described above
and give notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant
to this Section other than from moneys provided to it by the Company or from
moneys held in the funds and accounts created under this Agreement. The Trustee
shall be deemed conclusively to have complied with this Section if it follows
the directions of the Company.
In the event any tax that is guaranteed by the Company pursuant to this
Section 3.06 is refunded to the Trust or otherwise is determined not to be
payable, the Company shall be repaid the amount of such refund or that portion
of any guarantee payment made by the Company that is not applied to the payment
of such tax.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
-----------------------------------------------------------
SECTION 4.01. Transfer of Loans.
a. On or prior to the Closing Date, or the Subsequent Transfer Date in
the case of Subsequent Loans, the Company shall deliver the Loan Files to the
Trustee. The Trustee shall maintain the Loan Files at its office or with a duly
appointed Custodian, who shall act as the agent of the Trustee on behalf of the
Certificateholders. The Trustee may release a Loan File to the Servicer pursuant
to Section 5.07. The Company has filed a form UCC-1 financing statement
regarding the sale of the Loans to the Trustee, and shall file continuation
statements in respect of such UCC-1 financing statement as if such financing
statement were necessary to perfect the security interest granted pursuant to
Section 2.01. The Company shall take any other actions necessary to maintain the
perfection of such security interest.
b. If at any time during the term of this Agreement the Company does
not have a long-term senior debt rating of BBB+ or higher from both S&P and
Fitch (if rated by Fitch), (i) the Company shall within 60 days execute and
deliver to the Trustee (if it has not previously done so) endorsements of each
promissory note evidencing a Loan and assignments in recordable form of each
mortgage, deed of trust or security deed securing a Loan, and (ii) the Trustee,
at the Company's expense, shall within 60 days file in the appropriate recording
offices the assignments to the Trustee on behalf of the Trust of each mortgage,
deed of trust or security deed securing a Loan; provided, however, that the
recording of such assignments shall not be required if the Trustee receives
written confirmation from both S&P and Fitch that the ratings of the
Certificates would not be reduced or withdrawn by the failure to execute and
file such assignments; provided, however, that the recording of such assignments
shall not be required if the Company delivers an Opinion of Counsel to the
effect that such assignment and recordation is not necessary to effect the
assignment to the Trustee of the Company's lien on the real property securing
each Loan.
c. If, as of the Post-Funding Payment Date, the aggregate Scheduled
Principal Balance of Loans secured by real property located in Maryland
("Maryland Loans") exceeds 10% of the Pool Scheduled Principal Balance, the
Company shall, within sixty (60) days, submit to the appropriate recording
offices the assignments to the Trustee on behalf of the Trust of the number of
mortgages, deeds of trust or security deeds required to reduce to less than 10%
of the Pool Scheduled Principal Balance the aggregate Scheduled Principal
Balance of Maryland Loans as to which such assignments are not recorded.
SECTION 4.02. Costs and Expenses. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the vesting (including the
perfection and the maintenance of perfection, as against all third parties) in
the Trust of all right, title and interest in and to the Loans (including,
without limitation, the mortgage or deed of trust on the related real estate
granted thereby).
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ARTICLE V
SERVICING OF LOANS
------------------
SECTION 5.01. Responsibility for Loan Administration. The Servicer will
have the sole obligation to manage, administer, service and make collections on
the Loans and perform or cause to be performed all contractual and customary
undertakings of the holder of the Loans to the Obligor. The Company, if it is
the Servicer, may delegate some or all of its servicing duties to a wholly owned
subsidiary of the Company, for so long as such subsidiary remains, directly or
indirectly, a wholly owned subsidiary of the Company. Notwithstanding any such
delegation the Company shall retain all of the rights and obligations of the
Servicer hereunder. The Trustee, at the request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder. The Company is hereby appointed the Servicer until such time
as any Service Transfer shall be effected under Article VII.
The Servicer shall, with respect to each Loan which does not provide
for a fixed interest rate over the life of the Loan, make adjustments to the
interest rate and the payments due on such Loan in compliance with applicable
regulatory adjustable mortgage loan requirements and the terms of the Loan. The
Servicer shall establish procedures to monitor the interest rate adjustment
dates and the interest rate in order to assure that it correctly calculates any
applicable interest rate change, and it will comply with those procedures. The
Servicer shall execute and deliver all appropriate notices required by the
applicable adjustable mortgage loan laws and regulations and the Loans regarding
such interest rate adjustments and payment adjustments.
SECTION 5.02. Standard of Care. In managing, administering, servicing
and making collections on the Loans pursuant to this Agreement, the Servicer
will exercise that degree of skill and care required by FHA (in the case of
FHA-Insured Loans) and otherwise consistent with the highest degree of skill and
care that the Servicer exercises with respect to similar loans (including
manufactured housing contracts) serviced by the Servicer; provided, however,
that such degree of skill and care shall be at least as favorable as the degree
of skill and care generally applied by prudent servicers of home improvement
loans for prudent institutional investors.
SECTION 5.03. Records. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the Trustee to determine the status of each Loan.
SECTION 5.04. Inspection.
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Loans, which have not previously been
provided to the Trustee, and will cause its personnel to assist in any
examination of such records by the Trustee. The examination referred to in this
Section will be conducted in a manner which does not unreasonably interfere with
the Servicer's
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normal operations or customer or employee relations. Without otherwise limiting
the scope of the examination the Trustee may make, the Trustee may, using
generally accepted audit procedures, verify the status of each Loan and review
the Electronic Ledger and records relating thereto for conformity to Monthly
Reports prepared pursuant to Article VI and compliance with the standards
represented to exist as to each Loan in this Agreement.
b. At all times during the term hereof, the Servicer shall keep
available a copy of the List of Loans at its principal executive office for
inspection by Certificateholders.
c. A Certificateholder holding Certificates representing in the
aggregate at least 5% of the Aggregate Certificate Principal Balance shall have
the rights of inspection afforded to the Trustee pursuant to this Section 5.04.
SECTION 5.05. Certificate Account.
a. On or before the Closing Date, the Company shall establish the
Certificate Account on behalf of the Trust, which shall be an Eligible Account.
The Servicer shall pay into the Certificate Account, as promptly as practicable
(but not later than the next Business Day) following receipt thereof, all
amounts received with respect to the Loans, including all proceeds of FHA
Insurance claims received by the Servicer, other than extension fees and
assumption fees, which fees shall be retained by the Servicer as compensation
for servicing the Loans, and other than Liquidation Expenses permitted by
Section 5.08. The Trustee shall pay into the Certificate Account as promptly as
practicable all proceeds of FHA Insurance claims with respect to FHA-Insured
Loans received by the Trustee. The Trustee shall hold all amounts paid into the
Certificate Account under this Agreement in trust for the Certificateholders and
the Class C Certificateholders until payment of any such amounts is authorized
under this Agreement. Only the Trustee may withdraw funds from the Certificate
Account.
b. If the Servicer so directs, the institution maintaining the
Certificate Account shall, in the name of the Trustee in its capacity as such,
invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Payment
Date. Any investment of funds in the Certificate Account shall be made in
Eligible Investments held by a financial institution in accordance with the
following requirements: (1) all Eligible Investments shall be held in an account
with such financial institution in the name of the Trustee, and the agreement
governing such account shall be governed by the laws of the State of Minnesota,
(2) with respect to securities held in such account, such securities shall be
(i) certificated securities (as such term is used in N.Y. U.C.C. ss.
8-102(4)(i)), securities deemed to be certificated securities under applicable
regulations of the United States government, or uncertificated securities issued
by an issuer organized under the laws of the State of New York or the State of
Delaware, (ii) either (A) in the possession of such institution, (B) in the
possession of a clearing corporation (as such term is used in Minn. Stat. ss.
8-102(5)) in the State of New York, registered in the name of such clearing
corporation or its nominee, not endorsed for collection or surrender or any
other purpose not involving transfer, not containing any evidence of a right or
interest inconsistent with the Trustee's security interest therein, and held by
such clearing corporation in an account of such
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institution, (C) held in an account of such institution with the Federal Reserve
Bank of New York or the Federal Reserve Bank of Minneapolis, or (D) in the case
of uncertificated securities, issued in the name of such institution, and (iii)
identified, by book entry or otherwise, as held for the account of, or pledged
to, the Trustee on the records of such institution, and such institution shall
have sent the Trustee a confirmation thereof, and (3) with respect to repurchase
obligations held in such account, such repurchase obligations shall be
identified by such institution, by book entry or otherwise, as held for the
account of, or pledged to, the Trustee on the records of such institution, and
the related securities shall be held in accordance with the requirements of
clause (2) above. Once such funds are invested, such institution shall not
change the investment of such funds. All income and gain from such investments
shall be added to the Certificate Account and distributed on such Payment Date
pursuant to Section 8.04(b). Losses, if any, realized on amounts in the
Certificate Account invested pursuant to this paragraph shall first be credited
against undistributed investment earnings on amounts in the Certificate Account
invested pursuant to this paragraph, and shall thereafter be deemed to reduce
the amount on deposit in the Certificate Account and otherwise available for
distribution to Certificateholders and the Class C Certificateholders pursuant
to Section 8.01. The Company, the Servicer and the Trustee shall in no way be
liable for losses on amounts invested in accordance with the provisions hereof.
Funds in the Certificate Account not so invested must be insured to the extent
permitted by law by the Federal Deposit Insurance Corporation.
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, 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;
(ii) (A) demand and time deposits in, certificates of deposit
of, bankers' acceptances issued by, or federal funds sold by any
depository institution or trust company (including the Trustee or any
Affiliate of the Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, the commercial
paper or other short-term debt obligations of such depository
institution or trust company are rated at least A-1+ by S&P and F1+ 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 a rating of AAA by both S&P and Fitch,
and whose only investments are in securities described in clauses (i)
and (ii) above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii)(A) above;
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(v) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at least AA
from both S&P and 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 Certificate Account;
(vi) commercial paper having a rating of at least A-1+ from
S&P and at least F1+ from Fitch (if rated by Fitch) at the time of such
investment; and
(vii) other obligations or securities that are acceptable to
both S&P and Fitch as an Eligible Investment hereunder and will not
reduce the rating assigned to any Class of Certificates by both S&P and
Fitch below the lower of the then-current rating or the rating assigned
to such Certificates as of the Closing Date by both S&P and Fitch, as
evidenced in writing;
provided that any such investment must constitute a "cash flow investment"
within the meaning of the REMIC Provisions.
The Trustee may trade with itself or an Affiliate in the purchase or
sale of such Eligible Investments.
c. If at any time the Trustee receives notice (from S&P, Fitch, the
Servicer or otherwise) that the Certificate Account has ceased to be an Eligible
Account, the Trustee shall, as soon as practicable but in no event later than
five Business Days of the Trustee's receipt of such notice, transfer the
Certificate Account and all funds and Eligible Investments therein to an
Eligible Account. Following any such transfer, the Trustee shall notify S&P,
Fitch and the Servicer of the location of the Certificate Account.
SECTION 5.06. Enforcement.
a. The Servicer shall, consistent with customary servicing procedures,
act with respect to the Loans in such manner as will maximize the receipt of
principal and interest on such Loans and Liquidation Proceeds with respect to
Liquidated Loans. The Company shall pay all FHA Insurance premiums required by
FHA Regulations in respect of FHA-Insured Loans; if the Company is no longer the
Servicer and fails to pay such FHA Insurance premiums, the successor Servicer
shall pay such premiums and shall be entitled to reimbursement therefor in
accordance with Section 8.04. The Servicer shall comply with FHA Regulations in
servicing FHA-Insured Loans 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
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any subject real estate, or may take such other steps that in the Servicer's
reasonable judgment will maximize Liquidation Proceeds with respect to the Loan,
including, for example, the sale of the Loan 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 paid to Certificateholders and the
Class C Certificateholders. The Servicer shall also deposit in the Certificate
Account any Net Liquidation Proceeds received in connection with any Loan which
became a Liquidated Loan in a prior Due Period.
c. The Servicer may sue to enforce or collect upon Loans, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Loan, the act of commencement shall be deemed to
be an automatic assignment of the Loan 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 Loan on the ground that it is not a
real party in interest or a holder entitled to enforce the Loan, the Trustee on
behalf of the Trust shall, at the Servicer's expense, take such steps as the
Servicer deems necessary to enforce the Loan, including bringing suit in its
name or the names of the Certificateholders and the Class C Certificateholders.
d. The Servicer may grant to the Obligor on any Loan any rebate, refund
or adjustment out of the Certificate Account that the Servicer in good faith
believes is required because of the Principal Prepayment in Full of the Loan.
The Servicer will not permit any rescission or cancellation of any Loan.
e. The Servicer shall enforce any due-on-sale clause in a Loan if such
enforcement is called for under its then current servicing policies for
obligations similar to the Loans, provided that such enforcement is permitted by
applicable law and will not adversely affect any applicable insurance policy. If
an assumption of a Loan is permitted by the Servicer, upon conveyance of the
related property the Servicer shall use its best efforts to obtain an assumption
agreement in connection therewith.
f. If, following the termination of the Trust pursuant to Section
12.04, HUD demands reimbursement of an FHA Insurance claim paid on an
FHA-Insured Loan prior to the termination of the Trust, the Servicer agrees that
it will not seek to recover any such amount from the Trustee or the
Certificateholders.
g. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Loan at a time when such Loan is not in default or such default is not
reasonably foreseeable, if such modification or waiver would both (i) be treated
as a taxable exchange under Section 1001 of the Code or any proposed, temporary
or final Treasury Regulations promulgated thereunder and (ii) cause the Trust to
fail to qualify as a REMIC or cause the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions.
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SECTION 5.07. Trustee to Cooperate.
a. Upon payment in full on any Loan, the Servicer will notify the
Trustee and the Company (if the Company is not the Servicer) on the next
succeeding Payment 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
Certificate Account pursuant to Section 5.05 have been so deposited) and shall
request delivery of the Loan and Loan File to the Servicer. Upon receipt of such
delivery and request, the Trustee shall promptly release or cause to be released
such Loan and Loan File to the Servicer. Upon receipt of such Loan and Loan
File, each of the Company (if different from the Servicer) and the Servicer is
authorized to execute an instrument in satisfaction of such Loan 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 Loan has been paid in full; provided
that, to the extent that insufficient payments are received on a Loan 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 Loan), and deposited in the Certificate Account.
b. If the Servicer elects to submit a claim to FHA under the FHA
Insurance in respect of an FHA-Insured Loan 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 Payment 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 Certificate Account pursuant to Section 5.05 have been so
deposited) and shall request delivery of the Loan and Loan File to the Servicer.
Upon receipt of such delivery and request, the Trustee shall promptly release or
cause to be released such Loan and Loan 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
Loan, 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 Loan and the related Loan 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. The Trustee shall stamp the face of each such Loan to
be released to the Servicer with a notation that the Loan has been assigned to
the Trustee. Upon request of a Servicing Officer, the Trustee shall perform such
other acts as reasonably requested by the Servicer and otherwise cooperate with
the Servicer in enforcement of the Certificateholders' and Class C
Certificateholders' rights and remedies with respect to Loans.
d. The Servicer's receipt of a Loan and/or Loan File shall obligate the
Servicer to return the original Loan and the related Loan File to the Trustee
when its need by the Servicer has ceased unless the Loan shall be liquidated or
repurchased or replaced as described in Section 3.05 or 8.06.
SECTION 5.08. Costs and Expenses. Except as provided in Section 8.04(b)
for the reimbursement of Advances, all costs and expenses incurred by the
Servicer in carrying out its duties
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hereunder (including payment of FHA Insurance premiums, payment of the Trustee's
fees pursuant to Section 11.06, fees and expenses of accountants and payments of
all fees and expenses incurred in connection with the enforcement of Loans
(including enforcement of Loans and foreclosures upon real estate securing any
such Loans) and all other fees and expenses not expressly stated hereunder to be
for the account of the Trust) shall be paid by the Servicer and the Servicer
shall not (except as otherwise provided in Section 8.04(b)(16)) be entitled to
reimbursement hereunder, except that the Servicer shall be reimbursed out of the
Liquidation Proceeds of a Liquidated Loan for customary out-of-pocket
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 Loan. The Servicer's out-of-pocket Liquidation Expenses in connection
with the submission of a claim to FHA currently do not exceed $100 per Loan.
If the Servicer fails to make a timely interest rate or monthly payment
adjustment on a Loan which does not provide for a fixed interest rate over the
life of the Loan, the Servicer shall use its own funds to satisfy any shortage
in the Obligor's remittance so long as such shortage shall continue; any such
amount paid by the Servicer shall be reimbursable to it from any subsequent
amounts collected on account of the related Loan with respect to such
adjustments.
SECTION 5.09. Maintenance of Insurance. The Servicer shall at all times
keep in force a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement, and a fidelity
bond. Such policy or policies and such fidelity bond shall be in such form and
amount as is generally customary among persons who service a portfolio of home
improvement loans having an aggregate principal amount of $10,000,000 or more,
and which are generally regarded as servicers acceptable to institutional
investors. The Servicer shall cause to be maintained with respect to any real
property securing an FHA-Insured Loan such hazard insurance and flood insurance
as may be required by the FHA Regulations, it being understood that at the
Closing Date hazard insurance was not required to be maintained under the FHA
Regulations. The Servicer shall cause to be maintained with respect to the real
property securing a Loan hazard insurance (excluding flood insurance coverage)
if such Loan is secured by a first priority mortgage, deed of trust or security
deed or the initial principal balance of such Loan exceeds $30,000.
SECTION 5.10. Merger or Consolidation of Servicer. Any Person into
which the Servicer may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party shall be the successor of
the Servicer hereunder, provided such Person shall be an Eligible Servicer,
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
Servicer shall promptly notify S&P and Fitch in the event it is a party to any
merger, conversion or consolidation.
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ARTICLE VI
REPORTS AND TAX MATTERS
-----------------------
SECTION 6.01. Monthly Reports. No later than one Business Day following
each Determination Date, the Servicer shall deliver to the Trustee, S&P and
Fitch a Monthly Report, substantially in the form of Exhibit M hereto.
SECTION 6.02. Officer's Certificate. Each Monthly Report pursuant to
Section 6.01 shall be accompanied by a certificate of a Servicing Officer
substantially in the form of Exhibit H, certifying the accuracy of the Monthly
Report and that no Event of Termination or event that with notice or lapse of
time or both would become an Event of Termination has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
SECTION 6.03. Other Data. In addition, the Company and (if different
from the Company) the Servicer shall, on request of the Trustee, S&P or Fitch,
furnish the Trustee, S&P and/or Fitch such underlying data as may be reasonably
requested.
SECTION 6.04. Annual Report of Accountants. On or before May 1 of each
year, commencing May 1, 2000, 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 issue to the Servicer a report that such firm
has examined selected documents, records and management's assertions relating to
loans serviced by the Servicer and stating that, on the basis of such
examination, such servicing has been conducted in compliance with the minimum
servicing standards identified in the Mortgage Bankers Association of America's
Uniform Single Attestation Program for Mortgage Bankers, or any successor
uniform program, except for such significant exceptions or errors in records
that, in the opinion of such firm, generally accepted attestation standards
requires it to report.
SECTION 6.05. Statements to Certificateholders and the Class C
Certificateholders.
a. The Servicer shall prepare and furnish to the Trustee the statements
specified below relating to the Class A Certificates, the Class M Certificates
and the Class B Certificates on or before the third Business Day next preceding
each Payment Date.
b. Concurrently with each distribution to Certificateholders, the
Trustee shall, so long as it has received the Monthly Report from the Servicer,
forward or cause to be forwarded by mail to each Holder of a Class A Certificate
and (if the Company is not the Servicer) the Company a statement setting forth
the following:
(i) the amount of such distribution to Holders of each Class
of Class A Certificates allocable to interest, separately identifying
any Unpaid Class A Interest Shortfall included in such distribution and
any remaining Unpaid Class A Interest Shortfall after giving effect to
such distribution;
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(ii) the amount of such distribution to Holders of each Class
of Class A Certificates allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class A Formula
Distribution Amount for such Payment Date exceeds the Class A
Distribution Amount for such Payment Date;
(iv) the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class A-3 Principal Balance, and the Class A-4 Principal
Balance after giving effect to the distribution of principal on such
Payment Date;
(v) the Pool Scheduled Principal Balance for such Payment
Date;
(vi) the Senior Percentage for such Payment Date;
(vii) the Pool Factor;
(viii) the number and aggregate principal balances of the
Loans, delinquent (a) 30- 59 days and (b) 60 or more days;
(ix) the Class B Principal Balance Test (as set forth in
Exhibit M hereto);
(x) the Class B Principal Distribution Test (as set forth in
Exhibit M hereto);
(xi) the number of Liquidated Loans and the Net Liquidation
Loss on such Loans;
(xii) the aggregate number and principal amount of FHA-Insured
Loans on which either (i) the Servicer has submitted a claim for FHA
Insurance, HUD rejected such claim and the Servicer has determined not
to submit 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;
(xiii) the Net Liquidation Losses on all FHA-Insured Loans
that became Liquidated Loans in any prior Due Period and the aggregate
Repurchase Price of all such Liquidated Loans;
(xiv) the amount in the Company's FHA Insurance reserve
available to pay FHA Insurance claims on the FHA-Insured Loans; and
(xv) the Pre-Funded Amount for such Payment Date.
The Trustee and the Servicer shall, if any Certificateholder, Class C
Certificateholder or Underwriter inquires by telephone, provide the information
contained in the most recent Monthly Report.
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In the case of information furnished pursuant to clauses (i) through
(iv) above, the amounts shall be expressed as a dollar amount per Class A
Certificate with a 1% Percentage Interest or per $1,000 denomination of Class A
Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class A Certificate a statement
containing the information with respect to interest accrued and principal paid
on its Class A Certificates during such calendar year. Such obligation of the
Certificate Registrar shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
c. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class M-1 Certificate a copy of the
monthly statement forwarded to the Holders of Class A Certificates on such
Payment Date. The Servicer shall also furnish to the Trustee, which shall
forward such information to the Class M-1 Certificateholders as part of their
monthly statement, the following information:
(i) the amount of such distribution to Holders of Class M-1
Certificates allocable to interest, separately identifying any Unpaid
Class M-1 Interest Shortfall included in such distribution and any
remaining Unpaid Class M-1 Interest Shortfall after giving effect to
such distribution;
(ii) the amount of such distribution to Holders of Class M-1
Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class M-1 Formula
Distribution Amount for such Payment Date exceeds the Class M-1
Distribution Amount for such Payment Date;
(iv) the Class M-1 Principal Balance after giving effect to
the distribution of principal on such Payment Date;
(v) the Unpaid Class M-1 Liquidation Loss Interest Shortfall
after giving effect to any distribution on such Payment Date pursuant
to Section 8.04(b)(10); and
(vi) the information set forth in clauses (v) through (xv) of
Section 6.05(b).
In the case of the information in clauses (i) through (v) above, the
amounts shall be expressed as a dollar amount per Class M-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class M-1 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a
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Class M-1 Certificate a statement containing the applicable distribution
information provided pursuant to this Section aggregated for such calendar year
or applicable portion thereof during which such Person was the Holder of a Class
M-1 Certificate. Such obligation of the Certificate Registrar shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Certificate Registrar pursuant to any requirements of
the Code as from time to time in force.
d. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class M-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class A and Class M-1
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class M-2
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class M-2
Certificates allocable to interest, separately identifying any Unpaid
Class M-2 Interest Shortfall included in such distribution and any
remaining Unpaid Class M-2 Interest Shortfall after giving effect to
such distribution;
(ii) the amount of such distribution to Holders of Class M-2
Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class M-2 Formula
Distribution Amount for such Payment Date exceeds the Class M-2
Distribution Amount for such Payment Date;
(iv) the Class M-2 Principal Balance after giving effect to
the distribution of principal on such Payment Date;
(v) the Unpaid Class M-2 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant
to Section 8.04(b)(11); and
(vi) the information set forth in clauses (v) through (xv) of
Section 6.05(b).
In the case of the information in clauses (i) through (v) above, the
amounts shall be expressed as a dollar amount per Class M-2 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class M-2 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class M-2 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class M-2 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall
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be provided by the Certificate Registrar pursuant to any requirements of the
Code as from time to time in force.
e. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-1 Certificate a copy of the
monthly statements forwarded to the Holders of Class A and Class M Certificates
on such Payment Date. The Servicer shall also furnish to the Trustee, which
shall forward such information to the Class B-1 Certificateholders as part of
their monthly statement, the following information:
(i) the amount of such distribution to Holders of Class B-1
Certificates allocable to interest, separately identifying any Unpaid
Class B-1 Interest Shortfall included in such distribution and any
remaining Unpaid Class B-1 Interest Shortfall after giving effect to
such distribution;
(ii) the amount of such distribution to Holders of Class B-1
Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class B-1 Formula
Distribution Amount for such Payment Date exceeds the Class B-1
Distribution Amount for such Payment Date;
(iv) the Class B-1 Principal Balance after giving effect to
the distribution of principal on such Payment Date;
(v) the Unpaid Class B-1 Liquidation Loss Interest Shortfall,
after giving effect to any distribution on such Payment Date pursuant
to Section 8.04(b)(12);
(vi) the Class B Percentage for such Payment Date; and
(vii) the information set forth in clauses (v) through (xv) of
Section 6.05(b).
In the case of the information in clauses (i) through (v) above, the
amounts shall be expressed as a dollar amount per Class B-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-1 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class B-1 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class B-1 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
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f. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class A, Class M and Class B-1
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class B-2
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class B-2
Certificates allocable to interest, separately identifying any Unpaid
Class B-2 Interest Shortfall included in such distribution and any
remaining Unpaid Class B-2 Interest Shortfall after giving effect to
such distribution;
(ii) the amount of such distribution to Holders of Class B-2
Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the sum of the Class B-2
Formula Distribution Amount and the Class B-2 Liquidation Loss
Principal Amount, if any, for such Payment Date exceeds the Class B-2
Distribution Amount for such Payment Date;
(iv) the Class B-2 Principal Balance after giving effect to
the distribution of principal on such Payment Date;
(v) the Class B Percentage for such Payment Date; and
(vi) the information set forth in clauses (v) through (xv) of
Section 6.05(b).
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class B-2 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-2 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class B-2 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class B-2 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
h. Copies of all reports and statements provided to the Trustee for the
Certificateholders shall also be provided to S&P, Fitch and the Class C
Certificateholders.
SECTION 6.06. Payment of Taxes. The Servicer shall be responsible for
and agrees to prepare, make and timely file all federal, state, local or other
tax returns, information statements and
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other returns and documents of every kind and nature whatsoever required to be
made or filed by or on behalf of the Trust pursuant to the Code and other
applicable tax laws and regulations. Each such return, statement and document
shall, to the extent required by the Code or other applicable law and at the
request of the Servicer, be signed on behalf of the Trust by the Trustee. The
Trustee shall have no responsibility whatsoever for the accuracy or completeness
of any such return, statement or document. The Servicer agrees to indemnify the
Trustee and hold it harmless for, from, against and in respect to any and all
liability, loss, damage and expense which may be incurred by the Trustee based
upon or as a result of the Trustee's execution of any and all such tax returns,
statements and documents. The Servicer, if and for so long as it is a Class C
Certificateholder, shall be designated the "tax matters person" on behalf of the
Trust in the same manner as a partnership may designate a "tax matters partner,"
as such term is defined in Section 6231(a)(7) of the Code. To the extent
permitted by the REMIC Provisions, any subsequent holder of the Class C
Certificates, by acceptance thereof, irrevocably designates and appoints the
Servicer as its agent to perform the responsibilities of the "tax matters
person" on behalf of the Trust if, and during such time as, the Servicer is not
the holder of the Class C Certificates. The Servicer may, at its expense, retain
such outside assistance as it deems necessary in the performance of its
obligations under this paragraph. The Servicer shall provide to the Internal
Revenue Service the name, title, address and telephone number of the person who
will serve as the representative of the REMIC.
Each of the Holders of the Certificates or the Class C Certificates, by
acceptance thereof, agrees to file tax returns consistent with and in accordance
with any elections, decisions or other reports made or filed with regard to
federal, state or local taxes on behalf of the Trust. The Servicer, as tax
matters person or as agent for the tax matters person, shall represent the Trust
in connection with all examinations of the Trust's affairs by tax authorities,
including resulting administrative and judicial proceedings. Each of the Holders
of the Certificates and Class C Certificates, by acceptance thereof, agrees to
cooperate with the Servicer in such matters and to do or refrain from doing any
or all things reasonably required by the Servicer to conduct such proceedings,
provided that no such action shall be required by the Servicer of any
Certificateholder that would entail unnecessary or unreasonable expenses for
such Certificateholder in the performance of such action.
The Class C Certificateholders shall pay, on behalf of the Trust, any
foreign, federal, state or local income, property, excise, sales, receipts or
any other similar or related taxes or charges which may be imposed upon the
Trust as a REMIC or otherwise and shall, to the extent provided in Section
10.06, be entitled to be reimbursed out of the Certificate Account or, if such
tax or charge results from a failure by the Trustee, the Company or any Servicer
to comply with the provisions of Section 2.04 or 3.06, or a failure by any
Servicer to comply with the provisions of this Section 6.06, the Trustee, the
Company or such Servicer, as the case may be, shall indemnify the Class C
Certificateholders for the payment of any such tax or charge. The Trustee shall
be entitled to withhold from amounts otherwise distributable to the Class C
Certificateholders any taxes or charges payable by the Class C
Certificateholders hereunder.
In the event a Class C Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Company shall provide to the Internal
Revenue Service and the persons specified in Sections
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860(E)(e)(5) and (6) of the Code all information necessary for the application
of Section 860E(e) and any other applicable provision of the Code with respect
to the transfer of the Class C Certificate to such disqualified organization
including, without limitation, a computation showing the present value of the
total anticipated excess inclusions with respect to such Class C Certificate for
periods after the transfer as defined in the REMIC Provisions. In addition, to
the extent required by the REMIC Provisions, the Company shall, upon the written
request of persons designated in Section 860E(e)(5) of the Code, furnish to such
requesting party and the Internal Revenue Service information sufficient to
compute the present value of anticipated excess inclusions within 60 days of the
receipt of such written request.
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ARTICLE VII
SERVICE TRANSFER
----------------
SECTION 7.01. Events of Termination. "Event of Termination" means the
occurrence of any of the following:
a. Any failure by the Servicer to make any payment or deposit
required to be made hereunder (including an Advance) and the
continuance of such failure for a period of four Business Days;
b. Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement (other
than a covenant or agreement which is elsewhere in this Section
specifically dealt with) which continues unremedied for 30 days;
c. Any assignment by the Servicer of its duties or rights
hereunder except as specifically permitted hereunder, or any attempt to
make such an assignment;
d. A court 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;
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;
f. The failure of the Servicer to be an Eligible Servicer; or
g. If the Company is the Servicer, the Company's servicing
rights under its master seller-servicer agreement with GNMA are
terminated by GNMA.
SECTION 7.02. Transfer. If an Event of Termination has occurred and is
continuing, either the Trustee or Certificateholders, in the aggregate,
representing 25% or more of the Aggregate Certificate Principal Balance, by
notice in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), all authority and
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power of the Servicer under this Agreement, whether with respect to the Loans,
the Loan Files or otherwise (except with respect to the Certificate Account, the
transfer of which shall be governed by Section 7.06), shall pass to and be
vested in the Trustee pursuant to and under this Section 7.02; and, without
limitation, the Trustee is authorized and empowered to execute and deliver on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do any and all acts or things necessary or
appropriate to effect the purposes of such notice of termination. The Trustee
shall cause all assignments of mortgages, deeds of trust or security deeds
securing the Loans to be duly recorded. If the Servicer was the lender of record
for purposes of the FHA Insurance relating to FHA-Insured Loans, the Trustee
shall notify HUD of such termination and shall request that HUD transfer the FHA
Insurance reserves allocable to such FHA-Insured Loans to the successor
Servicer; provided, however, that if the Trustee is the successor Servicer, the
Trustee shall request such transfer of reserves if and to the extent it is
legally able to do so, and the Trustee shall use its best efforts to obtain any
approvals that may be required for the Trustee to receive such transfer of
reserves. Each of the Company and the Servicer agrees to cooperate with the
Trustee in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the transfer to the Trustee
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Certificate Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Loans, and the transfer of
all rights under FHA Insurance relating to FHA-Insured Loans. The Servicer shall
transfer to the new servicer (i) the Servicer's records relating to the Loans in
such electronic form as the new servicer may reasonably request and (ii) any
Loan Files in the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor. On and after
the time the Servicer receives a notice of termination pursuant to Section 7.02,
the Trustee shall be the successor in all respects to the Servicer in its
capacity as servicer under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
hereof, and the Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Service Transfer; provided, however, that (i) the
Trustee will not assume any obligations of the Company pursuant to Section 3.05,
and (ii) the Trustee shall not be liable for any acts or omissions of the
Servicer occurring prior to such Service Transfer or for any breach by the
Servicer of any of its obligations contained herein or in any related document
or agreement. As compensation therefor, the Trustee shall be entitled to receive
reasonable compensation out of the Monthly Servicing Fee. Notwithstanding the
above, the Trustee may, if it shall be unwilling so to act, or shall, if it is
legally unable so to act, appoint, or petition a court of competent jurisdiction
to appoint, an Eligible Servicer as the successor to the Servicer hereunder in
the assumption of all or any part of the responsibilities, duties or liabilities
of the Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Loans as it and such successor
shall agree; provided, however, that no such monthly compensation shall, without
the written consent of 100% of the Certificateholders, exceed the Monthly
Servicing Fee. The Trustee
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and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
SECTION 7.04. Notification to Certificateholders and Class C
Certificateholders.
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, to S&P, to Fitch, to
the Certificateholders and to the Class C Certificateholders at their respective
addresses appearing on the Certificate Register.
b. Within 10 days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to S&P, to Fitch, to the Certificateholders and to the
Class C Certificateholders at their respective addresses appearing on the
Certificate Register.
SECTION 7.05. Effect of Transfer.
a. After the Service Transfer, the Trustee or new Servicer shall notify
Obligors to make payments directly to the new Servicer that are due under the
Loans 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 Loans 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 Loans.
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article X and Sections 3.05, 11.06 and 11.12(f))
other than those relating to the management, administration, servicing or
collection of the Loans after the Service Transfer.
SECTION 7.06. Transfer of Certificate Account. Notwithstanding the
provisions of Section 7.02, if the Certificate Account shall be maintained with
the Servicer and an Event of Termination shall occur and be continuing, the
Servicer shall, after five days' written notice from the Trustee, or in any
event within ten days after the occurrence of the Event of Termination,
establish a new account or accounts in trust for the Certificateholders and the
Class C Certificateholders conforming with the requirements of this Agreement at
the corporate trust department of the Trustee or with an institution other than
the Servicer and promptly cause the Trustee to transfer all funds in the
Certificate Account to such new account, which shall thereafter be deemed the
Certificate Account for the purposes hereof.
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ARTICLE VIII
PAYMENTS
--------
SECTION 8.01. Monthly Payments.
a. Subject to the terms of this Article VIII, each Holder of a
Certificate or Class C Certificate as of a Record Date shall be paid on the next
succeeding Payment Date by check mailed to such Certificateholder or Class C
Certificateholder at the address for such Certificateholder or Class C
Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates of a Class with an aggregate Percentage
Interest of at least 5% of such Class and so requests, by wire transfer pursuant
to instructions delivered to the Trustee at least 10 days prior to such Payment
Date), the sum equal to such Certificateholder's or Class C Certificateholder's
Percentage Interest of the Class A-1 Distribution Amount, the Class A-2
Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class M-1 Distribution Amount, the Class M-2
Distribution Amount, the Class B-1 Distribution Amount, the Class B-2
Distribution Amount, any Class B-2 Guaranty Payment or the Class C Distribution
Amount, as applicable. Final payment of any Certificate or a Class C Certificate
shall be made only upon presentation and surrender of such Certificate or Class
C Certificate at the office or agency of the Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book-Entry Certificates. Neither the Trustee, the Certificate Registrar nor
the Company shall have any responsibility therefor except as otherwise provided
by applicable law. To the extent applicable and not contrary to the rules of the
Depository, the Trustee shall comply with the provisions of the form of the
Certificates as set forth in Exhibits A through C hereto, and the Class C
Certificates as set forth in Exhibit I hereto.
c. The Trustee shall either act as the paying agent or appoint an
Eligible Institution to be the paying agent (in either such case, the "Paying
Agent") to make the payments to the Certificateholders and the Class C
Certificateholders required hereunder. The Trustee's corporate trust operations
department, with an office at 180 East Fifth Street, Third Floor, St. Paul,
Minnesota 55101, Attention: Tamara Schultz-Fugh, shall initially act as Paying
Agent. The Trustee shall require the Paying Agent (if other than the Trustee) to
agree in writing that all amounts held by the Paying Agent for payment hereunder
will be held in trust for the benefit of the Certificateholders and the Class C
Certificateholders and that it will notify the Trustee of any failure by the
Servicer to
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make funds available to the Paying Agent for the payment of amounts due on the
Certificates and the Class C Certificates.
SECTION 8.02. Advances.
a. Not later than one Business Day following the Determination Date,
the Servicer shall advance all Delinquent Payments for the immediately preceding
Due Period by depositing the aggregate amount of such Delinquent Payments in the
Certificate 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 funds subsequently
available therefor in the Certificate Account in accordance with Section
8.04(b). If the Servicer fails to advance all Delinquent Payments required under
this Section 8.02, the Trustee shall be obligated to advance such Delinquent
Payments pursuant to Section 11.15.
b. The Servicer shall be entitled to reimbursement of an Advance from
subsequent funds available therefor in the Certificate Account in accordance
with Section 8.04(b).
SECTION 8.03. Class B-2 Limited Guaranty.
(i) No later than the Determination Date, the Servicer (if other than
the Company) shall notify the Company of the amount of the Class B-2 Guaranty
Payment (if any) for the related Payment Date. Not later than the Business Day
preceding each Payment Date, the Company shall deposit the Class B-2 Guaranty
Payment, if any, for such Payment Date into the Certificate Account. Any Class
B-2 Guaranty Payment shall be distributable to Class B-2 Certificateholders
pursuant to Section 8.01.
(ii) The obligations of the Company under this Section 8.03 shall not
terminate upon or otherwise be affected by a Service Transfer pursuant to
Article VII of this Agreement.
(iii) The obligation of the Company to provide the Class B-2 Limited
Guaranty under this Agreement shall terminate on the Final Payment Date.
(iv) The obligation of the Company to make the Class B-2 Guaranty
Payments described in subsection (i) above shall be unconditional and
irrevocable. The Company acknowledges that its obligation to make the Class B-2
Guaranty Payments described in subsection (i) above shall be deemed a guaranty
by the Company of indebtedness of the Trust for money borrowed from the Class
B-2 Certificateholders.
(v) If the Company fails to make a Class B-2 Guaranty Payment in whole
or in part, the Company shall promptly notify the Trustee, and the Trustee shall
promptly notify S&P and Fitch.
(vi) In consideration of providing the Class B-2 Limited Guaranty, the
Company shall be entitled to the Class B-2 Guaranty Fee payable in accordance
with Section 8.04(b)(20).
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SECTION 8.04. Permitted Withdrawals from the Certificate Account;
Payments.
a. The Trustee shall, from time to time as provided herein, make
withdrawals from the Certificate Account of amounts deposited in said account
pursuant to Section 5.05 that are attributable to the Loans for the following
purposes:
(i) to make payments in the amounts and in the manner provided
for in Section 8.04(b);
(ii) to pay to the Company with respect to each Loan or
property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 3.05, all amounts received thereon and not
required to be distributed to Certificateholders as of the date on
which the related Scheduled Principal Balance or Repurchase Price is
determined;
(iii) to reimburse the Servicer out of Liquidation Proceeds
for Liquidation Expenses incurred by it and not otherwise reimbursed,
to the extent such reimbursement is permitted pursuant to Section 5.08;
(iv) to withdraw any amount deposited in the Certificate
Account that was not required to be deposited therein; or
(v) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (iii), the
Company's entitlement thereto is limited to collections or other recoveries on
the related Loan, the Servicer shall keep and maintain separate accounting, on a
Loan by Loan basis, for the purpose of justifying any withdrawal from the
Certificate Account pursuant to such clause.
b. On each Payment Date, the Trustee shall apply the Amount Available
for such Payment Date to make payment in the following order of priority,
subject to Section 8.04(c) and the last sentence of this Section 8.04(b):
(1) if neither the Company nor a wholly owned subsidiary of
the Company is the Servicer, to pay, with respect to the Loans, the
Monthly Servicing Fee and any other compensation owed to the Servicer
pursuant to Section 7.03;
(2) to pay the Class A Formula Interest Distribution Amount as
follows (and in the following order of priority):
(i) the amount in clause (a)(1) of the definition of
Class A Formula Distribution Amount to the Class A-1
Certificateholders; the amount in clause (a)(2) of the
definition of Class A Formula Distribution Amount to the Class
A-2 Certificateholders; the amount in clause (a)(3) of the
definition of Class A Formula
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Distribution Amount to the Class A-3 Certificateholders; and
the amount in clause (a)(4) of the definition of Class A
Formula Distribution Amount to the Class A-4
Certificateholders; or, if the Amount Available is less than
the amount necessary to pay all of the amounts specified in
clause (1) of the definition of Class A Formula Interest
Distribution Amount, pro rata to each Class of Class A
Certificates in accordance with their respective entitlements
to interest; and
(ii) to each Class of Class A Certificates the
amount, if any, of the Unpaid Class A Interest Shortfall of
such Class or, if the remaining Amount Available is less than
the amount necessary to pay all Unpaid Class A Interest
Shortfalls, pro rata to each Class of Class A Certificates
based on the Unpaid Class A Interest Shortfall of each such
Class;
(3) after payment of the amounts specified in clauses (1) and
(2) above, to the Class M-1 Certificateholders as follows (and in the
following order of priority):
(i) the amount in clause (a) of the definition of
Class M-1 Formula Distribution Amount; and
(ii) any Unpaid Class M-1 Interest Shortfall;
(4) after payment of the amounts specified in clauses (1)
through (3) above, to the Class M-2 Certificateholders as follows (and
in the following order of priority):
(i) the amount in clause (a) of the definition of
Class M-2 Formula Distribution Amount; and
(ii) any Unpaid Class M-2 Interest Shortfall;
(5) after payment of the amounts specified in clauses (1)
through (4) above, to the Class B-1 Certificateholders as follows (and
in the following order of priority):
(i) the amount in clause (a) of the definition of
Class B-1 Formula Distribution Amount; and
(ii) any Unpaid Class B-1 Interest Shortfall;
(6) after payment of the amounts specified in clauses (1)
through (5) above, to pay principal in respect of the Class A
Certificates as follows:
(i) if there is a Class A Principal Deficiency Amount
for such Payment Date, the remaining Amount Available, pro
rata to each Class of Class A Certificates based on the Class
Principal Balance of each Class (but in no event shall such
amount for any Class exceed the Class Principal Balance of any
such Class); and
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(ii) if there is no Class A Principal Deficiency
Amount for such Payment Date, and if such Payment Date is on
or prior to the Class A-4 Cross-over Date, the Senior
Percentage of the Formula Principal Distribution Amount as
follows:
(a) if such Payment Date is on or prior to
the Class A-1 Crossover Date, to the Class A-1
Certificateholders, but in no event more than is
necessary to reduce the Class A-1 Principal Balance
to zero;
(b) if such Payment Date is on or after the
Class A-1 Cross-over Date, but on or prior to the
Class A-2 Cross-over Date, to the Class A-2
Certificateholders, but in no event more than is
necessary to reduce the Class A-2 Principal Balance
to zero;
(c) if such Payment Date is on or after the
Class A-2 Cross-over Date, but on or prior to the
Class A-3 Cross-over Date, to the Class A-3
Certificateholders, but in no event more than is
necessary to reduce the Class A-3 Principal Balance
to zero and;
(d) if such Payment Date is on or after the
Class A-3 Cross-over Date, but on or prior to the
Class A-4 Cross-over Date, to the Class A-4
Certificateholders, but in no event more than is
necessary to reduce the Class A-4 Principal Balance
to zero;
(7) after payment of the amounts specified in clauses (1)
through (6) above, to the Class M-1 Certificateholders, the amount in
clause (c) of the definition of Class M-1 Formula Distribution Amount;
(8) after payment of the amounts specified in clauses (1)
through (7) above, to the Class M-2 Certificateholders, the amount in
clause (c) of the definition of Class M-2 Formula Distribution Amount;
(9) after payment of the amounts specified in clauses (1)
through (8) above, to the Class B-1 Certificateholders, the amount in
clause (c) of the definition of Class B-1 Formula Distribution Amount;
(10) after payment of the amounts specified in clauses (1)
through (9) above, to the Class M-1 Certificateholders as follows (and
in the following order of priority):
(i) any Class M-1 Liquidation Loss Interest Amount;
and
(ii) any Unpaid Class M-1 Liquidation Loss Interest
Shortfall;
(11) after payment of the amounts specified in clauses (1)
through (10) above, to the Class M-2 Certificateholders as follows (and
in the following order of priority):
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(i) any Class M-2 Liquidation Loss Interest Amount;
and
(ii) any Unpaid Class M-2 Liquidation Loss Interest
Shortfall;
(12) after payment of the amounts specified in clauses (1)
through (11) above, to the Class B-1 Certificateholders as follows (and
in the following order of priority):
(i) any Class B-1 Liquidation Loss Interest Amount;
and
(ii) any Unpaid Class B -1 Liquidation Loss Interest
Shortfall;
(13) after payment of the amounts specified in clauses (1)
through (12) above, to the Class B-2 Certificateholders as follows (and
in the following order of priority):
(i) the amount in clause (a) of the definition of
Class B-2 Formula Distribution Amount;
(ii) any Unpaid Class B-2 Interest Shortfall; and
(iii) the amount in clause (c) of the definition of
Class B-2 Formula Distribution Amount;
(14) [RESERVED]
(15) if the Company or a wholly owned subsidiary of the
Company is the Servicer, after payment of the amounts specified in
clauses (1) through (14) above, to pay the Servicer the Monthly
Servicing Fee with respect to the Loans;
(16) after payment of the amounts specified in clauses (1)
through (15) above, to reimburse the Trustee or any successor Servicer
for any payments of FHA Insurance Premiums in respect of FHA-Insured
Loans not paid by the Company and for which the Trustee or such
successor Servicer has not been reimbursed by the Company;
(17) after payment of the amounts specified in clauses (1)
through (16) above, to reimburse the Servicer or the Trustee, as
applicable, for any unreimbursed Advances made with respect to the
Loans in respect of current or prior Payment Dates and to reimburse the
Company for any unreimbursed Advances made pursuant to Section 8.02;
(18) after payment of the amounts specified in clauses (1)
through (17) above, to reimburse the Class C Certificateholders for
expenses incurred by and reimbursable to them pursuant to Section
10.06;
(19) after payment of the amounts specified in clauses (1)
through (18) above, to reimburse the Company for any prior unreimbursed
Class B-2 Guaranty Payments;
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(20) after payment of the amounts specified in clauses (1)
through (19) above, to pay the Class B-2 Guaranty Fee to the Company;
and
(21) after payment of the amounts specified in clauses (1)
through (20) above, to pay the remainder, if any, of the Amount
Available to the Class C Certificateholders.
If the Trustee shall not have received the applicable Monthly Report by
any Payment Date, the Trustee shall, in accordance with this Section 8.04(b),
distribute all funds then in the Certificate Account to Certificateholders, to
the extent of such funds, on such Payment Date.
c. Notwithstanding the priorities set forth above, any Pre-Funded
Amount deposited in the Certificate Account shall be applied solely to pay
principal of the Class A-1 Certificates, and any amount withdrawn from the
Capitalized Interest Account and deposited in the Certificate Account shall be
applied solely as described in Section 8.07.
SECTION 8.05. Reassignment of Repurchased and Replaced Loans. Upon
receipt by the Trust, by deposit in the Certificate Account, of the Repurchase
Price under Section 3.05(a), or upon receipt by the Trust of an Eligible
Substitute Loan under Section 3.05(b) and receipt by the Trust, by deposit in
the Certificate Account, of any additional amount under Section 3.05(b)(vi), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as Exhibit J-1 or J-2, as applicable, the Trustee shall convey and assign to the
Company all of the Certificateholders' right, title and interest in the
repurchased Loan or Replaced Loan without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Trustee. Upon such deposit of the Repurchase Price
or receipt of such Eligible Substitute Loan and related deposit of any
additional amount under Section 3.05(b)(vi), the Servicer shall be deemed to
have released any claims to such Loan as a result of Advances with respect to
such Loan.
SECTION 8.06. Servicer's Purchase Option.
a. The Servicer shall, subject to subsection (b) hereof, have the
option to purchase all of the Loans and all property acquired in respect of any
Loan remaining in the Trust at a price equal to the greatest of:
(i) the sum of (x) 100% of the principal balance of each Loan
(other than any Loan as to which title to the underlying property has
been acquired and whose fair market value is included pursuant to
clause (y) below), together with accrued and unpaid interest on each
such Loan at a rate per annum equal to the Weighted Average
Pass-Through Rate, plus (y) the fair market value of such acquired
property (as reasonably determined by the Servicer as of the close of
business on the third Business Day preceding the date of such
purchase),
(ii) the aggregate fair market value (as reasonably determined
by the Servicer as of the close of business on such third Business Day)
of all of the assets of the Trust, and
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(iii) the Aggregate Certificate Principal Balance as of the
date of such purchase (less any amounts on deposit in the Certificate
Account on such purchase date and representing payments of principal in
respect of the Loans) plus an amount necessary to pay the Class A
Formula Interest Distribution Amount, the Class M-1 Formula Interest
Distribution Amount, the Class M-1 Formula Liquidation Loss Interest
Distribution Amount, the Class M-2 Formula Interest Distribution
Amount, the Class M-2 Formula Liquidation Loss Interest Distribution
Amount, the Class B-1 Formula Interest Distribution Amount, the Class
B-1 Formula Liquidation Loss Interest Distribution Amount and the Class
B-2 Formula Interest Distribution Amount due on the Payment Date
occurring in the calendar month following such purchase date (less any
amounts on deposit in the Certificate Account on such purchase date and
representing payments of interest in respect of the Loans at a rate per
annum equal to the Weighted Average Pass-Through Rate).
b. The purchase by the Servicer of all of the Loans pursuant to this
Section 8.06 shall be conditioned upon (1) the Pool Scheduled Principal Balance
of all Loans, at the time of any such purchase, aggregating less than 10% of the
Original Aggregate Certificate Principal Balance, (2) such purchase constituting
a plan of complete liquidation in accordance with Section 860F of the Code, and
(3) the Servicer having provided the Trustee and the Depository (if any) with at
least 30 days' written notice. If such option is exercised, the Servicer shall
provide to the Trustee (at the Servicer's expense) the certification required by
Section 12.04, which certificate shall constitute a plan of complete liquidation
within the meaning of Section 860F of the Code, and the Trustee shall promptly
sign such certification and release to the Servicer the Loan Files pertaining to
the Loans being purchased.
SECTION 8.07. Capitalized Interest Account.
a. On or before the Closing Date, the Trustee shall establish the
Capitalized Interest Account on behalf of the Trust, which must be an Eligible
Account, and shall deposit therein $0.00 received from the Company pursuant to
Section 2.02(m). The Capitalized Interest Account shall be entitled "Capitalized
Interest Account, U.S. Bank Trust National Association as Trustee for the
benefit of holders of Home Improvement Loan Certificates, Series 1999-E." On the
Payment Date occurring in each of October, November and December 1999, if the
Monthly Report for such Payment Date indicates that the Amount Available (after
payment of the amount specified in clause (1) of Section 8.04(b) and including
in the Amount Available only payments in respect of interest on the Loans) is
not sufficient to pay the Class A Formula Interest Distribution Amount, plus the
Class M-1 Formula Interest Distribution Amount, plus the Class M-2 Formula
Interest Distribution Amount, plus the Class B-1 Formula Interest Distribution
Amount, the Trustee shall withdraw the amount of such deficiency, or the amount
of funds in the Capitalized Interest Account (net of any investment earnings
thereon), if less, and shall deposit such funds in the Certificate Account for
distribution on such Payment Date in order first to pay any deficiency in the
Amount Available to pay the Class A Formula Interest Distribution Amount, second
to pay any deficiency in the Amount Available to pay the Class M-1 Formula
Interest Distribution Amount, third to pay any deficiency in the Amount
Available to pay the Class M-2 Formula Interest Distribution Amount and fourth
to
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<PAGE>
pay any deficiency in the Amount Available to pay the Class B-1 Formula Interest
Distribution Amount.
b. The Capitalized Interest Account shall be part of the Trust but not
part of the REMIC. The Trustee on behalf of the Trust shall be the legal owner
of the Capitalized Interest Account. The Company shall be the beneficial owner
of the Capitalized Interest Account, subject to the foregoing power of the
Trustee to transfer amounts in the Capitalized Interest Account to the
Certificate Account. Funds in the Capitalized Interest Account shall, at the
direction of the Company, be invested in Eligible Investments that mature no
later than the Business Day prior to the next succeeding Payment Date. All net
income and gain from such investments shall be distributed to the Company on
such Payment Date. All amounts earned on amounts on deposit in the Capitalized
Interest Account shall be taxable to the Company.
c. Any funds remaining in the Capitalized Interest Account after the
Payment Date in December 1999 shall be distributed to the Company. After such
date no further amounts shall be deposited in or withdrawn from the Capitalized
Interest Account. Any losses on such investments shall be deposited in the
Capitalized Interest Account by the Company out of its own funds immediately as
realized.
SECTION 8.08. Pre-Funding Account.
a. On or before the Closing Date, the Trustee shall establish the
Pre-Funding Account on behalf of the Trust, which must be an Eligible Account,
and shall deposit therein the amounts received from the Company pursuant to
Section 2.02(l). The Pre-Funding Account shall be entitled "Pre-Funding Account,
U.S. Bank Trust National Association as Trustee for the benefit of holders of
Home Improvement Loan Certificates, Series 1999-E." Funds deposited in the
Pre-Funding Account shall be held in trust by the Trustee for the Holders of the
Certificates and the Class C Certificates for the uses and purposes set forth
herein.
b. On or before the Closing Date, the Company shall deposit in the
Pre-Funding Account the amount specified in Section 2.02(l). Amounts on deposit
in the Pre-Funding Account shall be withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall
withdraw from the Pre- Funding Account an amount equal to 100% of the
Cut-off Date Principal Balance of each Subsequent Loan transferred and
assigned to the Trustee 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.
(ii) On the Business Day immediately preceding the
Post-Funding Payment Date, the Trustee shall deposit into the
Certificate Account any amounts remaining in the Pre-Funding Account,
net of investment earnings.
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<PAGE>
c. The Pre-Funding Account shall be part of the Trust but not part of
the REMIC. The Trustee on behalf of the Trust shall be the legal owner of the
Pre-Funding Account. The Company shall be the beneficial owner of the
Pre-Funding Account, subject to the foregoing power of the Trustee to transfer
amounts in the Pre-Funding Account to the Certificate Account. Funds in the Pre-
Funding Account shall, at the direction of the Servicer, be invested in Eligible
Investments of the kind described in clauses (i) and (ii)(A) of the definition
of "Eligible Investments" and that mature no later than the Business Day prior
to the next succeeding Payment Date. All amounts earned on deposits in the
Pre-Funding Account shall be taxable to the Company. The Trustee shall release
to the Company all investment earnings in the Pre-Funding Account on the first
Payment Date after the end of the Pre-Funding Period.
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<PAGE>
ARTICLE IX
THE CERTIFICATES AND THE CLASS C CERTIFICATES
---------------------------------------------
SECTION 9.01. The Certificates and the Class C Certificates. The Class
A, the Class M, the Class B and the Class C Certificates shall be substantially
in the forms set forth in Exhibits A, B, C and I, as applicable, and shall, on
original issue, be executed by the Trustee on behalf of the Trust to or upon the
order of the Company. The Class A, the Class M and the Class B Certificates
shall be evidenced by (i) one or more Class A-1 Certificates evidencing
$216,000,000 in Original Class A-1 Principal Balance, (ii) one or more Class A-2
Certificates evidencing $42,000,000 in Original Class A-2 Principal Balance,
(iii) one or more Class A-3 Certificates evidencing $124,000,000 in Original
Class A-3 Principal Balance, (iv) one or more Class A-4 Certificates evidencing
$84,500,000 in Original Class A-4 Principal Balance, (v) one or more Class M-1
Certificates evidencing $48,000,000 in Original Class M-1 Principal Balance,
(vi) one or more Class M-2 Certificates evidencing $28,500,000 in Original Class
M-2 Principal Balance, (vii) one or more Class B-1 Certificates evidencing
$18,000,000 in Original Class B-1 Principal Balance and (viii) one or more Class
B-2 Certificates evidencing $39,000,000 in Original Class B-2 Principal Balance,
beneficial ownership of such Classes of Certificates (other than the Class B-2
Certificates) to be held through Book-Entry Certificates in minimum dollar
denominations of $1,000. The Class C Certificates shall be evidenced by a single
Class C Certificate issued on the Closing Date to the Company and shall
represent 100% of the Percentage Interest of the Class C Certificates.
The Certificates and the Class C Certificates shall be executed by
manual signature on behalf of the Trustee by a duly authorized Responsible
Officer or authorized signatory. Certificates or the Class C Certificates
bearing the signatures of individuals who were at any time the proper officers
of the Trustee shall bind the Trustee, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the execution and delivery
of such Certificates or Class C Certificates, or did not hold such offices at
the date of such Certificates or Class C Certificates. No Certificate or Class C
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate or Class C Certificate has been
executed by manual signature in accordance with this Section, and such signature
upon any Certificates or Class C Certificate shall be conclusive evidence, and
the only evidence, that such Certificates or Class C Certificate has been duly
executed and delivered hereunder. All Certificates and the Class C Certificates
shall be dated the date of their execution, except for those Certificates and
the Class C Certificates executed on the Closing Date, which shall be dated the
Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates and
the Class C Certificates.
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.03 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and the Class C Certificates
and of transfers and exchanges of Certificates and the Class C Certificates as
herein provided. The Trustee initially appoints itself to be the "Certificate
Registrar" and transfer agent for the purpose of registering Certificates and
the Class C Certificates
9-1
<PAGE>
and transfers and exchanges of Certificates and the Class C Certificates as
provided herein. The Trustee will give prompt written notice to
Certificateholders, the Class C Certificateholders and the Servicer of any
change in the Certificate Registrar.
b. (1) Subject to clauses (2) and (3) below, no transfer of a Class C
Certificate shall be made by the Company or any other Person unless such
transfer is exempt from the registration requirements of the Securities Act of
1933 (the "Act"), as amended, and any applicable state securities laws or is
made in accordance with the Act and laws. In the event that any such transfer is
to be made, (A) the Company may require a written Opinion of Counsel acceptable
to and in form and substance satisfactory to the Company that such transfer may
be made pursuant to an exemption, describing the applicable exemption and the
basis therefor, from the Act and laws or is being made pursuant to the Act and
laws, which Opinion of Counsel shall not be an expense of the Trustee or the
Company, and (B) the Trustee shall require the transferee to execute an
investment letter substantially in the form of Exhibit K attached hereto, which
investment letter shall not be an expense of the Trustee or the Company. The
Class C Certificateholder desiring to effect such transfer shall, and does
hereby agree to, indemnify the Trustee, the Company and the Certificate
Registrar against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(2) No transfer of a Class M, Class B or Class C Certificate or any
interest therein shall be made to any employee benefit plan within the meaning
of section 3(3) of ERISA, or that is described in Section 4975(e)(1) of the Code
or to any person or entity purchasing on behalf of, or with assets of, such an
employee benefit plan (each, a "Plan"), unless the Plan delivers to the Company
and the Trustee, at its own expense, an Opinion of Counsel in form satisfactory
to the Company and the Trustee that the purchase and holding of such Certificate
or Class C Certificate by such Plan will not result in the assets of the Trust
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee, the Company
or the Servicer to any obligation or liability in addition to those undertaken
in this Agreement. Unless such opinion is delivered, each person acquiring such
a Certificate or Class C Certificate will be deemed to represent to the Trustee,
the Company and the Servicer either (i) that such person is neither a Plan, nor
acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code, or
(ii) that the purchase and holding of the Certificate by such Plan will not
result in the assets of the Trust being deemed to be Plan assets and subject to
the prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee, the Company or the Servicer to any obligation or liability in
addition to those undertaken in this Agreement.
(3) Notwithstanding anything to the contrary contained herein, (A)
no Class C Certificate, nor any interest therein, shall be transferred, sold or
otherwise disposed of to a "disqualified organization," within the meaning of
Section 860E(e)(5) of the Code (a "Disqualified Organization"), including, but
not limited to, (i) the United States, a state or political subdivision thereof,
a foreign government, an international organization or an agency or
instrumentality of any of the foregoing, (ii) an organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the taxes
imposed by Chapter 1 of the Code and not subject to the tax imposed on unrelated
business income by Section 511 of the Code, or (iii) a cooperative described in
Section
9-2
<PAGE>
1381(a)(2)(C) of the Code, and (B) prior to any registration of any transfer,
sale or other disposition of a Class C Certificate, the proposed transferee
shall deliver to the Trustee, under penalties of perjury, an affidavit that such
transferee is not a Disqualified Organization, with respect to which the Trustee
shall have no actual knowledge that such affidavit is false, and the transferor
and the proposed transferee shall each deliver to the Trustee an affidavit with
respect to any other information reasonably required by the Trustee pursuant to
the REMIC Provisions, including, without limitation, information regarding the
transfer of noneconomic residual interests and transfers of any residual
interest to or by a foreign person; provided, however, that, upon the delivery
to the Trustee of an Opinion of Counsel, in form and substance satisfactory to
the Trustee and rendered by Independent counsel, to the effect that the
beneficial ownership of a Class C Certificate by any Disqualified Organization
will not result in the imposition of federal income tax upon the Trust or any
Certificateholder or Class C Certificateholder or any other person or otherwise
adversely affect the status of the Trust as a REMIC, the foregoing prohibition
on transfers, sales and other dispositions, as well as the foregoing requirement
to deliver a certificate prior to any registration thereof, shall, with respect
to such Disqualified Organization, terminate. Notwithstanding any transfer, sale
or other disposition of a Class C Certificate, or any interest therein, to a
Disqualified Organization or the registration thereof in the Certificate
Register, such transfer, sale or other disposition and any registration thereof,
unless accompanied by the Opinion of Counsel described in the preceding
sentence, shall be deemed to be void and of no legal force or effect whatsoever
and such Disqualified Organization shall be deemed not to be a Class C
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on a Class C Certificate, and shall be deemed to have
no interest whatsoever in a Class C Certificate. Each Class C Certificateholder,
by his acceptance thereof, shall be deemed for all purposes to have consented to
the provisions of this Section 9.02(b)(3).
(4) Any transfer, sale or other disposition not in compliance
with the provisions of this Section 9.02(b) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed not to be
the Certificateholder or Class C Certificateholder, as applicable, for any
purpose hereunder, including, but not limited to, the receipt of distributions
on the Certificate or Class C Certificate, and shall be deemed to have no
interest whatsoever in the Certificate or Class C Certificate.
(5) The Trustee shall give notice to S&P and Fitch promptly
following any transfer, sale or other disposition of a Class C Certificate.
c. At the option of a Certificateholder or a Class C Certificateholder,
Certificates and the Class C Certificates may be exchanged for other
Certificates or Class C Certificates of authorized denominations of a like
aggregate original denomination, upon surrender of such Certificates or the
Class C Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates or the Class C Certificates are so surrendered for exchange, the
Trustee shall execute and deliver the Certificates or Class C Certificates which
the Certificateholder or Class C Certificateholder making the exchange is
entitled to receive. Every Certificate or Class C Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or shall be
accompanied by a written instrument
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<PAGE>
of transfer in form satisfactory to the Trustee and the Certificate Registrar
duly executed by, the holder thereof or his or her attorney duly authorized in
writing.
d. Except as provided in paragraph (e) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of the Certificates on the books of the Depository
shall be governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating firms as representatives of
the Certificate Owners of the Certificates for purposes of exercising the rights
of Holders under this Agreement, and requests and directions for and votes of
such representatives shall not be deemed to be inconsistent if they are made
with respect to different Certificate Owners; and (vi) the Trustee may rely and
shall be fully protected in relying upon information furnished by the Depository
with respect to its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons shown on
the books of such indirect participating firms as direct or indirect Certificate
Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
e. If (x)(i) the Company or the Depository advises the Trustee in
writing that the Depository is no longer willing or able properly to discharge
its responsibilities as Depository and (ii) the Trustee or the Company is unable
to locate a qualified successor or (y) the Company at its sole option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Company nor the Trustee shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository, two Class A-1 Certificates, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-4 Certificate, one Class M-1 Certificate, one Class M-2
Certificate, one Class B-1 Certificate and one Class B-2
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Certificate, each in registered form registered in the name of the Depository's
nominee, Cede & Co., the total face amount of which represents 100% of the
Original Class Principal Balance of each Class, respectively. Each such
Certificate registered in the name of the Depositary's nominee shall bear the
following legend:
"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
SECTION 9.03. No Charge; Disposition of Void Certificates or Class C
Certificates. No service charge shall be made to a Certificateholder or Class C
Certificateholder for any transfer or exchange of a Certificate or a Class C
Certificate, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of a Certificate or a Class C
Certificate. All Certificates and Class C Certificates surrendered for transfer
and exchange shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or
Class C Certificates. If (a) any mutilated Certificate or Class C 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 or Class C Certificate, and (b) there is delivered to the
Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate or Class C
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate or Class C Certificate, a new Certificate
or Class C Certificate of like tenor and original denomination. Upon the
issuance of any new Certificate or Class C Certificate under this Section 9.04,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate or Class C Certificate
issued pursuant to this Section 9.04 shall constitute complete and indefeasible
evidence of ownership of the Percentage Interest, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate or Class C
Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners. Prior to due presentation of a
Certificate or Class C Certificate for registration of transfer, the Servicer,
the Company, the Trustee, the Paying Agent and the Certificate Registrar may
treat the person in whose name any Certificate or Class C Certificate is
registered as the owner of such Certificate or Class C Certificate for the
purpose of receiving remittances pursuant to Section 8.01 and for all other
purposes whatsoever, and none of the Servicer, the Company, the Trustee, the
Certificate Registrar, the Paying Agent or any agent of
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the Servicer, the Company, the Trustee, the Paying Agent or the Certificate
Registrar shall be affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' and Class C
Certificateholders' Names and Addresses. The Certificate Registrar will furnish
to the Trustee and the Servicer, within five days after receipt by the
Certificate Registrar of a request therefor from the Trustee in writing, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Certificateholders and the Class C Certificateholders as of the most
recent Record Date. If Holders of Certificates representing, in the aggregate,
25% or more of the Aggregate Certificate Principal Balance apply in writing to
the Trustee (hereinafter referred to as "Applicants"), and such application
states that the Applicants desire to communicate with other Certificateholders
or the Class C Certificateholders with respect to their rights under this
Agreement or under the Certificates or the Class C Certificates and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders and the Class C Certificateholders
held by the Trustee. If such list is as of a date more than 90 days prior to the
date of receipt of such Applicants' request, the Trustee shall promptly request
from the Certificate Registrar a current list as provided above, and shall
afford such Applicants access to such list promptly upon receipt. Every
Certificateholder and the Class C Certificateholders, by receiving and holding a
Certificate or a Class C Certificate, agrees with the Certificate Registrar and
the Trustee that none of the Company, the Certificate Registrar or the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Certificateholders or the Class C
Certificateholders hereunder, regardless of the source from which such
information was derived.
SECTION 9.07. Authenticating Agents. The Trustee may appoint one or
more Authenticating Agents with power to act on its behalf and subject to its
direction in the execution and delivery of the Certificates or the Class C
Certificates. For all purposes of this Agreement, the execution and delivery of
Certificates or the Class C Certificates by the Authenticating Agent pursuant to
this Section shall be deemed to be the execution and delivery of Certificates or
the Class C Certificates "by the Trustee."
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ARTICLE X
INDEMNITIES
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SECTION 10.01. Real Estate. The Company will defend and indemnify the
Trust, the Trustee (including the Custodian and any other agents of the Trustee)
and the Certificateholders and the Class C Certificateholders against any and
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation arising out
of or resulting from the use or ownership of any real estate related to a Loan
by the Company or the Servicer or any Affiliate of either. Notwithstanding any
other provision of this Agreement, the obligation of the Company under this
Section shall not terminate upon a Service Transfer pursuant to Article VII,
except that the obligation of the Company under this Section shall not relate to
the actions of any subsequent Servicer after a Service Transfer.
SECTION 10.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Loans is intended to be assumed by the Trust, the
Certificateholders or the Class C Certificateholders under or as a result of
this Agreement and the transactions contemplated hereby and, to the maximum
extent permitted and valid under mandatory provisions of law, the Trust, the
Certificateholders and the Class C Certificateholders expressly disclaim such
assumption.
SECTION 10.03. Tax Indemnification. The Company agrees to pay, and to
indemnify, defend and hold harmless the Trust, the Trustee (including the
Custodian and any other agents of the Trustee), the Certificateholders and the
Class C Certificateholders from, any taxes which may at any time be asserted
with respect to, and as of the date of, the transfer of the Loans to the Trust,
including, without limitation, any sales, gross receipts, general corporation,
personal property, privilege or license taxes (but not including any federal,
state or other taxes arising out of the creation of the Trust and the issuance
of the Certificates and the Class C Certificates) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising by reason
of the acts to be performed by the Company, the Servicer or the Trustee under
this Agreement or imposed against the Trust, a Certificateholder, the Class C
Certificateholders or otherwise.
SECTION 10.04. Servicer's Indemnities. The Servicer shall defend and
indemnify the Trust, the Trustee (including the Custodian and any other agents
of the Trustee), the Certificateholders and the Class C Certificateholders
against any and all costs, expenses, losses, damages, claims and liabilities,
including any failure to comply with FHA Regulations in enforcing an FHA-Insured
Loan, 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 Loan. This indemnity shall survive any Service
Transfer (but the original Servicer's obligations under this Section 10.04 shall
not relate to any actions of any subsequent Servicer after a Service Transfer)
and any payment of the amount owing under, or any repurchase by the Company of,
any such Loan.
SECTION 10.05. Operation of Indemnities. Indemnification under this
Article shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Company or the Servicer has made any
indemnity payments to the Trustee pursuant to this Article
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and the Trustee thereafter collects any of such amounts from others, the Trust
will repay such amounts collected to the Company or the Servicer, as the case
may be, without interest.
SECTION 10.06. REMIC Tax Matters. If a Class C Certificateholder,
pursuant to Section 6.06, pays any taxes or charges imposed upon the Trust as a
REMIC or otherwise, such taxes or charges, except to the extent set forth in the
following proviso, shall be expenses and costs of the Trust and the Class C
Certificateholders shall be entitled to be reimbursed therefor out of the
Certificate Account as provided in Section 8.04; provided, however, that any
such taxes or charges shall not be expenses or costs of the Trust, nor will the
Class C Certificateholders be entitled to reimbursement therefor out of the
Certificate Account, if and to the extent that such taxes or charges resulted
from a failure (i) by the Company, the Trustee or any Servicer to comply with
the provisions of Section 2.05, (ii) by any Servicer to comply with the
provisions of Section 6.06, or (iii) by the Trustee to execute any tax returns
pursuant to Section 11.11.
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ARTICLE XI
THE TRUSTEE
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SECTION 11.01. Duties of Trustee. The Trustee, prior to the occurrence
of an Event of Termination and after the curing of all Events of Termination
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Termination has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
a. Prior to the occurrence of an Event of Termination, and
after the curing of all such Events of Termination which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
c. The Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith
in accordance with the direction of the Certificateholders
representing, in the aggregate, 25% or more of the Aggregate
Certificate Principal Balance relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement;
d. The Trustee shall not be charged with knowledge of any
event referred to in Section 7.01 unless a Responsible Officer of the
Trustee at the Corporate Trust Office
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obtains actual knowledge of such event or the Trustee receives written
notice of such event from the Servicer or the Certificateholders
representing, in the aggregate, 25% or more of the Aggregate
Certificate Principal Balance; and
e. The Trustee may rely and shall be protected in acting or
refraining from taking any action in reliance on the advice of the
Servicer in all matters with respect to FHA Insurance. The Trustee
shall not be liable for any actions taken by the Servicer with respect
to FHA Insurance, including but not limited to the maintenance of such
insurance and the submission of claims to FHA.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Company or the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement. The Trustee shall not be required
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there is reasonable ground for believing that the repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of a Servicing Officer, certificate of auditors or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties;
b. The Trustee may consult with counsel and any opinion of any
counsel for the Company or the Servicer shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by the Trustee hereunder in good faith and in accordance
with such Opinion of Counsel;
c. The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at
the request, order or direction of any of the Certificateholders,
pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Termination (which has not been cured), to
exercise such of the rights and powers vested in it by this Agreement,
and to use the same degree of care and skill
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in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
d. Prior to the occurrence of an Event of Termination and
after the curing of all Events of Termination which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do
by Certificateholders representing, in the aggregate, 25% or more of
the Aggregate Certificate Principal Balance; provided, however, that if
the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such cost, expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the
Servicer upon demand; and
e. The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian and shall not be liable for
any acts or omissions of such agents, attorneys or custodians if
appointed by it with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates, Class C
Certificates or Loans. The Trustee assumes no responsibility for the correctness
of the recitals contained herein, in the Certificates or in the Class C
Certificates (other than the Trustee's execution thereof). The Trustee makes no
representations as to the validity or sufficiency of this Agreement, of the
Certificates or of the Class C Certificates (other than its execution thereof)
or of any Loan, Loan File or related document. The Trustee shall not be
accountable for the use or application by the Servicer or the Company of funds
paid to the Company in consideration of conveyance of the Loans to the Trust by
the Company or deposited in or withdrawn from the Certificate Account by the
Servicer.
SECTION 11.04. Trustee May Own Certificates. The Trustee in its
individual or other capacity may become the owner or pledgee of Certificates
representing less than all the beneficial interest in the Trust with the same
rights as it would have if it were not Trustee.
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to
Waive Events of Termination. Holders of Certificates representing, in the
aggregate, 25% or more of the Aggregate Certificate Principal Balance shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee; provided, however, that, subject to Section 11.01, the Trustee
shall have the right to decline to follow any such direction if the Trustee
being advised by counsel determines that the action so directed may not lawfully
be taken, or if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of the Certificateholders not
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parties to such direction; and provided, further that nothing in this Agreement
shall impair the right of the Trustee to take any action deemed proper by the
Trustee and which is not inconsistent with such direction by the
Certificateholders. Holders of the Certificates representing, in the aggregate,
51% or more of the Aggregate Certificate Principal Balance may on behalf of all
Certificateholders waive any past Event of Termination hereunder and its
consequences, except a default in respect of a covenant or provision hereof
which under Section 12.08 cannot be modified or amended without the consent of
all Certificateholders, and upon any such waiver, such Event of Termination
shall cease to exist and shall be deemed to have been cured for every purpose of
this Agreement; but no such waiver shall extend to any subsequent or other Event
of Termination or impair any right consequent thereon.
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses. The
Servicer agrees:
a. to pay to the Trustee reasonable compensation for all
services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust);
b. except as otherwise expressly provided herein, to reimburse
the Trustee, to the extent requested by the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Agreement (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
c. to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust and its duties hereunder,
including the costs and expenses of defending itself against any claim
or liability in connection with the exercise or performance of any of
its powers or duties hereunder.
The covenants in this Section 11.06 shall be for the benefit of the
Trustee in its capacities as Trustee, Paying Agent and Certificate Registrar
hereunder, and shall survive the termination of this Agreement.
SECTION 11.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any State, authorized
under such laws to exercise corporate trust powers, and a Title I approved
lender pursuant to FHA Regulations, and shall have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding system
the aggregate combined capital and surplus of which is $50,000,000, provided
that the Trustee's separate capital and surplus shall at all times be at least
the amount required by Section 310(a)(2) of the Trust Indenture Act of 1939, as
amended. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of a supervising or examining authority,
then for the purposes of this Section 11.07, the combined capital and surplus of
such Person shall be deemed to be its combined capital and
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surplus as set forth in its most recent report of condition so published. In
addition, the Trustee (or, if the Trustee is U.S. Bank Trust National
Association, the parent company of U.S. Bank Trust National Association) shall
at all times have a long-term deposit rating from S&P of at least BBB or as
shall be otherwise acceptable to S&P and have a long-term deposit rating from
Fitch of at least BBB or as shall be otherwise acceptable to Fitch. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 11.07, the Trustee shall resign immediately in the
manner and with the effect specified in Section 11.08.
SECTION 11.08. Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer and the Company. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to each of the Servicer and the Company and one copy to the successor
Trustee. If no successor Trustee shall have been so appointed and shall have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.07 and shall fail to resign after written
request therefor by the Company, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Company may
remove the Trustee. If the Company shall have removed the Trustee under the
authority of the immediately preceding sentence, the Company shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.09.
SECTION 11.09. Successor Trustee. Any successor Trustee appointed as
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Company and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The predecessor Trustee shall deliver
or cause to be delivered to the successor Trustee the Loans and the Loan Files
and any related documents and statements held by it hereunder; and, if the Loans
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
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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
Loans 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 Loans.
No successor Trustee shall accept appointment as provided in this
Section 11.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 11.09, the Servicer shall cause notice of the succession of such
Trustee hereunder to be mailed to S&P, to Fitch and to each Certificateholder
and the Class C Certificateholders at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within ten days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Servicer.
SECTION 11.10. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.07, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee shall promptly notify S&P and Fitch in the event it
is a party to any merger, conversion or consolidation.
SECTION 11.11. Tax Returns. Upon the Servicer's request, the Trustee
will furnish the Servicer with all such information as the Servicer may
reasonably require in connection with preparing all tax returns of the Trust and
the Trustee shall execute such returns.
SECTION 11.12. Obligor Claims. In connection with any offset defenses,
or affirmative claims for recovery, asserted in legal actions brought by
Obligors under one or more Loans based upon provisions therein complying with,
or upon other rights or remedies arising from, any legal requirements applicable
to the Loans, including, without limitation, the Federal Trade Commission's
Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses
(16 C.F.R. (SS) 433) as amended from time to time:
a. The Trustee is not, and shall not be deemed to be, either
in any individual capacity, as trustee hereunder or otherwise, a
creditor, or a joint venturer with or an Affiliate of, or acting in
concert or cooperation with, any seller of home improvements in the
arrangement, origination or making of Loans. The Trustee is the holder
of the Loans only as trustee on behalf of the Certificateholders and
the Class C Certificateholders, and not as a principal or in any
individual or personal capacity;
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b. The Trustee shall not be personally liable for or obligated
to pay Obligors any affirmative claims asserted thereby, or responsible
to Certificateholders or the Class C Certificateholders for any offset
defense amounts applied against Loan payments, pursuant to such legal
actions;
c. The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final
judicial orders or judgments, or judicially approved settlement
agreements, resulting from such legal actions;
d. The Trustee will comply with judicial orders and judgments
which require its actions or cooperation in connection with Obligors'
legal actions to recover affirmative claims against Certificateholders
and the Class C Certificateholders;
e. The Trustee will cooperate with and assist
Certificateholders and the Class C Certificateholders in their defense
of legal actions by Obligors to recover affirmative claims if such
cooperation and assistance is not contrary to the interests of the
Trustee as a party to such legal actions and if the Trustee is
satisfactorily indemnified for all liability, costs and expenses
arising therefrom; and
f. The Company hereby agrees to indemnify, hold harmless and
defend the Trustee, Certificateholders and the Class C
Certificateholders from and against any and all liability, loss, costs
and expenses of the Trustee, Certificateholders and the Class C
Certificateholders resulting from any affirmative claims for recovery
asserted or collected by Obligors under the Loans. Notwithstanding any
other provision of this Agreement, the obligation of the Company under
this Section 11.12(f) shall not terminate upon a Service Transfer
pursuant to Article VII.
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Loans or the Obligors, the Company and the Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, 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,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Company and the Trustee may consider necessary or desirable. If
the Company shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, or in case an Event of Termination shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee under Section 11.07
hereunder and no notice to Certificateholders or the Class C Certificateholders
of the appointment of co-trustee(s) or separate trustee(s) shall be required
under Section 11.09.
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In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 11.13 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 co-trustee or separate trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), 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 by
such co-trustee or separate trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then co-trustees and separate trustees,
as effectively as if given to each of them. Every instrument appointing any
co-trustee or separate trustee shall refer to this Agreement and the conditions
of this Article XI. Each co-trustee and separate 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 Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any co-trustee or separate 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 co-trustee or separate 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.
SECTION 11.14. Trustee and U.S. Bancorp. In the event the Trustee
ceases to be a direct, wholly owned subsidiary of U.S. Bancorp, the Trustee
shall promptly notify S&P and Fitch.
SECTION 11.15. Trustee Advances.
a. If the Servicer fails to deposit into the Certificate Account
Advances as required by Section 8.02, then the Trustee shall, subject to the
provisions of paragraph (b) below, from its own funds, deposit into the
Certificate Account the amount not so deposited by the Servicer on or before the
Business Day preceding the related Payment Date (a "Trustee Advance").
b. The Trustee shall not be required to make any Trustee Advance if and
to the extent that it determines in good faith that the funds, if advanced,
would not be recoverable by it from subsequent amounts available in the
Certificate Account in accordance with Section 8.04(b).
c. The Trustee shall be entitled to reimbursement of a Trustee Advance
from funds subsequently available therefor in the Certificate Account in
accordance with Section 8.04(b).
11-8
<PAGE>
SECTION 11.16. 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 Loans
required by FHA Regulations, the Trustee shall pay such FHA Insurance premiums
and shall be entitled to reimbursement for such amounts pursuant to Section
8.04(b)(16).
b. If, following the termination of the Trust pursuant to Section
12.04, HUD demands reimbursement from the Trustee of an FHA Insurance claim paid
on an FHA-Insured Loan prior to the termination of the Trust, the Trustee agrees
that it will not seek to recover any such amount from any Person other than the
Servicer that submitted such claim.
11-9
<PAGE>
ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties.
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. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel for the
Servicer to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
7.03.
Notwithstanding the foregoing, the Company, if it is the Servicer, may
delegate some or all of its servicing duties to a wholly owned subsidiary of the
Company, for so long as said subsidiary remains, directly or indirectly, a
wholly owned subsidiary of the Company. Notwithstanding any such delegation, the
Company shall retain all of the rights and obligations of the Servicer
hereunder.
SECTION 12.02. Company Not to Engage in Certain Transactions with
Respect to the Trust. The Company shall not:
a. Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
b. Purchase any Certificates in an agency or trustee capacity;
or
c. Loan any money to the Trust (other than Advances pursuant
to Section 8.02).
SECTION 12.03. Maintenance of Office or Agency. The Trustee will
maintain in Minneapolis or St. Paul, Minnesota, an office or agency where
Certificates or the Class C Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates, the Class C Certificates and this Agreement may be
served. On the date hereof the Trustee's office for such purposes is located at
180 East 5th Street, Second Floor, St. Paul, Minnesota 55101. The Trustee will
give prompt written notice to the Company, the Servicer, the Certificateholders
and the Class C Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 12.04. Termination.
a. The Trust created hereby and the respective obligations and
responsibilities of the Company, the Servicer and the Trustee created hereby
(other than the responsibility of the Trustee to make any final distributions to
Certificateholders and the Class C Certificateholders as set forth below) shall
terminate on the earlier of (a) the Payment Date on which the principal balance
of all of the Loans is reduced to zero; or (b) the Payment Date occurring in the
month following the Servicer's purchase of the Loans pursuant to Section 8.06;
provided, that in no event shall the trust
12-1
<PAGE>
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late Ambassador of
the United States to the Court of St. James, living on the date hereof, and
provided, further, that the Servicer's and the Company's representations and
warranties and indemnities by the Company and the Servicer shall survive
termination. Any termination of the Trust must be conducted so as to qualify as
a "qualified liquidation" of the Trust (excluding the Pre-Funding Account and
Capitalized Interest Account) as a REMIC within the meaning of the REMIC
Provisions.
b. Notice of any termination, specifying the Final Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which all
Certificateholders or the Class C Certificateholders may surrender their
Certificates or the Class C Certificates to the Servicer for payment of the
final distribution and cancellation, shall be given promptly by the Trustee
(upon direction by the Servicer ten days prior to the date such notice is to be
mailed) by letter to S&P, Fitch, the Certificateholders and the Class C
Certificateholders mailed no later than the fifth Business Day of the month of
the Final Payment Date specifying (1) the Final Payment Date upon which final
payment on the Certificates and the Class C Certificates will be made upon
presentation and surrender of Certificates and the Class C Certificates at the
office or agency of the Servicer therein designated; (2) the amount of any such
final payment; and (3) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates and the Class C Certificates at the office or agency of the
Servicer therein specified. Any notice of purchase of Loans by the Servicer
pursuant to Section 8.06 shall constitute the adoption by the Trustee on behalf
of the Certificateholders and the Class C Certificateholders of a plan of
complete liquidation within the meaning of Section 860F of the Code on the date
such notice is given when signed by the Trustee. Each such notice shall, to the
extent required by the REMIC Provisions or other applicable law, be signed on
behalf of the Trust by the Trustee. The Trustee shall give such notice to the
Certificate Registrar at the time such notice is given to the Certificateholders
and the Class C Certificateholders. In the event such notice is given in
connection with the Servicer's election to purchase the Loans, the Servicer
shall deposit in the Certificate Account on the Final Payment Date in
immediately available funds an amount equal to the purchase price specified in
Section 8.06 and upon such deposit the Certificateholders and the Class C
Certificateholders will be entitled to the amount of such purchase price but not
amounts in excess thereof, all as provided herein. Upon certification to the
Trustee by a Servicing Officer following such final deposit, the Trustee shall
promptly release to the Servicer the Loan Files for the remaining Loans, and the
Trustee shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer.
c. Upon presentation and surrender of the Certificates and the Class C
Certificates, the Trustee shall cause to be distributed from the Certificate
Account, in the following order of priority, to the Certificateholders and the
Class C Certificateholders on the Final Payment Date in proportion to their
respective Percentage Interests: (1) to the extent the Amount Available is
sufficient therefor, and in the order of priority provided for in Section
8.04(b), an amount equal to (i) as to Class A Certificates, the Class A-1
Principal Balance, the Class A-2 Principal Balance, the Class A-3 Principal
Balance, the Class A-4 Principal Balance, and, together with any Unpaid Class A
Interest Shortfall and one month's interest at the Class A-1 Pass-Through Rate,
the Class A-2 Pass-Through
12-2
<PAGE>
Rate, the Class A-3 Pass-Through Rate, and the Class A-4 Pass-Through Rate, the
Class A-l Principal Balance, the Class A-2 Principal Balance, the Class A-3
Principal Balance, and the Class A-4 Principal Balance, respectively, (ii) as to
Class M-1 Certificates, the Class M-1 Principal Balance, together with any
Unpaid Class M-1 Interest Shortfall, any Unpaid Class M-1 Liquidation Loss
Interest Shortfall and one month's interest at the Class M-1 Pass-Through Rate
on the Class M-1 Principal Balance, (iii) as to Class M-2 Certificates, the
Class M-2 Principal Balance, together with any Unpaid Class M-2 Interest
Shortfall, any Unpaid Class M-2 Liquidation Loss Interest Shortfall and one
month's interest at the Class M-2 Pass-Through Rate on the Class M-2 Principal
Balance, (iv) as to Class B-1 Certificates, the Class B-1 Principal Balance,
together with any Unpaid Class B-1 Interest Shortfall, any Unpaid Class B-1
Liquidation Loss Interest Shortfall and one month's interest at the Class B-1
Pass-Through Rate on the Class B-1 Principal Balance, and (v) as to Class B-2
Certificates, the Class B-2 Principal Balance, together with any Unpaid Class
B-2 Interest Shortfall and one month's interest at the Class B-2 Pass-Through
Rate on the Class B-2 Principal Balance; and (2) as to the Class C Certificates,
the amount which remains on deposit in the Certificate Account (other than
amounts retained to meet claims) after application pursuant to clause (1) above;
provided, that, any Class B-2 Guaranty Payment deposited in the Certificate
Account shall be distributed only to the Class B-2 Certificateholders. The
distribution on the Final Payment Date pursuant to this Section 12.04 shall be
in lieu of the distribution otherwise required to be made on such Payment Date
in respect of each Class of Certificates and the Class C Certificates.
d. In the event that all of the Certificateholders and the Class C
Certificateholders do not surrender their Certificates and the Class C
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Company shall give a second written
notice to the remaining Certificateholders and the Class C Certificateholders to
surrender their Certificates and the Class C Certificates for cancellation and
receive the final distribution with respect thereto. If within three months
after the second notice all the Certificates and the Class C Certificates shall
not have been surrendered for cancellation, the Company shall transfer to itself
all amounts remaining on deposit in the Certificate Account, to hold in trust
for Certificateholders and the Class C Certificateholders who have not
surrendered their Certificates or the Class C Certificates, as the case may be,
for cancellation, together with the final record list of Certificateholders and
the Class C Certificateholders, and the Company shall take appropriate steps, or
may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and to contact the
Class C Certificateholders concerning their surrender of their Class C
Certificates, and the cost thereof shall be paid out of the funds and other
assets which remain in trust hereunder.
SECTION 12.05. Acts of Certificateholders and Class C
Certificateholders.
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates representing, in the aggregate, 51% or more of the
Aggregate Certificate Principal Balance.
12-3
<PAGE>
b. Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders or the Class C Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders or the Class C Certificateholders in person or by an
agent duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Company if made in the
manner provided in this Section.
c. The fact and date of the execution by any Certificateholder or the
Class C Certificateholders of any such instrument or writing may be proved in
any reasonable manner which the Trustee deems sufficient.
d. The ownership of Certificates and the Class C Certificates shall be
proved by the Certificate Register.
e. Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder or the Class C Certificateholders
shall bind every holder of every Certificate or the Class C Certificates, as
applicable, issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done
by the Trustee, the Servicer or the Company in reliance thereon, whether or not
notation of such action is made upon such Certificates or Class C Certificates.
f. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
SECTION 12.06. Calculations. Except as otherwise provided in this
Agreement, all interest rate and basis point calculations under this Agreement
will be made on the basis of a 360-day year and twelve 30-day months and will be
carried out to at least three decimal places.
SECTION 12.07. Assignment or Delegation by Company. Except as
specifically authorized hereunder, and except for its obligations as Servicer
which are dealt with under Article V and Article VII, the Company may not convey
and assign or delegate any of its rights or obligations hereunder absent the
prior written consent of Holders of Certificates representing, in the aggregate,
66-2/3% or more of the Aggregate Certificate Principal Balance, and any attempt
to do so without such consent shall be void. Notwithstanding the foregoing, the
Company may not delegate its obligations under Section 8.03 absent (a) the prior
written consent of Holders of Certificates representing, in the aggregate,
66-2/3% or more of the Aggregate Certificate Principal Balance, and the prior
written confirmation of S&P and Fitch that the rating of the Certificates will
not be lowered or withdrawn following such delegation, or (b) the prior written
consent of all of the Certificateholders, and any attempt to do so without such
consent shall be void. It is understood that the foregoing does not prohibit the
pledge or assignment by the Company of any right to payment pursuant to Article
VIII.
12-4
<PAGE>
SECTION 12.08. Amendment.
a. This Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders
or the Class C Certificateholders, to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein, as the case may be, to make such
changes as are necessary to maintain the status of the Trust as a "real estate
mortgage investment conduit" under the REMIC Provisions of the Code or to
otherwise effectuate the benefits of such status to the Trust, the
Certificateholders or the Class C Certificateholders, including, without
limitation, to implement any provision permitted by law that would enable a
REMIC to avoid the imposition of any tax, or to make any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel for the Servicer,
adversely affect in any material respect the interests of any Certificateholder.
b. This Agreement may also be amended by agreement of the Trustee, the
Servicer and the Company at any time without the consent of the
Certificateholders or the Class C Certificateholders to effect the transfer of
FHA Insurance reserves to another entity in compliance with revisions to FHA
Regulations, provided that prior to any such amendment the Rating Agencies have
each confirmed in writing that the rating of the Certificates will not be
lowered or withdrawn following such amendment.
c. This Agreement may also be amended from time to time by the
Servicer, the Company and the Trustee, with the consent of Holders of
Certificates representing, in the aggregate, 66-2/3% or more of the Aggregate
Certificate Principal Balance, 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 such Certificateholders; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of payments on the Loans or distributions which
are required to be made on any Certificate, (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the holders of
all Certificates then outstanding, (c) result in the disqualification of the
Trust as a REMIC under the Code, (d) adversely affect the status of the
Certificates as "regular interests" in the REMIC, or (e) cause any tax (other
than any tax imposed on "net income from foreclosure property" under Section
860G(c)(1) of the Code that would be imposed without regard to such amendment)
to be imposed on the Trust, including, without limitation, any tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
This Agreement may not be amended without the consent of the Class C
Certificateholders, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement which would
modify in any manner the rights of the Class C Certificateholders.
d. This Agreement shall not be amended under this Section without the
consent of 100% of the Certificateholders and the Class C Certificateholders if
such amendment would result in the disqualification of the Trust as a REMIC
under the Code.
12-5
<PAGE>
e. Concurrently with the solicitation of any consent pursuant to this
Section 12.08, the Trustee shall furnish written notification to S&P and Fitch.
Promptly after the execution of any amendment or consent pursuant to this
Section 12.08, the Trustee shall furnish written notification of the substance
of such amendment to S&P, Fitch, each Certificateholder and the Class C
Certificateholders.
f. It shall not be necessary for the consent of Certificateholders and
the Class C Certificateholders under this Section 12.08 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders and the Class C Certificateholders shall be subject to such
reasonable requirements as the Trustee may prescribe.
g. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
h. In connection with any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel to the Servicer to
the effect that such amendment is authorized or permitted by this Agreement.
i. Upon the execution of any amendment or consent pursuant to this
Section 12.08, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Certificateholder and the Class C Certificateholders hereunder shall
be bound thereby.
j. In the absence of the consent described in subsection (d) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment (i) will
not adversely affect the status of the Trust (excluding the Capitalized Interest
Account and Pre-Funding Account) as a REMIC or the status of the Certificates as
"regular interests" therein, and (ii) will not cause any tax (other than any tax
imposed on "net income from foreclosure property" under Section 860G(c)(1) of
the Code that would be imposed without regard to such amendment) to be imposed
on the Trust (excluding the Capitalized Interest Account and Pre-Funding
Account), including, without limitation, any tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code.
SECTION 12.09. Notices. All communications and notices pursuant
hereto to the Servicer, the Company, the Trustee, S&P and Fitch shall be in
writing and delivered or mailed to it at the appropriate following address:
12-6
<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: (651) 293-5746
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East Fifth Street
Second Floor
St. Paul, Minnesota 55101
Attention: Tamara Schultz-Fugh
Telecopier Number: (651) 244-0089
If to S&P:
Standard & Poor's Ratings Services
55 Water Street
New York, New York 10041
Attention: Ernestine Warner, Mortgage Surveillance
If to Fitch:
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Attention: Jenine Potolsky
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
or the Class C Certificateholders shall be in writing and delivered or mailed at
the address shown in the Certificate Register.
SECTION 12.10. 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.
12-7
<PAGE>
SECTION 12.11. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 12.12. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Minnesota.
12-8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
this 15th day of September, 1999.
GREEN TREE FINANCIAL CORPORATION
By:___________________________________________________
Phyllis A. Knight
Senior Vice President and Treasurer
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By:____________________________________________
Laurie A. Howard
Vice President
12-9
<PAGE>
EXHIBIT A
---------
FORM OF CLASS A CERTIFICATE
---------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
Class A-[1][2][3][4] No.
(Senior)
Cut-off Date: as defined in the Pass-Through Rate:________%
Pooling and Servicing Agreement
dated September 1, 1999 Original Principal Amount: $__________
First Payment Date: Aggregate Original Principal Amount of
October 15, 1999 all Class A-[1][2][3][4]
Certificates: $_______________
Servicer: Final Scheduled Payment Date:
Green Tree Financial Corporation August 15, 2030 (or if such day is not a
Business Day, then the next succeeding
Business Day)
CUSIP:_________
CERTIFICATE FOR HOME IMPROVEMENT LOANS
SERIES 1999-E, CLASS A-[1][2][3][4] (SENIOR)
--------------------------------------------
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that is the registered owner of the undivided Percentage
Interest represented by the original principal amount set forth above in the
Certificates for Home Improvement Loans, Series 1999-E, Class A-[1][2][3][4]
issued by Home Improvement Loan Trust 1999-E (the "Trust"), which includes among
its asset a pool of closed-end home improvement contracts and promissory notes
(the "Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date or Subsequent Cut-off Date.
The Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of September 1, 1999,
A-1
<PAGE>
between Green Tree Financial Corporation, as Seller and Servicer (the
"Company"), and U.S. Bank Trust National Association, as Trustee of the Trust
(the "Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in October
1999, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class A-[1][2][3][4] Certificates with an aggregate
Percentage Interest of at least 5% of the Class A-[1][2][3][4] Certificates and
so desires, by wire transfer pursuant to instructions delivered to the Trustee
at least 10 days prior to such Payment Date) to the registered Certificateholder
at the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class A-[1][2][3][4] Distribution
Amount for such Payment Date. Distributions of interest and principal on the
Class A-[1][2][3][4] Certificates will be made primarily from amounts available
in respect of the Loans. The final scheduled Payment Date of this Certificate is
August 15, 2030 or the next succeeding Business Day if such August 15 is not a
Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer,
A-2
<PAGE>
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 in as much as
the registered owner hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
A-3
<PAGE>
IN WITNESS WHEREOF, Home Improvement Loan Trust 1999-E has caused this
Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee.
Dated: HOME IMPROVEMENT LOAN TRUST 1999-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By:__________________________________
Authorized Officer
A-4
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto the within Certificate for Home Improvement Loans, Series 1999-E, and does
hereby irrevocably constitute and appoint _______________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated:___________ By:__________________________________
Signature
A-5
<PAGE>
EXHIBIT B
---------
FORM OF CLASS M CERTIFICATE
---------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS
A CERTIFICATES [AND CLASS M-1 CERTIFICATES] AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class M-[1][2] No.
(Subordinate)
Cut-off Date: as defined in the Pass-Through Rate:_______%
Pooling and Servicing Agreement (or, if less, the Weighted Average
dated September 1, 1999 Loan Rate)
First Payment Date:
October 15, 1999 Original Principal Amount: $___________
Servicer: Aggregate Original Principal Amount
Green Tree Financial Corporation of all Class M-[1][2] Certificates:
$________________
Final Scheduled Payment Date:
August 15, 2030 (or if such day is not a
Business Day, then the next succeeding
Business Day)
CUSIP:_________
CERTIFICATE FOR HOME IMPROVEMENT LOANS
SERIES 1999-E, CLASS M-[1][2] (SUBORDINATE)
-------------------------------------------
BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE OR
ANY INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT
PLAN, WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION
4975(e)(1) OF THE CODE (EACH, A "PLAN")
B-1
<PAGE>
ACKNOWLEDGES THAT EITHER THE CERTIFICATEHOLDER HAS DELIVERED TO THE COMPANY AND
THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF COUNSEL (SATISFACTORY TO THE
COMPANY AND THE TRUSTEE) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY
SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN
ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE
CODE AND WILL NOT SUBJECT THE TRUSTEE, THE COMPANY OR THE SERVICER TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF
NO SUCH OPINION IS DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE COMPANY
AND THE SERVICER EITHER (I) THAT THE PERSON ACQUIRING THE CERTIFICATE IS NEITHER
A PLAN, NOR ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF
THE CODE, OR (II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN
WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND
SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL
NOT SUBJECT THE TRUSTEE, THE COMPANY OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that is the registered owner of the undivided Percentage
Interest represented by the original principal amount set forth above in the
Certificates for Home Improvement Loans, Series 1999-E, Class M-[1][2] issued by
Home Improvement Loan Trust 1999-E (the "Trust"), which includes among its
assets a pool of home improvement contracts and promissory notes (the "Loans")
(including, without limitation, all mortgages, deeds of trust and security deeds
relating to such Loans and any and all rights to receive payments due on the
Loans after the applicable Cut-off Date or Subsequent Cut-off Date. The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of September 1, 1999, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and U.S. Bank Trust
National Association, as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in October
1999, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class M-[1][2] Certificates with an aggregate Percentage
Interest of at least 5% of the Class M-[1][2] Certificates and so desires, by
wire transfer pursuant to instructions delivered to the Trustee at least 10 days
prior to such Payment Date) to the registered Certificateholder at the address
appearing on the Certificate Register as of the Business Day
B-2
<PAGE>
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class M-[1][2] Distribution
Amount for such Payment Date. Distributions of interest and principal on the
Class M-[1][2] Certificates will be made primarily from amounts available in
respect of the Loans. The final scheduled Payment Date of this Certificate is
August 15, 2030 or the next succeeding Business Day if such August 15 is not a
Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the
Agreement, for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or that is described in
Section 4975(e)(1) of the Code or to any person or entity purchasing on behalf
of, or with assets of, such an employee benefit plan (each, a "Plan") will be
registered unless the transferee, at its expense, delivers to the Company and
the Trustee at its own expense an opinion of counsel (satisfactory to the
Company and the Trustee) that the purchase and holding of this Certificate by
such Plan will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee, the Company or the Servicer to any
obligation or liability in addition to those undertaken in the Agreement. Unless
such opinion is delivered, each person acquiring this Certificate will be deemed
to represent to the Trustee, the Company and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Company or the Servicer to
any obligation or liability in addition to those undertaken in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
B-3
<PAGE>
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
B-4
<PAGE>
IN WITNESS WHEREOF, Home Improvement Loan Trust 1999-E has caused this
Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee.
Dated:___________________ HOME IMPROVEMENT LOAN TRUST 1999-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By:________________________________
Authorized Officer
B-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________ the within Certificate for Home Improvement Loans,
Series 1999-E, and does hereby irrevocably constitute and appoint
______________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated:____________________ By:____________________________
Signature
B-6
<PAGE>
EXHIBIT C
---------
FORM OF CLASS B-[1][2] CERTIFICATE
----------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES [,] AND THE CLASS M CERTIFICATES [AND] THE CLASS B-1 CERTIFICATES]
AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class B-[1][2] No.
(Subordinate)
Cut-off Date: as defined in the Pass-Through Rate:___________%
Pooling and Servicing Agreement [(or, if less, the Weighted Average
dated September 1, 1999 Loan Rate)]
First Payment Date: Original Principal Amount: $__________
October 15, 1999
Servicer: Aggregate Original Principal Amount of
Green Tree Financial Corporation all Class B-[1][2] Certificates:
$_______________
Final Scheduled Payment Date:
August 15, 2030 (or if such day is not a
Business Day, then the next succeeding
Business Day)
CUSIP:___________
CERTIFICATES FOR HOME IMPROVEMENT LOANS
SERIES 1999-E, CLASS B-[1][2] (SUBORDINATE)
-------------------------------------------
BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE OR
ANY INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT
PLAN WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"),
C-1
<PAGE>
OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH, A "PLAN")
ACKNOWLEDGES THAT EITHER THE CERTIFICATEHOLDER HAS DELIVERED TO THE COMPANY AND
THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF COUNSEL (SATISFACTORY TO THE
COMPANY AND THE TRUSTEE) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY
SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN
ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE
CODE AND WILL NOT SUBJECT THE TRUSTEE, THE COMPANY OR THE SERVICER TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF
NO SUCH OPINION IS DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE COMPANY
AND THE SERVICER EITHER (I) THAT THE PERSON ACQUIRING THE CERTIFICATE IS NEITHER
A PLAN, NOR ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF
THE CODE, OR (II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN
WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND
SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL
NOT SUBJECT THE TRUSTEE, THE COMPANY OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN
INTEREST IN GREEN TREE FINANCIAL CORPORATION OR ANY AFFILIATE THEREOF,
EXCEPT TO THE EXTENT SET FORTH IN THE AGREEMENT.
This certifies that ___________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement Loans, Series 1999-E, Class
B-[1][2], issued by Home Improvement Loan Trust 1999- E (the "Trust"), which
includes among its assets a pool of home improvement contracts and promissory
notes (the "Loans") (including, without limitation, all mortgages, deeds of
trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date or the
Subsequent Cut-off Date [and payments due under the Class B-2 Limited Guaranty].
The Trust has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of September 1, 1999, between Green Tree Financial
Corporation, as Seller and Servicer (the "Company"), and U.S. Bank Trust
National Association as Trustee of the Trust (the "Trustee"). This Certificate
is one of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in October
1999, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B-[1][2] Certificates with an aggregate Percentage
Interest of at least 5% of the Class B-[1][2] Certificates and so desires, by
wire transfer pursuant to instructions delivered to the Trustee at least 10 days
prior to such Payment Date) to the registered
C-2
<PAGE>
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class B-[1][2] Distribution
Amount [and any Class B-2 Guaranty Payment] for such Payment Date. Distributions
of interest and principal on the Class B-[1][2] Certificates will be made
primarily from amounts available in respect of the Loans. The final scheduled
Payment Date of this Certificate is August 15, 2030 or the next succeeding
Business Day if such August 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account [and the Class
B-2 Limited Guaranty of the Company], to the extent available for distribution
to the Certificateholder as provided in the Agreement, for payment hereunder and
that the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or that is described in
Section 4975(e)(1) of the Code or to any person or entity purchasing on behalf
of, or with assets of, such an employee benefit plan (each, a "Plan") will be
registered unless the transferee, at its expense, delivers to the Company and
the Trustee at its own expense an opinion of counsel (satisfactory to the
Company and the Trustee) that the purchase and holding of this Certificate by
such Plan will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee, the Company or the Servicer to any
obligation or liability in addition to those undertaken in the Agreement. Unless
such opinion is delivered, each person acquiring this Certificate will be deemed
to represent to the Trustee, the Company and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Company or the Servicer to
any obligation or liability in addition to those undertaken in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form
C-3
<PAGE>
satisfactory to the Trustee and the Certificate Registrar duly executed by the
holder thereof or his or her attorney duly authorized in writing, and thereupon
one or more new Certificates evidencing the same aggregate Percentage Interest
will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Company, the Servicer, the Trustee, the Paying Agent, the Certificate
Registrar nor any such agent shall be affected by any notice to the contrary.
C-4
<PAGE>
IN WITNESS WHEREOF, Home Improvement Loan Trust 1999-E has caused this
Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee.
Dated:_____________ HOME IMPROVEMENT LOAN TRUST 1999-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By:__________________________________
Authorized Officer
C-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________ the within Certificate for Home Improvement Loans,
Series 1999-E, and does hereby irrevocably constitute and appoint
____________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated:________________ By:_____________________________
Signature
C-6
<PAGE>
EXHIBIT D
---------
FORM OF ASSIGNMENT
------------------
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of September 1, 1999, between the undersigned and U.S.
Bank Trust National Association as Trustee (the "Trustee"), the undersigned does
hereby transfer, convey and assign, set over and otherwise convey, without
recourse, to Home Improvement Loan Trust 1999-E, created by the Agreement, to be
held in trust as provided in the Agreement, (i) all right, title and interest in
the home improvement contracts and promissory notes identified in the List of
Loans attached to the Agreement and each Subsequent Transfer Instrument
(including, without limitation, all related mortgages, deeds of trust and
security deeds and any and all rights to receive payments on or with respect to
the Loans due after the applicable Cut-off Date, or Subsequent Cut-off Date with
respect to Subsequent Loans, (ii) all rights under FHA Insurance in respect of
each FHA-Insured Loan, (iii) all rights under any hazard, flood or other
individual insurance policy on the real estate securing a Loan for the benefit
of the creditor of such Loan, (ix) all rights the Company may have against the
originating contractor with respect to Loans not originated by the Company, (v)
all rights under the Errors and Omissions Protection Policy and the Fidelity
Bond as such policy and bond relate to the Initial Loans, (vi) all rights under
any title insurance policies, if applicable, on any of the properties securing
Loans, (vii) all documents contained in the related Loan Files, (viii) amounts
in the Certificate Account, any Capitalized Interest Account and any Pre-Funding
Account (including all proceeds of investments) and (ix) all proceeds and
products of the foregoing.
This Assignment is made pursuant to and upon the representations and
warranties on the part of the undersigned contained in 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 , 1999.
GREEN TREE FINANCIAL CORPORATION
By:__________________________________
[Name]
[Title]
D-1
<PAGE>
EXHIBIT E
---------
FORM OF CERTIFICATE OF OFFICER
------------------------------
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company in
connection with the Pooling and Servicing Agreement dated as of September 1,
1999 (the "Agreement") between the Company and U.S. Bank Trust National
Association as Trustee (all capitalized terms used herein without definition
having the respective meanings specified in the Agreement), and further
certifies that:
(i) attached hereto as Exhibit I is a true and correct copy of
the Restated Certificate of Incorporation of the Company, together with
all amendments thereto as in effect on the date hereof;
(ii) attached hereto as Exhibit II is a true and correct copy
of the Bylaws of the Company, as amended, as in effect on the date
hereof;
(iii) the representations and warranties of the Company
contained in Sections 3.01 and 3.04 of the Agreement are true and
correct on and as of the date hereof and, to the best of his knowledge,
the representations and warranties of the Company contained in Sections
3.02 and 3.03 of the Agreement are true and correct on and as of the
date hereof;
(iv) no event with respect to the Company has occurred and is
continuing which would constitute an Event of Termination or an event
that with notice or lapse of time or both would become an Event of
Termination under the Agreement; and
(v) each of the agreements and conditions of the Company to be
performed on or before the date hereof pursuant to the Agreement have
been performed in all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of __________, 1999.
________________________
[Name]
[Title]
E-1
<PAGE>
EXHIBIT F
---------
FORM OF OPINION OF COUNSEL FOR THE COMPANY
------------------------------------------
The opinion of Briggs and Morgan, P.A. shall be to the effect that
(capitalized terms have the meanings set forth in the Pooling and Servicing
Agreement):
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with corporate power
to execute, deliver and perform its obligations under the Pooling and Servicing
Agreement (including the Class B-2 Limited Guaranty contained therein), the
Certificates and the Class C Certificates.
2. The Pooling and Servicing Agreement (including the Class B-2 Limited
Guaranty contained therein) has been duly authorized by all requisite corporate
action, duly executed and delivered by the Company, and constitutes the valid
and binding obligation of the Company enforceable in accordance with its terms.
The Certificates have been duly authorized by all requisite corporate action
and, when duly and validly executed by the Trustee in accordance with the
Pooling and Servicing Agreement, will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by the Company
for the consummation of the transactions contemplated by the Pooling and
Servicing Agreement, except such as may be required under blue sky laws under
any jurisdiction in connection with the offering of the Certificates by the
Underwriters pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and the Trust is not
required to be registered as an investment company under the Investment Company
Act of 1940.
5. Neither the transfer of the Loans to the Trustee acting on behalf of
the Trust, nor the assignment of the Company's lien on the related real estate
which is the subject of a home improvement loan, nor the issuance or sale of the
Certificates and the Class C Certificates, nor the execution and delivery of the
Pooling and Servicing Agreement, nor the consummation of any other of the
transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates, the Class C Certificates or the
Pooling and Servicing Agreement by the Company will conflict with, or result in
a breach, violation or acceleration of, or constitute a default under, any term
or provision of the Restated Certificate of Incorporation or Bylaws of the
Company or of any indenture or other agreement or instrument known to us to
which the Company is a party or by which it is bound, or result in a violation
of, or contravene the terms of any statute, order or regulation, applicable to
the Company, of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it.
F-1
<PAGE>
6. There are no actions or proceedings pending, nor to the best of our
knowledge, are there any investigations pending or overtly threatened against
the Company before any court, administrative agency or other tribunal (A)
asserting the invalidity of the Pooling and Servicing Agreement, the
Certificates, the Class C Certificates, the hazard or flood insurance policies
applicable to any Loans or the Errors and Omissions Protection Policy, (B)
seeking to prevent the issuance of the Certificates or the Class C Certificates
or the consummation of any of the transactions contemplated by the Pooling and
Servicing Agreement, (C) which is likely materially and adversely to affect the
performance by the Company of its obligations under, or the validity or
enforceability of the Pooling and Servicing Agreement, the Certificates or the
Class C Certificates, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates or the Class C Certificates described in the
Prospectus and the Prospectus Supplement under the heading "Federal Income Tax
Consequences."
7. The transfer of the Loans to the Trust in accordance with Section
2.01 of the Pooling and Servicing Agreement would not be avoidable as a
preferential transfer under Section 547 of the United States Bankruptcy Code (11
U.S.C. ss. 547), as in effect on the date hereof, in the event that the Company
became a debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Company has
transferred to the Trustee acting on behalf of the Trust all of the Company's
right, title and interest in the Loans, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Loans, and has delivered the Loan Files to the Trustee or its custodian.
No filing or other action, other than the filing of a financing statement on
Form UCC-1 with the Secretary of State of the State of Minnesota identifying the
Loans as collateral and naming the Company as debtor and the Trust as secured
party, and the filing of continuation statements as required by Section 4.01 of
the Pooling and Servicing Agreement, is necessary to perfect as against third
parties the assignment of the Loans by the Company to the Trust. We have
separately provided you with our opinion concerning whether such assignment
could be recharacterized as a pledge rather than a sale in the event the Company
became a debtor under the United States Bankruptcy Code. However, in the event
such assignment were characterized as a pledge securing a loan from the
Certificateholders to the Company, it is our opinion that the Trustee would be
deemed to have a valid and perfected security interest in the Loans and the
proceeds thereof, which security interest would be prior to any other security
interest that may be perfected under the Uniform Commercial Code as in effect in
the State of Minnesota and over any "lien creditor" (as defined in Minn. Stat.
ss.336.9-301(3)) who becomes such after the Closing Date, except that a
subsequent purchaser of any Loan who gives new value and takes possession
thereof in the ordinary course of his business would have priority over the
Trustee's security interest in such Loan, if such purchaser acts without
knowledge that such Loan was subject to a security interest. We have assumed for
the purposes of this opinion that during the term of the Pooling and Servicing
Agreement the Trustee, or its custodian, shall maintain possession of the Loan
Files for the purpose of perfecting the assignment to the Trustee of the Loans.
We express no opinion with respect to the enforceability of any individual Loan
or the existence of any claims, rights or other matters in favor of any Obligor
or the owner of any financed home improvement.
F-2
<PAGE>
9. In reliance upon certain representations and warranties set forth in
the Pooling and Servicing Agreement and assuming that the Company and the
Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing on behalf of the Trust of a proper election to be taxed as
a REMIC, as of the date hereof the Trust created pursuant to the Pooling and
Servicing Agreement (excluding the Pre-Funding Account and the Capitalized
Interest Account) will qualify as a REMIC. Further, the Certificates will
evidence ownership of the "regular interests" in the REMIC and the Class C
Certificates will evidence ownership of the single class of "residual interest"
in the REMIC. For Minnesota income tax purposes, and subject to the foregoing
assumptions, and the provisions of Minnesota law as of the date hereof, the
Trust (excluding the Capitalized Interest Account and the Pre-Funding Account)
will not be subject to tax and the income of the Trust will be taxable to the
holders of interests therein, all in accordance with the provisions of the Code
concerning REMICs. Moreover, ownership of Certificates will not be a factor in
determining whether such owner is subject to Minnesota income taxes. Therefore,
if the owner of Certificates is not otherwise subject to Minnesota income or
franchise taxes in the State of Minnesota, such owner will not become subject to
such Minnesota taxes solely by virtue of owning Certificates.
10. The transfer of the Loans and the proceeds thereof by the Company
to the Trustee on the date hereof pursuant to the Pooling and Servicing
Agreement would not be avoidable as a fraudulent transfer under the Uniform
Fraudulent Transfer Act as in effect in Minnesota on the date hereof (Minn.
Stat. ss.ss. 513.41 through 513.51), nor, should the Company become a debtor
under the United States Bankruptcy Code, as a fraudulent transfer under Section
548 of the United States Bankruptcy Code (11 U.S.C. ss. 548) as in effect on the
date hereof.
F-3
<PAGE>
EXHIBIT G
---------
FORM OF TRUSTEE'S ACKNOWLEDGMENT
--------------------------------
U.S. Bank Trust National Association, a national banking association
organized under the laws of the United States, acting as trustee (the "Trustee")
of Home Improvement Loan Trust 1999-E (the "Trust") created pursuant to the
Pooling and Servicing Agreement dated as of September 1, 1999 between Green Tree
Financial Corporation and the Trustee (the "Agreement") (all capitalized terms
used herein without definition having the respective meanings specified in the
Agreement) acknowledges, pursuant to Section 2.04 of the Agreement, that the
Trustee has received the following: (i) all right, title and interest in the
home improvement contracts and promissory notes identified in the List of Loans
attached to the [Agreement] [Subsequent Transfer Instrument of even date
herewith] (the "[Subsequent] Loans"), including, without limitation, all related
mortgages and deeds of trust and any and all rights to receive payments on or
with respect to the [Subsequent] Loans (due after the [Subsequent] Cut-off
Date), (ii) all rights under FHA Insurance in respect of each FHA-Insured Loan,
(iii) all rights under any hazard, flood or other individual insurance policy on
the real estate securing a [Subsequent] Loan for the benefit of the creditor of
such [Subsequent] Loan, (iv) all rights the Company may have against the
originating contractor with respect to [Subsequent] Loans not originated by the
Company, (v) all rights under the Errors and Omissions Protection Policy and the
Fidelity Bond as such policy and bond relate to the [Subsequent] Loans, (vi) all
rights under any title insurance policies, if applicable, on any of the
properties securing [Subsequent] Loans, (vii) all documents contained in the
Loan Files relating to the [Subsequent] Loans, [(viii) amounts in the
Certificate Account, the Capitalized Interest Account and the Pre- Funding
Account (including all proceeds of investments of funds in the Certificate
Account, (ix) the Class B-2 Limited Guaranty,] and [(viii)] [(x)] all proceeds
and products of the foregoing; and declares that, directly or through a
Custodian, it will hold all Loan Files that have been delivered in trust, upon
the trusts set forth in the Agreement for the use and benefit of all
Certificateholders and the holders of the Class C Certificates.
[From Trustee or Custodian as applicable.] The Trustee acknowledges
that it has conducted a cursory review of the Loan Files and hereby confirms
that except as noted on the document exception listing attached hereto, each
Loan File contained (a) an original home improvement contract or promissory
note, (b) an original or a copy of the mortgage or deed of trust or similar
evidence of a lien on the related improved real estate (each, a "mortgage"), (c)
in the case of a Loan not originated by the Company, an original or a copy of an
assignment of the mortgage by the originating contractor to the Company, (d) an
assignment of the mortgage by the Company to the Trustee or in blank, and (e)
originals of any extension, modification or waiver agreement(s). The Trustee has
not otherwise reviewed the Loans and Loan Files for compliance with the terms of
the Agreement.
G-1
<PAGE>
IN WITNESS WHEREOF, ______________________ as Trustee has caused this
acknowledgment to be executed by its duly authorized officer as of this ______
day of ___________, 1999.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
By_____________________________________
[Name]
[Title]
G-2
<PAGE>
EXHIBIT H
---------
FORM OF CERTIFICATE OF SERVICING OFFICER
----------------------------------------
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of September 1, 1999 between the Company and U.S. Bank
Trust National Association, as Trustee of Home Improvement Loan Trust 1999-E
(all capitalized terms used herein without definition having the respective
meanings specified in the Agreement), and further certifies that:
1. The Monthly Report for the period from to attached to this
certificate is complete and accurate in accordance with the requirements of
Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ____________, _____.
GREEN TREE FINANCIAL CORPORATION
By:__________________________________
[Name]
[Title]
H-1
<PAGE>
EXHIBIT I
FORM OF CLASS C CERTIFICATE
---------------------------
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS M-1 CERTIFICATES, THE CLASS M-2 CERTIFICATES, THE CLASS
B-1 CERTIFICATES AND THE CLASS B-2 CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE OR
ANY INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT
PLAN WITHIN THE MEANING OF SECTION 3(3) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION
4975(e)(1) OF THE CODE (EACH, A "PLAN") ACKNOWLEDGES THAT EITHER THE
CERTIFICATEHOLDER HAS DELIVERED TO THE COMPANY AND THE TRUSTEE AT ITS OWN
EXPENSE AN OPINION OF COUNSEL (SATISFACTORY TO THE COMPANY AND THE TRUSTEE) THAT
THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE
ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE COMPANY OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN ADDITION
TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS DELIVERED, IS
DEEMED TO REPRESENT TO THE TRUSTEE, THE COMPANY AND THE SERVICER EITHER (I) THAT
THE PERSON ACQUIRING THE CERTIFICATE IS NEITHER A PLAN, NOR ACTING ON BEHALF OF
A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE, OR (II) THAT THE
PURCHASE AND
I-1
<PAGE>
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE
TRUST BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE COMPANY
OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN
IN THE AGREEMENT.
Class C No.
(Subordinate)
Cut-off Date: Percentage Interest:
As defined in the Pooling
and Servicing Agreement
First Payment Date:
October 15, 1999
CERTIFICATE FOR HOME IMPROVEMENT LOANS, SERIES 1999-E
Original Aggregate Certificate Principal Balance of the Trust: $______
This certifies that Green Tree Finance Corp.--Two is the registered
owner of the Residual Interest represented by this Certificate, and entitled to
certain distributions out of Home Improvement Loan Trust 1999-E (the "Trust"),
which includes among its assets a pool of home improvement contracts and
promissory notes (the "Loans") (including, without limitation, all mortgages,
deeds of trust and security deeds relating to such Loans and any and all rights
to receive payments due on the Loans after the applicable Cut-off Date or the
Subsequent Cut-off Date. The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of September 1, 1999, between
Green Tree Financial Corporation, as Seller and Servicer (the "Company"), and
U.S. Bank Trust National Association, as Trustee of the Trust (the "Trustee").
This Class C Certificate is described in the Agreement and is issued pursuant
and subject to the Agreement. By acceptance of this Class C Certificate the
holder assents to and becomes bound by the Agreement. To the extent not defined
herein, all capitalized terms have the meanings assigned to such terms in the
Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in October
1999, so long as the Agreement has not been terminated, by check to the
registered Class C Certificateholder at the address appearing on the Certificate
Register as of the Business Day immediately preceding such Payment Date, in an
amount equal to the difference between (A) the Amount Available, and (B) the sum
of (i) the Class A Distribution Amount, (ii) the Class M-1 Distribution Amount,
(iii) the Class M-2 Distribution Amount, (iv) the Class B-1 Distribution Amount,
(v) the Class B-2 Distribution Amount, (vi) the Monthly Servicing Fee with
respect to the Loans, (vii) amounts to reimburse the Servicer or the Trustee, as
applicable, for prior
I-2
<PAGE>
Advances with respect to the Loans, and (viii) amounts necessary to reimburse
the Company for any previous unreimbursed Class B-2 Guaranty Payments. The final
scheduled Payment Date of this Class C Certificate is August 15, 2030 or the
next succeeding Business Day if such August 15 is not a Business Day.
The Class C Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Class C Certificateholder as provided
in the Agreement for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Class C Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Class C Certificateholder agrees to
disclosure of his, her or its name and address to other Certificateholders under
the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or that is described in
Section 4975(e)(1) of the Code or to any person or entity purchasing on behalf
of, or with assets of, such an employee benefit plan (each, a "Plan") will be
registered unless the transferee, at its expense, delivers to the Company and
the Trustee at its own expense an opinion of counsel (satisfactory to the
Company and the Trustee) that the purchase and holding of this Certificate by
such Plan will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee, the Company or the Servicer to any
obligation or liability in addition to those undertaken in the Agreement. Unless
such opinion is delivered, each person acquiring this Certificate will be deemed
to represent to the Trustee, the Company and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Company or the Servicer to
any obligation or liability in addition to those undertaken in the Agreement.
This Class C Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class C Certificateholders
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class C Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class C
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Minneapolis or St. Paul, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon a new Class C Certificate evidencing the
same Class C Certificate will be issued to the designated transferee or
transferees.
I-3
<PAGE>
The Company, the Servicer, the Trustee, the Paying Agent and the
Certificate Registrar and any agent of the Company, the Servicer, the Trustee,
the Paying Agent or the Certificate Registrar may treat the person in whose name
this Class C Certificate is registered as the owner hereof for all purposes, and
neither the Company, the Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
The holder of this Class C Certificate, by acceptance hereof, agrees
that, in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of the Trust for its first taxable year shall provide that
the Trust elects to be treated as a "real estate mortgage investment conduit" (a
"REMIC") under the Code for such taxable year and all subsequent taxable years.
The Certificates shall be "regular interests" in the REMIC and the Class C
Certificate shall be the "residual interest" in the REMIC. In addition, the
holder of this Class C Certificate, by acceptance hereof, (i) agrees to file tax
returns consistent with and in accordance with any elections, decisions or other
reports made or filed with regard to federal, state or local taxes on behalf of
the Trust, and (ii) agrees to cooperate with the Company in connection with
examinations of the Trust's affairs by tax authorities, including administrative
and judicial proceedings, and (iii) makes the additional agreements,
designations and appointments, and undertakes the responsibilities, set forth in
Section 6.06 of the Agreement.
I-4
<PAGE>
IN WITNESS WHEREOF, Home Improvement Loan Trust 1999-E has caused this
Certificate to be duly executed by the manual signature of a duly authorized
officer of the Trustee.
Dated:_________ HOME IMPROVEMENT LOAN TRUST 1999-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By:___________________________________
Authorized Officer
I-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________ the within Certificate for Home Improvement Loans, Series
1999-E, and does hereby irrevocably constitute and appoint ___________________
Attorney to transfer the said certificate on the Certificate Register maintained
by the Trustee, with full power of substitution in the premises.
Dated:________________ By:______________________
Signature
I-6
<PAGE>
EXHIBIT J-1
-----------
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
-----------------------------------------------
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Sections 3.05 and 8.05 of the Pooling and Servicing Agreement (the
"Agreement") dated as of September 1, 1999 between the Company and U.S. Bank
Trust National Association, as Trustee of Home Improvement Loan Trust 1999-E
(all capitalized terms used herein without definition having the respective
meanings specified in the Agreement), and further certifies that:
1. The Loans on the attached schedule are to be repurchased by the
Company on the date hereof pursuant to Section 3.05 of the Agreement.
2. Upon deposit of the Repurchase Price for such Loans, such Loans may,
pursuant to Section 8.05 of the Agreement, be assigned by the Trustee to the
Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of __________, _________.
GREEN TREE FINANCIAL CORPORATION
By:________________________________
[Name]
[Title]
J-1-1
<PAGE>
EXHIBIT J-2
-----------
FORM OF CERTIFICATE REGARDING SUBSTITUTE LOANS
----------------------------------------------
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Sections 3.05(b) and 8.05 of the Pooling and Servicing Agreement
(the "Agreement") dated as of September 1, 1999 between the Company and U.S.
Bank Trust National Association, as Trustee of Home Improvement Loan Trust
1999-E (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan have
been delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on the date
hereof pursuant to Section 3.05(b) of the Agreement and each such Loan is an
Eligible Substitute Loan [description, as to each Loan, as to how it satisfies
the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 3.05 (b)(iii) of the Agreement,
have been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to
the Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Loans.
5. The requirements of Section 3.05(b) of the Agreement have been met
with respect to each such Eligible Substitute Loan.
[6. There has been deposited in the Certificate Account the amounts
listed on the schedule attached hereto as the amount by which the Scheduled
Principal Balance of each Replaced Loan exceeds the Scheduled Principal Balance
of each Loan being substituted therefor.]
J-2-1
<PAGE>
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ____________, __________.
GREEN TREE FINANCIAL CORPORATION
By:_________________________________
[Name]
[Title]
J-2-2
<PAGE>
EXHIBIT J-3
-----------
FORM OF CERTIFICATE REGARDING SUBSTITUTION FOR PREPAID LOANS
------------------------------------------------------------
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 2.06 of the Pooling and Servicing Agreement (the
"Agreement") dated as of September 1, 1999 between the Company and U.S. Bank
Trust National Association, as Trustee of Home Improvement Loan Trust 1999-E
(all capitalized terms used herein without definition having the respective
meanings specified in the Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan have
been delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on the date
hereof pursuant to Section 2.06 of the Agreement and each such Loan is an
Eligible Substitute Loan [description, as to each Loan, as to how it satisfies
the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 2.06(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to
the Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Loans.
5. The requirements of Section 2.06 of the Agreement have been met with
respect to each such Eligible Substitute Loan.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of __________, _________.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
[Name]
[Title]
J-3-1
<PAGE>
EXHIBIT K
---------
FORM OF REPRESENTATION LETTER
-----------------------------
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Certificates for Home Improvement Loans, Series 1999-E, Class C
The undersigned purchaser (the "Purchaser") understands that the
purchase of the above-referenced certificates (the "Certificates") may be made
only by institutions which are "Accredited Investors" under Regulation D, as
promulgated under the Securities Act of 1933, as amended (the "1933 Act"), which
includes banks, savings and loan associations, registered brokers and dealers,
insurance companies, investment companies, and organizations described in
Section 501(c)(3) of the Internal Revenue Code, corporations, business trusts
and partnerships, not formed for the specific purpose of acquiring the
Certificates offered, with total assets in excess of $5,000,000. The undersigned
represents on behalf of the Purchaser that the Purchaser is an "Accredited
Investor" within the meaning of such definition. The Purchaser is urged to
review carefully the responses, representations and warranties it is making
herein.
Representations and Warranties
The Purchaser makes the following representations and warranties in
order to permit the Trustee, Green Tree Financial Corporation, and
_______________ to determine its suitability as a purchaser of Certificates and
to determine that the exemption from registration relied upon by Green Tree
Financial Corporation under Section 4(2) of the 1933 Act is available to it.
1. The Purchaser understands that the Certificates have not been and
will not be registered under the 1933 Act and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that Green Tree
Financial Corporation is not required to register the Certificates and that any
transfer must comply with Section 9.02 of the Pooling and Servicing Agreement
relating to the Certificates.
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates.
K-1
<PAGE>
3. The Purchaser is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment. The Purchaser has reviewed
the Prospectus Supplement dated September 13, 1999, to the Prospectus dated
September 13, 1999 (the "Prospectus") with respect to the Certificates, and has
been given such information concerning the Certificates, the underlying home
improvement loans and Green Tree Financial Corporation as it has requested.
4. The Purchaser is acquiring the Certificates as principal for its own
account (or for the account of one or more other institutional investors for
which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser either (check one box):
[ ] is not an employee benefit plan within the meaning of
section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended or that is described
in Section 4975(e)(1) of the Internal Revenue Code of
1986, as amended or a person or entity purchasing on
behalf of, or with assets of, such a plan, or
[ ] has provided the Trustee and Servicer with the
opinion of counsel described in Section 9.02(b)(2) of
the Pooling and Servicing Agreement, or
[ ] acknowledges that it is deemed to make the
representation set forth in Section 9.02(b)(2) of the
Pooling and Servicing Agreement.
6. The Purchaser understands that such Certificate will bear a legend
substantially as set forth in the form of Certificate included in the Pooling
and Servicing Agreement.
7. The Purchaser, as holder of the Class C Certificate, acknowledges
(i) it may incur tax liabilities in excess of any cash flows generated by the
interest and (ii) it intends to pay the taxes associated with holding the Class
C Certificate as they become due.
8. The Purchaser agrees that it will obtain from any purchaser of the
Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 7 and in this paragraph 8.
The representations and warranties contained herein shall be binding
upon the heirs, executors, administrators and other successors of the
undersigned. If there is more than one
K-2
<PAGE>
signatory hereto, the obligations, representations, warranties and agreements of
the undersigned are made jointly and severally.
Executed at ____________________, ___________________, this _____ day
of ____________.
Purchaser's Name (Print)
By:__________________________________
Signature
Its:______________________________
Address of Purchaser
Purchaser's Taxpayer
Identification Number
K-3
<PAGE>
EXHIBIT L
LIST OF INITIAL AND ADDITIONAL LOANS
[To Be Supplied]
L-1-1
<PAGE>
EXHIBIT M
---------
FORM OF MONTHLY REPORT
----------------------
CERTIFICATES FOR HOME IMPROVEMENT LOANS, SERIES 1999-E
Payment Date:
----------------------
1. Amount Available (including Monthly
Servicing Fee) ________
2. Formula Principal Distribution Amount: ________
a. Scheduled principal ________
b. Principal Prepayments ________
c. Liquidated Loans ________
d. Repurchases ________
e. Previously undistributed (a)-(d) amounts ________
f. Pre-Funded Amount, if any
(Post-Funding Payment Date) ________
3. Senior Percentage ________
4. Class B Percentage ________
Class A Certificates
Interest
5. Aggregate current interest
a. Class A-1 Pass-Through Rate (6.32%) ________
b. Class A-l Interest ________
c. Class A-2 Pass-Through Rate (6.91%) ________
d. Class A-2 Interest ________
e. Class A-3 Pass-Through Rate (7.18%) ________
f. Class A-3 Interest ________
g. Class A-4 Pass-Through Rate (7.64%) ________
h. Class A-4 Interest ________
6. Amount applied to Unpaid Class A Interest Shortfall ________
M-1
<PAGE>
7. Remaining Unpaid Class A Interest Shortfall ________
Class M-1 Certificates
- ----------------------
8. Amount Available less all preceding
distributions ________
Interest on Class M-1 Adjusted Principal Balance
9. Class M-1 Adjusted Principal Balance ________
10. Current Interest
a. Class M-1 Pass-through Rate (floating rate equal to
the Weighted Average Loan Rate, but in no event
greater than 8.13%)
b. Class M-1 Interest ________
11. Amount applied to Unpaid Class M-1
Interest Shortfall ________
12. Remaining Unpaid Class M-1
Interest Shortfall ________
Class M-2 Certificates
- ----------------------
13. Amount Available less all preceding
distributions ________
Interest on Class M-2 Adjusted Principal Balance
14. Class M-2 Adjusted Principal Balance ________
15. Current Interest
a. Class M-2 Pass-Through Rate (floating rate equal
to the Weighted Average Loan Rate, but in no
event greater than 9.45%)
b. Class M-2 Interest ________
16. Amount applied to Unpaid Class M-2
Interest Shortfall ________
17. Remaining Unpaid Class M-2
M-2
<PAGE>
Interest Shortfall ________
Class B-1 Certificates
- ----------------------
18. Amount Available less all preceding
distributions ________
Interest on Class B-1 Adjusted Principal Balance
19. Class B-1 Adjusted Principal Balance ________
20. Current Interest
a. Class B-1 Pass-Through Rate (floating rate equal
to the Weighted Average Loan Rate, but in no
event greater than 10.34%)
b. Class B-1 Interest ________
21. Amount applied to Unpaid Class B-1
Interest Shortfall ________
22. Remaining Unpaid Class B-1
Interest Shortfall ________
Class A Certificates
23. Amount Available less all preceding
distributions ________
Principal
24. Class A principal distribution:(1)
a. Class A-1 ________
b. Class A-2 ________
c. Class A-3 ________
d. Class A-4 ________
- --------
(1) If a Class A Principal Deficiency Amount exists, the remaining Amount
Available is to be distributed pro rata to each Class of Class A Certificates
based on the Class Principal Balance of each such Class. If no Class A Principal
Deficiency Amount exists, the remaining Amount Available is to be distributed
sequentially to each Class of Class A Certificates in the order set forth above.
M-3
<PAGE>
25. a. Class A-1 Principal Balance ________
b. Class A-2 Principal Balance ________
c. Class A-3 Principal Balance ________
d. Class A-4 Principal Balance ________
26. Amount, if any, by which Class A Formula Principal
Distribution Amount exceeds amounts distributed
pursuant to item (24) ________
Class M-1 Certificates
- ----------------------
27. Amount Available less all preceding
distributions ________
Principal
28. Class M-1 principal distribution ________
29. Class M-1 Principal Balance ________
30. Amount, if any, by which the amount in clause
(c) of the Class M-1 Formula Distribution Amount
exceeds the amount distributed pursuant to item (28) ________
Class M-2 Certificates
- ----------------------
31. Amount Available less all preceding
distributions ________
Principal
32. Class M-2 principal distribution ________
33. Class M-2 Principal Balance ________
34. Amount, if any, by which the amount in clause (c)
of the Class M-2 Formula Distribution Amount (the
"Class M-2 Formula Principal Distribution Amount")
exceeds the amount distributed pursuant to item (32)
Class B Principal Distribution Tests (tests must be satisfied
- ------------------------------------
on and after the Payment Date occurring in October 2002)
M-4
<PAGE>
35. Average Sixty-Day Delinquency Ratio Test
a. Sixty-Day Delinquency Ratio for
current Payment Date ________
b. Average Sixty-Day Delinquency
Ratio Test (must not exceed 2.5% of
Senior Subordination Percentage) ________
36. Average Thirty-Day Delinquency Ratio Test
a. Thirty-Day Delinquency Ratio for
current Payment Date ________
b. Average Thirty-Day Delinquency Ratio
Test (arithmetic average of ratios
for this month and two preceding
months; may not exceed 50%) ________
37. Cumulative Realized Losses Test
Cumulative Realized Losses
for current Payment Date
(as a percentage of Cut-off Date
Pool Principal Balance may not
exceed 10.0%) ________
38. Current Realized Losses Test
a. Current Realized Losses
for current Payment Date ________
b. Current Realized Loss Ratio (total
Realized Losses for most recent
six months, multiplied by 2,
divided by arithmetic
average of Pool Scheduled Principal
Balance for sixth preceding
Payment Date and for current Payment
Date; may not exceed 2.5%)
39. Class B Principal Balance Test
Class B Principal Balance
divided by Pool Scheduled Principal Balance
for prior Payment Date (must equal or
exceed 19.0%) ________
M-5
<PAGE>
Class B-1 Certificates
- ----------------------
40. Amount Available less all preceding
distributions ________
Principal
41. Class B-1 principal distribution ________
42. Class B-1 Principal Balance ________
43. Amount, if any, by which the amount in clause (c)
of the Class B-1 Formula Distribution Amount
exceeds the amount distributed pursuant to item (41) ________
Class M-1 Certificates
- ----------------------
44. Amount Available less all preceding
distributions ________
Liquidation Loss Interest
45. Class M-1 Formula Liquidation Loss Interest Distribution
Amount ________
46. Amount applied to Unpaid Class M-1 Liquidation Loss
Interest Shortfall ________
47. Remaining Unpaid Class M-1 Liquidation Loss
Interest Shortfall ________
Class M-2 Certificates
- ----------------------
48. Amount Available less all preceding
distributions ________
Liquidation Loss Interest
49. Class M-2 Formula Liquidation Loss Interest Distribution
Amount ________
50. Amount applied to Unpaid Class M-2 Liquidation Loss
Interest Shortfall ________
51. Remaining Unpaid Class M-2 Liquidation Loss
M-6
<PAGE>
Interest Shortfall ________
Class B-1 Certificates
- ----------------------
52. Amount Available less all preceding
distributions ________
Liquidation Loss Interest
53. Class B-1 Formula Liquidation Loss Interest
Distribution Amount ________
54. Amount applied to Unpaid Class B-1 Liquidation Loss
Interest Shortfall ________
55. Remaining Unpaid Class B -1 Liquidation Loss
Interest Shortfall ________
Class B-2 Certificates
- ----------------------
56. Amount Available less all preceding
distributions ________
Interest
57. Current interest
a. Class B-2 Pass-Through Rate (floating rate equal
to the Weighted Average Loan Rate,
but in no event greater than 11.01%)
b. Class B-2 Interest ________
58. Amount applied to Unpaid Class
B-2 Interest Shortfall ________
59. Remaining Unpaid Class B-2
Interest Shortfall ________
Principal
60. Class B-2 principal distribution ________
61. Class B-2 Guaranty Payment ________
62. Class B-2 Principal Balance ________
M-7
<PAGE>
63. Amount, if any, by which Class B-2
Formula Distribution Amount plus Class B-2
Liquidation Loss Principal Amount exceeds
Class B-2 Distribution Amount ________
Class A, Class M and Class B Certificates
- ------------------------------------------
64. Pool Scheduled Principal Balance ________
65. Pool Factor ________
66. Loans Delinquent:
30 - 59 days
60 or more days
67. Principal Balance of Defaulted Loans
68. Number of Liquidated Loans and
Net Liquidation Loss ________
69. Number of Loans Remaining
70. Number and Principal Balance of Home
Improvement Loans with FHA claims finally
rejected, or no FHA claim submitted
because FHA Insurance unavailable ________
71. FHA Insurance reserve amount ________
72. Amount received from FHA Insurance ________
73. (a) Net Liquidation Losses on all FHA-Insured
Loans that became Liquidated Loans
in any prior Due Period ________
(b) Aggregate Repurchase Price of all such Liquidated
Loans ________
(c) Ratio of (a) to (b) _______%
74. Pre-Funded Amount ________
Company
- -------
75. Monthly Servicing Fee ________
M-8
<PAGE>
76. Reimbursement for Unreimbursed
(a) FHA premiums
(b) Advances
Company
- -------
77. Class B-2 Guaranty Fee ________
Class C Certificates
- --------------------
78. Class C Distribution Amount ________
Please contact the Bondholder Relations Department of U.S. Bank Trust
National Association at (612) 224-0444 with any questions regarding this
Statement or your Distribution.
M-9
<PAGE>
EXHIBIT N
---------
FORM OF ADDITION NOTICE
-----------------------
_______________, 1999
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, MN 55101
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
September 1, 1999, between Green Tree Financial Corporation
(the "Company") and U.S. Bank Trust National Association as
Trustee (the "Trustee") relating to Certificates for Home
Improvement Loans, Series 1999-E
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the
meanings given them in the Agreement. The Company hereby notifies the Trustee of
an assignment to the Trust of Subsequent Loans on the date and in the amounts
set forth below:
Subsequent Transfer Date:_______________________
Cut-off Date Principal Balance: $____________________
N-1
<PAGE>
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:
U.S. BANK TRUST NATIONAL ASSOCIATION
By:
-----------------------------
Name:
Title:
cc: Standard & Poor's Ratings Services
55 Water Street - 40th Floor
New York, New York 10041
Attn:
Fitch IBCA Inc.
One State Street Plaza
New York, New York 10004
Attn:
N-2
<PAGE>
EXHIBIT O
---------
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
--------------------------------------
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of September 1, 1999, between the undersigned and U.S.
Bank Trust National Association as Trustee (the "Trustee"), the undersigned does
hereby transfer, assign, set over and otherwise convey, without recourse, to
Home Improvement Loan Trust 1999-E, created by the Agreement, to be held in
trust as provided in the Agreement, (i) all right, title and interest in the
home improvement contracts and promissory notes identified in the List of Loans
attached hereto (each a "Subsequent Loan"), including, without limitation, all
related mortgages, deeds of trust, security deeds and any and all rights to
receive payments on or with respect to the Subsequent Loans (excluding principal
due before the Subsequent Cut-off Date), (ii) all rights under FHA Insurance in
respect of each Subsequent Loan that is an FHA-Insured Loan, (iii) all rights
under any hazard, flood or other individual insurance policy on the real estate
securing a Subsequent Loan for the benefit of the creditor of such Loan, (iv)
all rights the Company may have against the originating contractor with respect
to Subsequent Loans not originated by the Company, (v) all rights under the
Errors and Omissions Protection Policy and the Fidelity Bond as such policy and
bond relate to the Subsequent Loans, (vi) all rights under any title insurance
policies, if applicable, on any of the properties securing Subsequent Loans,
(vii) all documents contained in the related Loan Files, and (viii) all proceeds
and products 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 , 1999.
GREEN TREE FINANCIAL CORPORATION
[Seal] By:
----------------------------------
Name:
Title:
O-1
<PAGE>
EXHIBIT P
---------
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
---------------------------------------------------
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Company in
connection with the Pooling and Servicing Agreement dated as of September 1,
1999 (the "Agreement") between the Company and U.S. Bank Trust National
Association as Trustee. 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 Loans (the
"Subsequent Loans") identified in the List of Loans 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 3.02 and 3.03 of the Agreement with
respect to the Subsequent Loans are true to the best of his knowledge; and all
representations in Section 3.04 of the Agreement with respect to the Subsequent
Loans are true and correct.
3. All conditions precedent to the sale of the Subsequent Loans 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 ________________, 1999.
By:
-----------------------------
Name:
Title:
P-1
<PAGE>
EXHIBIT Q
---------
LIST OF FHA-INSURED LOANS
[To Be Supplied]
Q-1
<PAGE>
EXHIBIT 8.1
September 15, 1999
Lehman Brothers Inc. U.S. Bank Trust National Association
Three World Financial Center 180 East Fifth Street
New York, New York 10285 St. Paul, Minnesota 55101
Chase Securities Inc. Fitch IBCA, Inc.
270 Park Avenue, 7th Floor One State Street Plaza
New York, NY 10017 New York, New York 10004
First Union Capital Markets Standard & Poor's Ratings Services
a division of Wheat First Securities Corp. 55 Water Street
1 First Union Center, Sixth Floor New York, New York 10041
Charlotte, NC 28288
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
North Tower
World Financial Center
New York, New York 10201
Re: Green Tree Financial Corporation
Certificates for Home Improvement Loans, Series 1999-E
Gentlemen:
We have acted as counsel for Green Tree Financial Corporation ("Green
Tree") in connection with its execution of a Pooling and Servicing Agreement,
dated as of September 1, 1999 (the "Pooling and Servicing Agreement"), between
Green Tree as seller and servicer and U.S. Bank Trust National Association, as
Trustee (the "Trustee"), and its establishment, pursuant to the Pooling and
Servicing Agreement, of Home Improvement Loan Trust 1999-E (the "Trust"). All
undefined capitalized terms used in this opinion have the meanings given them in
the Pooling and Servicing Agreement.
Pursuant to the Pooling and Servicing Agreement, Green Tree will
transfer to the Trust the Loans and certain related property and Green Tree will
act as Servicer of the Loans and
<PAGE>
Lehman Brothers Inc.
Chase Securities Inc.
First Union Capital Markets
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
U.S. Bank Trust National Association
Fitch IBCA, Inc.
Standard & Poor's Ratings Systems
September 15, 1999
Page 2
provide a Class B-2 Limited Guaranty in respect of the Class B-2 Certificates
against losses on the Loans.
Green Tree has requested that we provide to you our opinion whether the
Trust (other than the Pre-Funding Account and the Capitalized Interest Account)
will be treated as a real estate mortgage investment conduit ("REMIC") under the
Internal Revenue Code of 1986, as amended through the date hereof (the "Code"),
under certain Treasury Regulations concerning REMICs promulgated by the Treasury
Department on December 23, 1992 (the "REMIC Regulations"), and under Minnesota
law.
In rendering our opinion, we have examined the Pooling and Servicing
Agreement and such additional related documents, and we have reviewed such
questions of law, as we have considered necessary and appropriate for the
purposes of the opinion expressed herein.
Our opinion is based upon existing law and currently applicable
Treasury Department regulations, current published administrative positions of
the Internal Revenue Service contained in revenue rulings and revenue
procedures, and judicial decisions, all of which are subject to change, either
prospectively or retroactively, and to possibly differing interpretations, and
is also based on the representations and warranties set forth in the Pooling and
Servicing Agreement and the assumptions that Green Tree and the Trustee will at
all times comply with the requirements of the Pooling and Servicing Agreement,
including, without limitation, the requirement that a proper election to be
taxed as a REMIC is made for the Trust (other than the Pre-Funding Account and
the Capitalized Interest Account) in accordance with the Pooling and Servicing
Agreement and the Code, and that the certificates representing interests in the
Trust will be issued as described in the Prospectus Supplement relating to the
Certificates.
Based upon the foregoing, as of the date hereof it is our opinion that:
1. The Trust (other than the Pre-Funding Account and the Capitalized
Interest Account) created pursuant to the Pooling and Servicing Agreement will
qualify as a REMIC under the Code and under the REMIC Regulations. The
Certificates will evidence ownership of the "regular
<PAGE>
Lehman Brothers Inc.
Chase Securities Inc.
First Union Capital Markets
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
U.S. Bank Trust National Association
Fitch IBCA, Inc.
Standard & Poor's Ratings Systems
September 15, 1999
Page 3
interests" in such REMIC. The Class C Certificates will evidence ownership of
the single class of "residual interests" in such REMIC.
2. For Minnesota income and franchise tax purposes, the Trust
(excluding the Pre-Funding Account), will not be subject to tax and the income
of the Trust will be taxable to the holders of interests therein, all in
accordance with the provisions of the Code concerning REMICs as amended through
December 31, 1998.
3. Ownership of a Certificate will not be a factor in determining
whether the owner is subject to Minnesota income or franchise taxes. Therefore,
if the owner of a Certificate is not otherwise subject to Minnesota income or
franchise taxes in the State of Minnesota, such owner will not become subject to
such Minnesota taxes solely by virtue of owning a Certificate.
We express no opinion as to the laws of any jurisdiction other than the
federal laws of the United States of America and the laws of the State of
Minnesota. This opinion is being delivered to you at Green Tree's request only
for your use. It may not be circulated or republished to or relied upon by any
other person without our prior written consent.
Very truly yours,
