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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 30, 1998
GREEN TREE FINANCIAL CORPORATION
as originator of
Green Tree Home Improvement and Home Equity Loan Trust
1998-F Loan-Backed Notes
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 01-08916 41-1807858
- ---------------------------- ------------------------ -------------------
(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
- -------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (651) 293-3400
--------------
Not Applicable
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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ITEM 1. Changes in Control of Registrant.
- ------- --------------------------------
Not applicable.
ITEM 2. Acquisition or Disposition of Assets.
- ------- ------------------------------------
Not applicable
ITEM 3. Bankruptcy or Receivership.
- ------- --------------------------
Not applicable
ITEM 4. Changes in Registrant's Certifying Accounting.
- ------- ---------------------------------------------
Not applicable
ITEM 5. Other Events.
- ------- ------------
On December 30, 1998, the Registrant sold approximately $425,250,000 in
connection with the Home Improvement and Home Equity Loan Trust, Series
1998-F Loan-Backed Notes, evidencing beneficial ownership interests in
a trust consisting of home improvement and home equity loan contracts
conveyed by Green Tree Financial Corporation.
ITEM 6. Resignations of Registrant's Directors.
- ------- --------------------------------------
Not applicable
ITEM 7. Financial Statements and Exhibits.
- ------- ---------------------------------
(a) Financial statements of businesses acquired.
Not applicable
(b) Pro forma financial information.
Not applicable
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
----------- -----------
4.1 Sale and Servicing Agreement between Green Tree
Home Improvement and Home Equity Loan Trust 1998-F,
as the Issuer or the Trust, and Green Tree
Financial Corporation, as Seller and Servicer,
dated as of December 1, 1998, relating to Green
Tree Home Improvement and Home Equity Loan Trust
1998-F Loan-Backed Notes.
4.2 Indenture between Green Tree Home Improvement and
Home Equity Loan Trust 1998-F, as Issuer, and U.S.
Bank Trust National Association, as Indenture
Trustee, dated as of December 1, 1998, relating to
Green Tree Home Improvement and Home Equity Loan
Trust 1998-F Loan-Backed Notes.
4.3 Trust Agreement between Green Tree Financial
Corporation as Depositor, and Wilmington Trust
Company, as Owner Trustee, dated as of December 1,
1998, relating to Green Tree Home Improvement and
Home Equity Loan Trust 1998-F Loan-Backed Notes.
4.4 Administration Agreement between Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, as
Issuer, Green Tree Financial Servicing Corporation,
as Administrator, and U.S. Bank Trust National
Association, not in its individual capacity but
solely as Indenture Trustee, dated as of December
1, 1998, relating to Green Tree Home Improvement
and Home Equity Loan Trust 1998-F Loan-Backed
Notes.
8.1 Tax opinion of Briggs and Morgan Professional
Association, dated December 30, 1998 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
By: /s/ Scott T. Young
------------------------------------
Scott T. Young
Senior Vice President and Controller
3
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INDEX TO EXHIBITS
Exhibit
- -------
Number
- -------
4.1 Sale and Servicing Agreement between Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, as the
Issuer or the Trust, and Green Tree Financial
Corporation, as Seller and Servicer, dated as of
December 1, 1998, relating to Green Tree Home
Improvement and Home Equity Loan Trust 1998-F
Loan-Backed Notes.
4.2 Indenture between Green Tree Home Improvement and Home
Equity Loan Trust 1998-F, as Issuer, and U.S. Bank Trust
National Association, as Indenture Trustee, dated as of
December 1, 1998, relating to Green Tree Home
Improvement and Home Equity Loan Trust 1998-F
Loan-Backed Notes.
4.3 Trust Agreement between Green Tree Financial Corporation
as Depositor, and Wilmington Trust Company, as Owner
Trustee, dated as of December 1, 1998, relating to Green
Tree Home Improvement and Home Equity Loan Trust 1998-F
Loan-Backed Notes.
4.4 Administration Agreement between Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, as
Issuer, Green Tree Financial Servicing Corporation, as
Administrator, and U.S. Bank Trust National Association,
not in its individual capacity but solely as Indenture
Trustee, dated as of December 1, 1998, relating to Green
Tree Home Improvement and Home Equity Loan Trust 1998-F
Loan-Backed Notes.
8.1 Tax opinion of Briggs and Morgan, Professional
Association, dated December 30, 1998, relating to
REMIC matters
4
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EXHIBIT 4.1
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
SALE AND SERVICING AGREEMENT
between
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
and
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
Dated as of December 1, 1998
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TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS....................................................1-1
SECTION 1.01. General...............................................1-1
SECTION 1.02. Specific Terms........................................1-1
ARTICLE II - TRANSFER OF CONTRACTS.........................................2-1
SECTION 2.01. Transfer of Contracts.................................2-1
SECTION 2.02. Conditions to Acceptance by Owner Trustee.............2-1
ARTICLE III - REPRESENTATIONS AND WARRANTIES...............................3-1
SECTION 3.01. Representations and Warranties Regarding the Company
and Covenants of the Company.........................3-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract.............................................3-3
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate...........................3-8
SECTION 3.04. Representations and Warranties Regarding the Contract
Files................................................3-9
SECTION 3.05. Repurchase of Contracts for Breach of
Representations and Warranties.......................3-9
ARTICLE IV - PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS.....................................4-1
SECTION 4.01. Custody of Contracts..................................4-1
SECTION 4.02. Filings...............................................4-1
SECTION 4.03. Name Change or Relocation.............................4-1
SECTION 4.04. Chief Executive Office................................4-2
SECTION 4.05. Costs and Expenses....................................4-2
ARTICLE V - SERVICING OF CONTRACTS.........................................5-1
SECTION 5.01. Responsibility for Contract Administration............5-1
SECTION 5.02. Standard of Care......................................5-1
SECTION 5.03. Records...............................................5-1
SECTION 5.04. Inspection; Computer Tape.............................5-1
SECTION 5.05. Collections...........................................5-2
SECTION 5.06. Enforcement...........................................5-3
SECTION 5.07. Satisfaction of Contracts.............................5-4
SECTION 5.08. Costs and Expenses....................................5-4
SECTION 5.09. Maintenance of Insurance..............................5-4
SECTION 5.10. [RESERVED]............................................5-5
SECTION 5.11. Deposit of Funds......................................5-5
SECTION 5.12. Retitling; Lien Holder................................5-5
SECTION 5.13. [RESERVED]............................................5-6
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer.....5-6
SECTION 5.15. Annual Report of Accountants..........................5-6
SECTION 5.16. Certain Duties of the Servicer Under the Trust
Agreement............................................5-6
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SECTION 5.17. [RESERVED]
SECTION 5.18. Annual Statement as to Compliance; Notice of Servicer
Termination Event....................................5-7
SECTION 5.19. [RESERVED]
SECTION 5.20. Maintenance of Lien Interests in Real Property........5-7
SECTION 5.21. Covenants, Representations, and Warranties of
Servicer.............................................5-8
SECTION 5.22. Purchase of Contracts Upon Breach of Covenant.........5-8
ARTICLE VI - DISTRIBUTIONS; TRUST ACCOUNTS; LIMITED GUARANTY;
STATEMENTS TO SECURITYHOLDERS........................................6-1
SECTION 6.01. Trust Accounts........................................6-1
SECTION 6.02. Collection Account Deposits...........................6-2
SECTION 6.03. Permitted Withdrawals.................................6-2
SECTION 6.04. [RESERVED] ...........................................6-3
SECTION 6.06. Distributions.........................................6-3
SECTION 6.08. Claims Upon Policy....................................6-7
SECTION 6.09. Effect of Payments by the Note Insurer; Subrogation...6-8
SECTION 6.10. Notices to the Note Insurer...........................6-9
SECTION 6.11. Rights of the Note Insurer To Exercise Rights of
Noteholders..........................................6-9
SECTION 6.12. Withdrawals From Undelivered Contract Account.........6-9
ARTICLE VII - SERVICE TRANSFER.............................................7-1
SECTION 7.01. Servicer Termination Event............................7-1
SECTION 7.02. [RESERVED]............................................7-4
SECTION 7.03. [RESERVED]............................................7-4
SECTION 7.04. Notification to Securityholders.......................7-4
SECTION 7.05. Effect of Transfer....................................7-5
SECTION 7.06. Transfer of Collection Account........................7-5
SECTION 7.07. Limits on Liability...................................7-5
SECTION 7.08. Waiver of Past Defaults...............................7-6
ARTICLE VIII - TERMINATION.................................................8-1
SECTION 8.01. Company's or Servicer's Repurchase Option.............8-1
SECTION 8.02. Liquidation of Trust Estate...........................8-2
ARTICLE IX - INDEMNITIES...................................................9-1
SECTION 9.01. Company's Indemnities.................................9-1
SECTION 9.02. Liabilities to Obligors...............................9-1
SECTION 9.03. Servicer's Indemnities................................9-1
SECTION 9.04. Operation of Indemnities..............................9-2
ARTICLE X - MISCELLANEOUS.................................................10-1
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation
of Servicing Duties................................10-1
SECTION 10.02. Assignment or Delegation by Company.................10-1
SECTION 10.03. Amendment...........................................10-2
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SECTION 10.04. Notices.............................................10-3
SECTION 10.05. Merger and Integration..............................10-5
SECTION 10.06. Headings............................................10-5
SECTION 10.07. Governing Law.......................................10-5
SECTION 10.08. Limitation of Liability.............................10-5
SECTION 10.09. The Note Insurer....................................10-5
SECTION 10.10. Third Party Rights..................................10-6
SECTION 10.11. Limitation of Liability. ..........................10-6
EXHIBIT A - FORM OF ASSIGNMENT...........................................A - 1
EXHIBIT B - FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS..............................................B - 1
EXHIBIT C - FORM OF MONTHLY REPORT.......................................C - 1
EXHIBIT D - FORM OF CERTIFICATE OF SERVICING OFFICER.....................D - 1
iii
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THIS SALE AND SERVICING AGREEMENT, dated as of December 1, 1998, between
Green Tree Home Improvement and Home Equity Loan Trust 1998-F (the "Issuer" or
the "Trust") and Green Tree Financial Corporation, a corporation organized and
existing under the laws of the State of Delaware, as Seller and Servicer (the
"Company").
WHEREAS, the Issuer wishes to purchase from the Company certain
"Contracts," as hereinafter defined; and
WHEREAS, Financial Security Assurance Inc. (the "Note Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement; and
WHEREAS, the Company and the Issuer wish to set forth the terms and
conditions pursuant to which the Issuer will acquire the Contracts and the
Company will service the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Company and the Issuer agree as provided herein:
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ARTICLE I
DEFINITIONS
SECTION 1.01. General.
For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Article
include the plural as well as the singular, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Section
references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
All terms defined in any Related Document and not otherwise defined in
this Agreement shall have the meanings given them in such Related Document.
"Advance Payment" means, with respect to any Due Period, any payment by an
Obligor that was not due under the related Contract during or before such Due
Period and which payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Liquidation Loss Principal Amount" means, as of any Payment
Date, the excess, if any, of (a) the Note Principal Balance as of the preceding
Payment Date (after giving effect to distributions of principal thereon) over
(b) the Pool Scheduled Principal Balance.
"Agreement" means this Sale and Servicing Agreement as the same may be
amended or supplemented from time to time.
"Amount Available" means, as to any Payment Date, an amount equal to the
Collected Funds for that Payment Date, plus any amounts required to be deposited
in the Collection Account for such Payment Date pursuant to Sections 6.05, 8.01
and 8.02, plus any Insured Payment deposited in the Note Distribution Account
for such Payment Date.
"Amount Held for Future Distribution" means, as to any Payment Date, the
total of the amounts held in the Collection Account on the last day of the
related Due Period on account of Advance Payments in respect of such Due Period.
"Assignment" means the Assignment from the Company to the Trust in
substantially the form of Exhibit A, whereby the Company assigns the Contracts
to the Trust.
1-1
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"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 4.5%.
"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 7.5%.
"Backup Servicer" means the Indenture Trustee, which shall initially serve
as Backup Servicer hereunder in the event of the termination of the Servicer,
subject to the right of the Indenture Trustee to assign such duties to another
party pursuant to Section 7.01.
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banking institutions in Minneapolis, Minnesota,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee or successor Indenture Trustee are authorized
or obligated by law, executive order or governmental decree to be closed.
"Certificate" means the Certificate issued under the Trust Agreement.
"Certificate Distribution Account" means the account established and
maintained pursuant to Section 6.01(c).
"Certificate Distribution Amount" means the amount specified in Section
6.06(a)(xv).
"Certificateholder" means the person in whose name a Certificate is
registered on the Certificate Register.
"Civil Relief Interest Shortfall" means, with respect to any Due Period,
for any Contract as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Due Period as a result
of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, the amount,
if any, by which interest collectible on such Contract during the most recently
ended Due Period is less than one month's interest on the outstanding principal
balance of such Contract at a rate equal to the related Contract Interest Rate.
"Class" means pertaining to each Class of Notes.
"Class A Cross-over Date" means the Payment Date on which the Class A
Principal Balance (after giving effect to the distributions of principal on the
Class A Certificates on such Payment Date) is reduced to zero.
"Class A Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class A Noteholders on such Payment Date pursuant to
Sections 8.02(c)(1) and (5) of the Indenture.
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"Class A Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class A Formula Principal Distribution Amount, (b) the Class A
Interest Amount, and (c) any Unpaid Class A Interest Shortfall.
"Class A Formula Principal Distribution Amount" means, as to any Payment
Date on or before the Class A Cross-over Date, the lesser of (a) the Senior
Formula Principal Distribution Amount and (b) the Class A Principal Balance;
and, as to any Payment Date after the Class A Crossover Date, zero.
"Class A Interest Amount" means, as to any Payment Date, the sum of the
Class A-1 Interest Amount and the Class A-2 Interest Amount.
"Class A Portion" means, as to any Payment Date, a fraction, the numerator
of which is the sum of the Class A Principal Balance, and the denominator of
which is the Note Principal Balance.
"Class A Principal Balance" means, as to any Payment Date, the sum of the
Class A-1 Principal Balance and the Class A-2 Principal Balance.
"Class A Principal Deficiency Amount" means, as to any Payment Date, the
amount, if any, by which the Pool Scheduled Principal Balance on such Payment
Date is less than the Class A Principal Balance.
"Class A Principal Distribution Amount" means (1) as to any Payment Date
on which there is no Class A Principal Deficiency Amount, the lesser of (a) the
Amount Available remaining after distribution of amounts described in Sections
6.06(a)(i) through (iv) and (b) the Class A Formula Principal Distribution
Amount, and (2) as to any Payment Date on which there is a Class A Principal
Deficiency Amount not covered by an Insured Payment on such Payment Date, the
Amount Available less amounts described in Section 6.06(a)(i) through (iv).
"Class A-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class A-1 Interest Rate on the Class A-1 Principal Balance
for such Payment Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-1 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-1 Interest Amount and the Unpaid
Class A-1 Interest Shortfall for such Payment Date.
"Class A-1 Interest Rate" means a per annum rate of interest equal to
6.62%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-1 Notes" means the Class A-1 Notes issued by the Trust pursuant
to the Indenture.
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"Class A-1 Principal Balance" means, as to any Payment Date, the Original
Class A-1 Principal Balance less all amounts distributed to Holders of Class A-1
Notes on any prior Payment Date on account of principal pursuant to Section
8.02(c) of the Indenture.
"Class A-2 Interest Amount" means, with respect to any Payment Date, one
month's interest (or, with respect to the first Payment Date, interest from and
including the Closing Date to but excluding the first Payment Date) at the Class
A-2 Interest Rate on the Class A-2 Principal Balance for such Payment Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-2 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-2 Interest Amount for such Payment
Date and the Unpaid Class A-2 Interest Shortfall.
"Class A-2 Interest Rate" means a per annum rate of interest equal to
6.62%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-2 Notes" means the Class A-2 Notes issued by the Trust pursuant
to the Indenture.
"Class A-2 Principal Balance" means, as to any Payment Date the Original
Class A-2 Principal Balance less all amounts distributed to Holders of Class A-2
Notes on prior Payment Dates on account of principal pursuant to Section 8.02(c)
of the Indenture.
"Class B Cross-over Date" means the earlier of:
(a) the Class M-2 Cross-over Date, and
(b) the first Payment Date on or after the Payment Date occurring in
January 2003.
"Class B Floor Reduction Amount" means, as to any Payment Date on or prior
to the Class M-2 Cross-over Date, the amount, if any, by which the Class B
Percentage of the Formula Principal Distribution Amount exceeds (a) the Class B
Principal Balance for such Payment Date less (b) $2,250,000, and, as to any
Payment Date after the Class M-2 Cross-over Date, zero.
"Class B Formula Principal Distribution Amount" means, as to any Payment
Date, the Class B Percentage of the Formula Principal Distribution Amount less
the Class B Floor Reduction Amount.
"Class B Percentage" means 100% minus the Senior Percentage.
"Class B Principal Balance" means, as to 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 sum of the Class B
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Principal Balance as of such Payment Date and the denominator of which is the
Pool Scheduled Principal Balance as of the immediately preceding Payment Date,
is equal to or greater than 22%.
"Class B Principal Distribution Test" means, as to 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.
"Class B-1 Adjusted Principal Balance" means, as of any Payment Date, the
Class B-1 Principal Balance as of that Payment Date minus the Class B-1
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"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 Notes on such Payment Date) is reduced to zero.
"Class B-1 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class B-1 Noteholders on such Payment Date pursuant to
Sections 8.02(c)(4), (8) and (9) of the Indenture.
"Class B-1 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class B-1 Interest Amount, (b) any Unpaid Class B-1 Interest
Shortfall, (c) any Class B-1 Formula Liquidation Loss Interest Amount, and (d)
the Class B-1 Formula Principal Distribution Amount.
"Class B-1 Formula Liquidation Loss Interest Distribution Amount" means,
as to 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 Formula Principal Distribution Amount" means, as to any Payment
Date on or before the Class B-1 Cross-over Date, the lesser of (a) the Class B
Formula Principal Distribution Amount plus, on the Class M-2 Cross-over Date,
the Senior Formula Principal Distribution Amount less the Class M Principal
Distribution Amount or (b) the Class B-1 Principal Balance; and, on any Payment
Date after the Class B-1 Cross-over Date, zero.
"Class B-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class B-1 Interest Rate on the Class B-1 Adjusted Principal
Balance for such Payment Date.
"Class B-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class B-1 Notes on such Payment Date pursuant to Section 8.02(c)(4) of the
Indenture is less than the sum of the Class B-1 Interest Amount plus the Unpaid
Class B-1 Interest Shortfall for such Payment Date.
"Class B-1 Interest Rate" means 8.99% per annum, computed on the basis of
a year of 360 days consisting of twelve 30-day months.
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"Class B-1 Liquidation Loss Interest Amount" means, as to 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 the first Payment
Date) at the Class B-1 Interest 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, as to any Payment
Date, the amount, if any, by which the Class B-1 Formula Liquidation Loss
Interest Distribution Amount exceeds any amount distributed to Class B-1 Note on
such Payment Date pursuant to Section 8.02(c)(9) of the Indenture.
"Class B-1 Liquidation Loss Principal Amount" means, as to 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 Notes 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 Notes on such Payment Date).
"Class B-1 Notes" means the Class B-1 Notes issued by the Trust pursuant
to the Indenture.
"Class B-1 Principal Balance" means, as to any Payment Date, the Original
Class B-1 Principal Balance less all amounts distributed to Holders of Class B-1
Notes on prior Payment Dates on account of principal pursuant to Section
8.02(c)(8) of the Indenture.
"Class B-1 Principal Distribution Amount" means, as to any Payment Date,
the lesser of (a) the Amount Available remaining after distribution of amounts
described in Sections 6.06(a)(i) through (vii), and (b) the Class B-1 Formula
Principal Distribution Amount.
"Class B-2 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class B-2 Noteholders on such Payment Date pursuant to
Section 8.02(c)(10) of the Indenture.
"Class B-2 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class B-2 Interest Amount, (b) any Unpaid Class B-2 Interest
Shortfall, (c) the Class B-2 Formula Principal Distribution Amount, and (d) the
Class B-2 Liquidation Loss Principal Amount, if any (but in no event more than
is necessary to reduce the Class B-2 Principal Balance to zero).
"Class B-2 Formula Principal Distribution Amount" means, as to any Payment
Date on or after the Class B-1 Cross-over Date, the lesser of (a) the Class B
Formula Principal Distribution Amount less, on the Class B-1 Cross-over Date,
the Class B-1 Principal Distribution Amount, and (b) the Class B-2 Principal
Balance.
"Class B-2 Interest Amount" means, as to any Payment Date, an amount equal
to one month's interest (or, with respect to the first Payment Date, interest
from and including the Closing Date to but excluding the first Payment Date) at
the Class B-2 Interest Rate on the Class B-2 Principal Balance for such Payment
Date.
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"Class B-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class B-2 Certificates on such Payment Date pursuant to Section 8.02(c)(10)
of the Indenture is less than the sum of the Class B-2 Interest Amount plus the
Unpaid Class B-2 Interest Shortfall for such Payment Date.
"Class B-2 Interest Rate" means 10% per annum, computed on the basis of a
360-day year consisting of twelve 30-day months.
"Class B-2 Liquidation Loss Principal Amount" means, as to 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 Notes on such Payment Date) and
(b) the Aggregate Liquidation Loss Principal Amount.
"Class B-2 Notes" means the Class B-2 Notes issued by the Trust pursuant
to the Indenture.
"Class B-2 Principal Balance" means, as to any Payment Date, the Original
Class B-2 Principal Balance less all amounts distributed to Holders of Class B-2
Notes on prior Payment Dates on account of principal pursuant to Section
8.02(c)(10) of the Indenture.
"Class M Formula Principal Distribution Amount" means, as to any Payment
Date before the Class A Cross-over Date or after the Class M-2 Cross-over Date,
zero; and, as to any Payment Date on or after the Class A Cross-over Date and on
or before the Class M-2 Cross-over Date, the lesser of (a) the Senior Formula
Principal Distribution Amount less, on the Class A Cross-over Date, the Class A
Principal Distribution Amount, and (b) the Class M Principal Balance.
"Class M Principal Balance" means, as to any Payment Date, the sum of the
Class M-1 Principal Balance and the Class M-2 Principal Balance.
"Class M Principal Distribution Amount" means, as to any Payment Date, the
lesser of (a) the Amount Available remaining after distribution of amounts
described in Sections 6.06(a)(i) through (vi), and (b) the Class M Formula
Principal Distribution Amount.
"Class M-1 Adjusted Principal Balance" means, as of any Payment Date, the
Class M-1 Principal Balance as of that Payment Date minus the Class M-1
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"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 Notes on such Payment Dates) is reduced to zero.
"Class M-1 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class M-1 Noteholders on such Payment Date pursuant to
Sections 8.02(c)(2), (6) and (9) of the Indenture.
"Class M-1 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class M-1 Interest Amount, (b) any Unpaid Class M-1 Interest
Shortfall, (c) any Class M-1
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Formula Liquidation Loss Interest Amount, and (d) the Class M-1 Formula
Principal Distribution Amount.
"Class M-1 Formula Liquidation Loss Interest Distribution Amount" means,
as to 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 Formula Principal Distribution Amount" means, as to any Payment
Date before the Class A Cross-over Date or after the Class M-1 Cross-over Date,
zero; and, as to any Payment Date on or after the Class A Cross-over Date and on
or before the Class M-1 Cross-over Date, the lesser of (a) the Senior Formula
Principal Distribution Amount less, on the Class A Cross-over Date, the Class A
Principal Distribution Amount, and (b) the Class M-1 Principal Balance.
"Class M-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class M-1 Interest Rate on the Class M-1 Adjusted Principal
Balance for such Payment Date.
"Class M-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class M-1 Notes on such Payment Date pursuant to Section 8.02(c)(2) of the
Indenture is less than the sum of the Class M-1 Interest Amount and the Unpaid
Class M-1 Interest Shortfall for such Payment Date.
"Class M-1 Interest Rate" means a per annum rate of interest equal to
7.43%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
"Class M-1 Liquidation Loss Interest Amount" means, as to 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 the first Payment
Date) at the Class M-1 Interest 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, as to any Payment
Date, the amount, if any, by which the Class M-1 Formula Liquidation Loss
Interest Distribution Amount exceeds any amount distributed to Class M-1
Noteholders on such Payment Date pursuant to Section 8.02(c)(9) of the
Indenture.
"Class M-1 Liquidation Loss Principal Amount" means, as to 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 Notes 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 Notes on such Payment Date).
"Class M-1 Notes" means the Class M-1 Notes issued by the Trust pursuant
to the Indenture.
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"Class M-1 Principal Balance" means, as to any Payment Date, the Original
Class M-1 Principal Balance less all amounts distributed to Holders of Class M-1
Notes on prior Payment Dates on account of principal pursuant to Section 8.02(c)
of the Indenture.
"Class M-1 Principal Distribution Amount" means as to any Payment Date the
amount paid to the Class M-1 Noteholders under Section 8.02 (c) (6) of the
Indenture.
"Class M-2 Adjusted Principal Balance" means, as of any Payment Date, the
Class M-2 Principal Balance as of that Payment Date minus the Class M-2
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"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 Notes on such Payment Date) is reduced to zero.
"Class M-2 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class M-2 Noteholders on such Payment Date pursuant to
Sections 8.02(c)(2), (7) and (9) of the Indenture.
"Class M-2 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class M-2 Interest Amount, (b) any Unpaid Class M-2 Interest
Shortfall, (c) any Class M-2 Formula Liquidation Loss Interest Amount, and (d)
the Class M-2 Formula Principal Distribution Amount.
"Class M-2 Formula Liquidation Loss Interest Distribution Amount" means,
as to 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 Formula Principal Distribution Amount" means, as to any Payment
Date before the Class M-1 Cross-over Date or after the Class M-2 Cross-over
Date, zero; and, as to any Payment Date on or after the Class M-1 Cross-over
Date and on or before the Class M-2 Cross-over Date, the lesser of (a) the
Senior Formula Principal Distribution Amount less, on the Class M-1 Cross-over
Date, the Class M-1 Principal Distribution Amount, and (b) the Class M-2
Principal Balance.
"Class M-2 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class M-2 Interest Rate on the Class M-2 Adjusted Principal
Balance.
"Class M-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class M-2 Notes on such Payment Date pursuant to Section 8.02(c)(2) of the
Indenture is less than the sum of the Class M-2 Interest Amount and the Unpaid
Class M-2 Interest Shortfall for such Payment Date.
"Class M-2 Interest Rate" means a per annum rate of interest equal to
8.16%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
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"Class M-2 Liquidation Loss Interest Amount" means, as to 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 the first Payment
Date) at the Class M-2 Interest 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, as to 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
Noteholders on such Payment Date pursuant to Section 8.02(c)(9) of the
Indenture.
"Class M-2 Liquidation Loss Principal Amount" means, as to 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 Notes 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 Notes on such Payment Date).
"Class M-2 Notes" means the Class M-2 Notes issued by the Trust pursuant
to the Indenture.
"Class M-2 Principal Balance" means, as to any Payment Date, the Original
Class M-2 Principal Balance less all amounts distributed to Holders of Class M-2
Notes on prior Payment Dates on account of principal pursuant to Section 8.02(c)
of the Indenture.
"Class M-2 Principal Distribution Amount" means, as to any Payment Date,
the amount paid to Class M-2 Noteholders under Section 8.02 (c) (7) of the
Indenture.
"Class Percentage Interest" means, as to any Note or Certificate, the
percentage interest evidenced thereby in distributions made on the related
Class, such percentage interest being equal to the percentage (carried to eight
places) obtained from dividing the denomination of such Note or Certificate by
the aggregate denomination of all Notes or Certificates of the related Class
(which equals the Original Class A-1 Principal Balance in the case of a Class
A-1 Note, the Original Class A-2 Principal Balance in the case of a Class A-2
Note, the Original Class M-1 Principal Balance in the case of a Class M-1 Note,
the Original Class M-2 Principal Balance in the case of a Class M-2 Note, the
Original Class B-1 Principal Balance in the case of a Class B-1 Note or the
Original Class B-2 Principal Balance in the case of a Class B-2 Note). The
aggregate Class Percentage Interest for each Class of Notes or Certificates
shall equal 100%.
"Class Principal Balance" means, as to any date, the Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class M-1 Principal Balance, the
Class M-2 Principal Balance, the Class B-1 Principal Balance or the Class B-2
Principal Balance, as appropriate.
"Closing Date" means December 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, with respect to any Contract, (i) the
mortgage, deed of trust or security deed granted by or on behalf of the related
Obligor with respect thereto, including the lien
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on the related real property, (ii) all other security interests or liens and
property subject thereto from time to time purporting to secure payment of such
Contract, whether pursuant to the agreement giving rise to such Contract or
otherwise, together with all financing statements signed by the Obligor
describing any collateral securing such Contract, (iii) all rights the Company
may have against the originator of the Contract if other than the Company, (iv)
all rights under hazard insurance, if applicable, on the property described in
the Contract, (v) all rights in any title insurance policy with respect to a
Contract and (vi) all guarantees, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of such
Contract whether pursuant to the agreement giving rise to such Contract or
otherwise, and (vii) all records in respect of such Contract.
"Collected Funds" means, as to any Payment Date, an amount equal to (a)
the sum of (i) the amount on deposit in the Collection Account as of the close
of business on the last day of the related Due Period (exclusive of any amounts
deposited therein pursuant to Sections 6.05, 8.01 or 8.02 of this Agreement),
and (ii) any amounts required to be deposited in the Collection Account on or
before the Business Day immediately preceding such Payment Date pursuant to
Section 5.09, reduced by (b) the sum as of the close of business on the last day
of the related Due Period of (i) the Amount Held for Future Distribution and
(ii) amounts permitted to be withdrawn by the Trustee from the Collection
Account pursuant to clauses (b) - (e), inclusive, of Section 6.03.
"Collection Account" means the account established and maintained pursuant
to Section 6.01.
"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contract File" means, as to each Contract, (a) the original copy of the
Contract which is comprised of the related contract and/or promissory note,
endorsed to the Indenture Trustee or in blank, (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 Contract was originated by
a contractor or lender other than the Company, the original or a copy of an
assignment of the mortgage, deed of trust or security deed by the contractor or
lender to the Company, (d) an assignment of the mortgage, deed of trust or
security deed to the Indenture Trustee or in blank, and (e) originals of any
extension, modification or waiver agreement(s).
"Contract Interest Rate" means, with respect to any Contract, the annual
rate of interest specified in that Contract.
"Contracts" means, collectively, the Home Improvement Contracts and the
Home Equity Contracts.
"Corporate Trust Office" means with respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the Closing Date
is located at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890-0001, Attention: Corporate Trust Administration; the telecopy
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number for the Corporate Trust Office of the Owner Trustee on the date of the
execution of this Agreement is 302-651-8882; with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at U.S. Bank Trust National Association, 180 East
Fifth Street, St. Paul, Minnesota 55101 Attention: Corporate Trust Department;
the telecopy number for the Corporate Trust Office of the Indenture Trustee on
the date of execution of this Agreement is 612-244-0089.
"Counsel for the Company" means Briggs and Morgan, P.A., or other legal
counsel for the Company acceptable to the Note Insurer.
"Cumulative Realized Losses" means, as to 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 as of such Payment
Date is less than or equal to 13%.
"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.
"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 5%.
"Current Realized Loss Ratio" means, as to 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 two immediately preceding Payment
Dates, multiplied by four, and the denominator of which is the arithmetic
average of the Pool Scheduled Principal Balance of as of the third preceding
Payment Date and the Pool Scheduled Principal Balance of as of such Payment
Date.
"Cut-off Date" means December 1, 1998 (or the date of origination, if
later).
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Contracts.
"Cut-off Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due prior thereto.
"Defaulted Contract" means a Contract with respect to which the Servicer
commenced foreclosure proceedings, made a sale of such Contract to a third party
for foreclosure or enforcement, or as to which there was a Delinquent Payment
180 or more days past due.
"Delinquent Payment" means, as to any Contract, with respect to any Due
Period, any payment or portion of a payment of principal or interest that was
originally scheduled to be made during such Due Period under such Contract
(after giving effect to any reduction in the principal amount deemed owed on
such Contract by the Obligor) and was not received or applied during such
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Due Period, whether or not any payment extension permitted under Section 5.06(f)
has been granted by the Servicer.
"Determination Date" means the third Business Day prior to each Payment
Date during the term of this Agreement.
"Due Date" means, as to any Contract, the date of the month on which the
scheduled monthly payment for such Contract is due.
"Due Period" means a calendar month during the term of this Agreement.
"Electronic Ledger" means the electronic master record of installment sale
contracts, home equity loans and 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 FDIC; (iii) a
trust account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Indenture Trustee, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the capital and surplus of the bank holding company) of not less than
$50,000,000 and the securities of such depository institution (or, if such
depository institution is a subsidiary of a bank holding company system and such
depository institution's securities are not rated, the securities of the bank
holding company) shall have a credit rating from Standard & Poor's (if rated by
Standard & Poor's) and Moody's (if rated by Moody's) in one of its generic
credit rating categories which signifies investment grade; or (iv) an account
that will not cause either of the Rating Agencies to downgrade or withdraw their
then-current ratings assigned to the Notes (without regard to the Note Insurance
Policy), as confirmed in writing by the Rating Agencies.
"Eligible Institution" means any depository institution (which may be the
Owner Trustee, the Indenture Trustee or an Affiliate of either) organized under
the laws of the United States or any State, the deposits of which are insured to
the full extent permitted by law by the Bank Insurance Fund (currently
administered by the Federal Deposit Insurance Corporation), which is subject to
supervision and examination by federal or state authorities and whose short-term
deposits have been rated A-1 by Standard & Poor's and P-1 by Moody's or whose
unsecured long-term debt has been rated in one of the two highest rating
categories by Standard & Poor's and Moody's in the case of unsecured long-term
debt, or who shall otherwise be acceptable to the Rating Agencies.
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association having the highest credit rating
then available from Moody's and Standard & Poor's, or any agency or
instrumentality of the United States of America the obligations of
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which are backed by the full faith and credit of the United States of
America and which are noncallable;
(ii) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or any
Affiliate of the Indenture Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any State
thereof and subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, the commercial paper or other
short-term deposits of such depository institution or trust company (or,
in the case of a depository institution which is the principal subsidiary
of a holding company, the commercial paper or other short-term debt
obligations of such holding company) are rated at least A-1+ by Standard &
Poor's and at least P-1 by Moody's;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then available
from Moody's and Standard & Poor's and whose only investments are in
securities described in clauses (i) and (ii) above if the Indenture
Trustee has taken possession of any certificate evidencing the shares or,
if uncertificated, there is an appropriate book entry notation showing the
Indenture Trustee as the owner of the shares;
(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) above if the
Indenture Trustee has taken possession of any certificate evidencing the
securities or, if uncertificated, there is an appropriate book entry
notation showing the Indenture Trustee as the owner of the securities;
(v) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a credit rating of at least AAA by Standard &
Poor's and at least Aaa from Moody's at the time of such investment;
provided, however, that securities issued by any particular corporation
will not be Eligible Investments to the extent that investment therein
will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the corpus of the Trust to exceed 10%
of amounts held in the Collection Account;
(vi) commercial paper having a rating of at least A-1+ from Standard
& Poor's and at least P-1 by Moody's at the time of such investment or
pledge as a security; and
(vii) any other investment approved by the Note Insurer in advance
and in writing.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
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Each of the Indenture Trustee and the Owner Trustee may trade with itself
or an Affiliate in the purchase or sale of such Eligible Investments.
"Eligible Servicer" means the Company or a Person designated as an
approved seller-servicer by Fannie Mae or Freddie Mac and otherwise qualified to
act as servicer of the Contracts under applicable Federal and State laws and
regulations, and which services not less than an aggregate of $100,000,000 in
outstanding principal amount of home improvement contracts and promissory notes,
manufactured housing conditional sales contracts and installment loan agreements
and home equity loans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Contracts comprising a portion of the corpus of the Trust.
"Final Scheduled Payment Date" has the meaning given in the Indenture.
"Formula Principal Distribution Amount" means, with respect to any Payment
Date, the sum of the Group 1 Formula Principal Distribution Amount and the Group
2 Formula Principal Distribution Amount, provided that the Formula Principal
Distribution Amount for the Distribution Date in August 2028 shall be the Note
Principal Balance.
"Group 1 Contract" means a Contract identified as such on the List of
Contracts.
"Group 2 Contract" means a Contract identified as such on the List of
Contracts.
"Group 1 Formula Principal Distribution Amount" means, as of any Payment
Date, the sum of the following amounts with respect to the related Due Period,
in each case computed in accordance with the method specified in the related
Group 1 Contract:
(i) all scheduled payments of principal due on each outstanding
Group 1 Contract during the related 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
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(ii) the Scheduled Principal Balance of each Group 1 Contract which,
during the related Due Period, was purchased by the Company pursuant to
this Agreement on account of a breach of a representation or warranty;
plus
(iii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received on Group 1 Contracts during the related Due
Period; plus
(iv) the aggregate Scheduled Principal Balance of all Group 1
Contracts that became Liquidated Contracts during the related Due Period;
plus the amount of any reduction in the outstanding principal balance of
any Group 1 Contract during such Due Period ordered as a result of a
bankruptcy or similar proceeding involving the related Obligor; plus
(v) any amount described in clauses (i) through (iv) above that was
not previously distributed because of an insufficient amount of funds
available in the Collection 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 Guaranty Payment
and corresponding reduction in the Class B Principal Balance.
"Group 2 Formula Principal Distribution Amount" means, as of any Payment
Date, the sum of the following amounts with respect to the related Due Period,
in each case computed in accordance with the method specified in the related
Group 2 Contract:
(i) all scheduled payments of principal due on each outstanding
Group 2 Contract during the related 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
(ii) the Scheduled Principal Balance of each Group 2 Contract which,
during the related Due Period, was purchased by the Company pursuant to
this Agreement on account of a breach of a representation or warranty;
plus
(iii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received on Group 2 Contracts during the related Due
Period; plus
(iv) the aggregate Scheduled Principal Balance of all Group 2
Contracts that became Liquidated Contracts during the related Due Period;
plus the amounts of any reduction in the outstanding principal balance of
a Group 2 Contract during such Due Period ordered as a result of a
bankruptcy or similar proceeding involving the related Obligor; plus
(v) any amount described in clauses (i) through (iv) above that was
not previously distributed because of an insufficient amount of funds
available in the Collection 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 Guaranty Payment
and corresponding reduction in the Class B Principal Balance.
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"Guaranty Payment" means, as of any Payment Date, the amount, if any, by
which (A) the Class B-2 Formula Distribution Amount on such Payment Date exceeds
(B) the remainder of (x) the sum of the Collected Funds as of that Payment Date
plus any amounts on deposit in the Collection Account as of that Payment Date
pursuant to Sections 8.01 or 8.02 of this Agreement, minus (y) the amounts to be
distributed from the Collection Account on that Payment Date pursuant to clauses
(i) through (x) of Section 6.06(a).
"Holder" means the person in whose name a Note is registered on the Note
Register.
"Home Equity Contract" means each closed-end home equity loan described in
the List of Contracts and to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, any and all related mortgages, deeds of
trust and security deeds and any and all rights to receive payments which are
due pursuant thereto on or after the Cut-off Date.
"Home Improvement Contracts" means each retail installment sale contract
and promissory note described in the List of Contracts and to be assigned and
conveyed by the Company to the Trust, and includes, without limitation, any and
all related mortgages, deeds of trust and security deeds and any and all rights
to receive payments which are due pursuant thereto on or after the Cut-off Date.
"Indemnification Agreement" means the Indemnification Agreement dated as
of December 16, 1998 among the Note Insurer, the Seller, the Trust and the
Underwriters.
"Indenture" means the Indenture, dated as of December 1, 1998, between the
Trust and U.S. Bank Trust National Association, as Indenture Trustee, as the
same may be amended and supplemented from time to time.
"Indenture Trustee" means the Person acting as Trustee under the
Indenture, its successors in interest and any successor Trustee under the
Indenture.
"Independent" means, when used with respect to any specified Person,
Briggs and Morgan, P.A., or any Person who (i) is in fact independent of the
Company and the Servicer, (ii) does not have any direct financial interest or
any material indirect financial interest in the Company or the Servicer or in an
Affiliate of either and (iii) is not connected with the Company or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Insurance Agreement" means the Insurance and Indemnity Agreement dated as
of December 1, 1998, among the Trust, the Seller and the Note Insurer, as such
agreement may be amended from time to time.
"Insured Payment" means as to any Payment Date, the lesser of (a) the
Shortfall or (b) the amount deposited in the Policy Payments Account pursuant to
Section 6.08.
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"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by The Chase
Manhattan Bank at its principal office in the City of New York, as its prime or
base lending rate (any change in such rate of interest to be effective on the
date such change is announced by The Chase Manhattan Bank) plus 3%, and (ii) the
per annum rate equal to 6.62% and (b) the maximum rate permissible under
applicable usury or similar laws limiting interest rates. The Late Payment Rate
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days.
"Limited Guaranty" means the obligation of the Company to make Guaranty
Payments pursuant to Section 6.05.
"Liquidated Contract" means with respect to any Due Period, either
(1) a Defaulted Contract as to which the Servicer has received from
the Obligor, or a third party purchaser of the Contract, all amounts which
the Servicer reasonably and in good faith expects to recover from or on
account of such Contract, or
(2) a Contract as to which there was a Delinquent Payment 180 or
more days past due (without regard to any extension given by the Servicer
under Section 5.06(f));
provided, however, that any Contract which the Company is obligated to
repurchase pursuant to Section 3.05, and did so repurchase shall be deemed not
to be a Liquidated Contract; and provided, further, that with respect to Due
Periods beginning on or after August 2027, a Liquidated Contract also means any
Contract as to which the Servicer has commenced foreclosure proceedings or made
a sale of the Contract to a third party for foreclosure or enforcement.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Contract, 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 Contracts, whether through
repossession, foreclosure sale or otherwise.
"List of Contracts" means the list identifying each Contract constituting
part of the corpus of the Trust, which list (a) identifies each Group 1 and
Group 2 Contract, (b) sets forth as to each Contract (i) the Cut-off Date
Principal Balance, (ii) the amount of monthly payments due from the Obligor,
(iii) the Contract Interest Rate and (iv) the maturity date, and (c) which is
attached to the Assignment.
"Moody's" means Moody's Investors Services, Inc., or any successor
thereto; provided that, if Moody's no longer has a rating outstanding on any
Class of Notes, then references herein to "Moody's" shall be deemed to refer to
the NRSRO then rating any Class of the Notes (or, if more than one such NRSRO is
then rating any Class of the Notes, to such NRSRO as may be designated
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by the Servicer), and references herein to ratings by or requirements of Moody's
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Monthly Report" has the meaning assigned in Section 5.14.
"Monthly Servicing Fee" means, as of any Payment Date (a) on which the
Company is acting as Servicer, one-twelfth of the product of 0.75% and the Pool
Scheduled Principal Balance and (b) on which the Company is not acting as
Servicer, any amount agreed to by the Indenture Trustee, the Note Insurer and
the successor Servicer; provided that only that portion of the Monthly Servicing
Fee that does not exceed one-twelfth of the product of 0.75% and the Pool
Scheduled Principal Balance for the immediately preceding Payment Date shall be
paid pursuant to Section 6.06(a)(i) and any balance shall be paid pursuant to
Section 6.06(a)(xiv).
"Net Liquidation Loss" means, as to a Liquidated Contract, the difference
between (a) the Repurchase Price of such Contract, and (b) the Net Liquidation
Proceeds with respect to such Liquidated Contract, where such difference is a
positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, the
proceeds received, or, for Contracts which become Liquidated Contracts pursuant
to the last proviso in the definition of "Liquidated Contract," the estimated
proceeds to be received, as of the last day of the Due Period in which such
Contract became a Liquidated Contract, from the Obligor, from a third party
purchaser of the Contract, under insurance or otherwise, net of Liquidation
Expenses.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(b).
"Note Insurance Policy" means the financial guaranty insurance policy
(number 50763-N) dated December 30, 1998 issued by the Note Insurer to the
Indenture Trustee for the benefit of the Holders of the Class A-1 Notes and
Class A-2 Notes pursuant to which the Note Insurer guarantees the Scheduled
Payments.
"Note Insurer" Financial Security Assurance Inc., or any successor
thereto, as issuer of the Note Insurance Policy.
"Note Insurer Default" means the existence and continuance of any of the
following:
(a) the Note Insurer fails to make a payment required under the Note
Insurance Policy in accordance with its terms; or
(b) the Note Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the
benefit of its creditors or (iii) had an order for relief entered against
it under the United States Bankruptcy Code, the New York State Insurance
Law or any other similar federal or
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state law relating to insolvency, bankruptcy, rehabilitation, liquidation,
or reorganization that is final and nonappealable.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"Note Majority" means, as to each Class of Notes, Holders of Notes
representing a majority of the Class Principal Balance of such Class, provided
that with respect to the Class A Notes, Note Majority means the Note Insurer if
there is at the time of determination no continuing Note Insurer Default.
"Note Pool Factor" means, with respect to any Payment Date and each Class
of Notes, an eight-digit decimal figure equal to the outstanding principal
balance of such Class of Notes as of such Payment Date (after giving effect to
all distributions on such date) divided by the Original Class Principal Balance
of such Class of Notes.
"Note Principal Balance" means, as of any Payment Date, the sum of the
Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class M-1
Principal Balance, the Class M-2 Principal Balance, the Class B-1 Principal
Balance and the Class B-2 Principal Balance.
"Notes" means the Class A-1 Notes, Class A-2 Notes, Class M-1 Notes, Class
M-2 Notes, Class B-1 Notes or Class B-2 Notes.
"NRSRO" means any nationally recognized statistical rating organization.
"MN UCC" means the Uniform Commercial Code as in effect in the State of
Minnesota.
"Obligor" means a Person who is indebted under a Contract.
"Officer's Certificate" means a certificate signed by the Chairman of the
Board, President or any Vice President of the Company and delivered to the Owner
Trustee and/or the Indenture Trustee as applicable.
"Opinion of Counsel" means a written opinion of counsel, who may, except
as expressly provided herein, be salaried counsel for the Company, acceptable to
the Indenture Trustee, the Owner Trustee, the Note Insurer and the Company.
"Original Class A-1 Principal Balance" means $245,280,000.
"Original Class A-2 Principal Balance" means $99,645,000.
"Original Class M-1 Principal Balance" means $24,075,000.
"Original Class M-2 Principal Balance" means $31,500,000.
"Original Class B-1 Principal Balance" means $24,750,000.
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"Original Class B-2 Principal Balance" means $24,750,000.
"Original Class Principal Balance" means, with respect to any Class, the
Original Class A-1 Principal Balance, the Original Class A-2 Principal Balance,
the Original Class M-1 Principal Balance, the Original Class M-2 Principal
Balance, the Original Class B-1 Principal Balance or the Original Class B-2
Principal Balance, as appropriate.
"Original Note Principal Balance" means the sum of the Original Class A-1
Principal Balance, Original Class A-2 Principal Balance, Original Class M-1
Principal Balance, Original Class M-2 Principal Balance, Original Class B-1
Principal Balance and Original B-2 Principal Balance.
"Owner Trustee" means Wilmington Trust Company, acting not individually
but solely as trustee, or its successor in interest, and any successor appointed
as provided in the Trust Agreement.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Collection Account pursuant to the proviso in Section 3.05(a).
"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 on January 15, 1999.
"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.
"Policy Payments Account" means the policy payment account maintained by
the Indenture Trustee pursuant to Section 6.08(b) hereof.
"Pool Factor" means, as to any Payment Date, a percentage derived from a
fraction, the numerator of which is the Note Principal Balance and the
denominator of which is the Cut-off Date Pool Principal Balance for such Payment
Date.
"Pool Scheduled Principal Balance" means, as of any Payment Date, the
aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the related Due Period.
"Premium Amount" means, as to any Payment Date, an amount equal to 0.18%
per annum of the Class A Principal Balance.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (exclusive of Liquidation Proceeds) which is received in advance of its
scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled Payment Date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
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"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Rating Agencies" means Standard & Poor's and Moody's.
"Realized Losses" means, as to any Payment Date, the aggregate Net
Liquidation Losses for all Contracts that became Liquidated Contracts during the
immediately preceding Due Period.
"Record Date" means the Business Day immediately preceding the related
Payment Date.
"Reimbursement Amount" means, as of any Payment Date, the sum of (x)(i)
all Insured Payments previously paid to the Indenture Trustee by the Note
Insurer and not previously repaid to the Note Insurer pursuant to Section
6.06(a)(vi) plus (ii) interest accrued on each such Insured Payment not
previously repaid calculated at the Late Payment Rate and (y)(i) any amounts
then due and owing to the Note Insurer under the Insurance Agreement (including,
without limitation, any unpaid Premium Amount relating to such Payment Date or
an earlier Payment Date) as certified in writing by the Note Insurer to the
Servicer and the Indenture Trustee, plus (ii) interest on such amounts at the
Late Payment Rate.
"Related Documents" means the Trust Agreement, the Indenture, the
Administration Agreement, the Insurance Agreement, the Indemnification
Agreement, the Note Insurance Policy, the Certificate, the Notes, the Custodial
Agreement, and the Underwriting Agreement. The Related Documents executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05 or which becomes a Liquidated Contract, an amount equal
to (a) the remaining principal amount outstanding on such Contract, plus (b)
interest at the Contract Interest Rate on such Contract from the end of the Due
Period with respect to which the Obligor last made a scheduled payment through
the date of such repurchase or liquidation.
"Responsible Officer" means, with respect to the Owner Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Owner Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"Scheduled Payments" means, as to any Payment Date, the sum of (a) the
Class A Interest Amount less the Class A Portion of any Civil Relief Interest
Shortfall, (b) any Class A Principal Deficiency Amount and (c) without
duplication, on the Final Scheduled Payment Date for the Class A-1 Notes or the
Class A-2 Notes, the Class A-1 Principal Balance or Class A-2 Principal Balance,
respectively.
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"Scheduled Principal Balance" means, with respect to any Contract and any
Payment Date or the Cut-off Date, the principal balance of such Contract as of
the Due Date in the Due Period immediately preceding such Payment Date or
Cut-off Date, as the case may be, as specified in the amortization schedule at
the time relating thereto (before any adjustment to such amortization schedule
by reason of any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to any
previous Partial Principal Prepayments and to the payment of principal due on
such Due Date and irrespective of any delinquency in payment by, or extension
granted to, the related Obligor. If for any Contract the Cut-off Date is the
date of origination of the Contract, its Scheduled Principal Balance as of the
Cut-off Date is the principal balance of the Contract on its date of
origination.
"Securities" means the Notes and the Certificate.
"Securityholders" means the Noteholders and the Certificateholder.
"Seller" means Green Tree Financial Corporation.
"Senior Formula Principal Distribution Amount" means, as to any Payment
Date, the Senior Percentage of the Formula Principal Distribution Amount plus
the Class B Floor Reduction Amount.
"Senior Percentage" means:
(a) as to any Payment Date prior to the Class B Cross-over Date,
100%;
(b) as to 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) as to 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 as of such Payment Date, and the
denominator of which is the Pool Scheduled Principal Balance as of the
immediately preceding Payment Date; and
(d) as to any Payment Date after the Class M-2 Cross-over Date, 0%.
"Service Transfer" has the meaning assigned in Section 7.01.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Servicer Termination Event" has the meaning assigned in Section 7.01.
"Servicer Termination Test" means, to be considered "satisfied" on any
Payment Date, that (a) the Average Sixty-Day Delinquency Ratio does not exceed
7.5%, (b) the sum of the Realized
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Losses for the preceding twelve Payment Dates does not exceed 7.5% of the Pool
Scheduled Principal Balance as of the first Payment Date in such 12-month
period, and (c) the Cumulative Realized Loss Ratio does not exceed the following
ratio:
Payment Date Ratio
------------ -----
On or before December 1999 8.0%
After December 1999 and on or 12.0%
before December 2000
After December 2000 and on or 15.0%
before December 2001
After December 2001 and on or 18.0%
before December 2002
After December 2002 21.0%
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"Shortfall" means, as to any Payment Date, the amount, if any, by which
the Scheduled Payments exceed that portion of the Collected Funds, plus any
amounts deposited in the Collection Account pursuant to Sections 8.01 and 8.02,
available for deposit in the Note Distribution Account in respect of the Class A
Notes pursuant to Sections 6.06(iv) and (v).
"Sixty-Day Delinquency Ratio" means, as to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Contracts that were delinquent 60 days or more as of
the end of the prior Due Period (including Contracts 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 as of such Payment
Date.
"Standard & Poor's" means Standard & Poor's Ratings Service, or any
successor thereto; provided that if Standard & Poor's no longer has a rating
outstanding on any Class of Notes, then references herein to "Standard & Poor's"
shall be deemed to refer to the NRSRO then rating any Class of the Notes (or, if
more than one such NRSRO is then rating any Class of the Notes, to such NRSRO as
may be designated by the Servicer), and references herein to ratings by or
requirements of Standard & Poor's shall be deemed to have the equivalent
meanings with respect to ratings by or requirements of such NRSRO.
"Supplementary Principal Distribution Test" means, to be considered
"satisfied" for any Payment Date, that the Cumulative Realized Loss Ratio does
not exceed the following ratio:
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Payment Date Ratio
------------ -----
On or before December 1999 8.0%
After December 1999 and
on or before December 2000 12.0%
After December 2000 17.0%
"Supplementary Principal Distribution Amount" means, on any Payment Date
on which the Supplementary Principal Distribution Test is not satisfied, an
amount equal to the lesser of (a) the Class A Principal Balance or (b) the
Amount Available (excluding any Guaranty Payment) remaining after distribution
of amounts described in Sections 6.06(a)(i) through (xii).
"Thirty-Day Delinquency Ratio" means, as to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Contracts that were delinquent 30 days or more as of
the end of the prior Due Period (including Contracts 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 as of such Payment
Date.
"Trust" means Green Tree Home Improvement and Home Equity Loan Trust
1998-F.
"Trust Accounts" means the Collection Account, the Note Distribution
Account, the Undelivered Contract Account and the Certificate Distribution
Account.
"Trust Agreement" means the Trust Agreement dated as of December 1, 1998
between the Company and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Fund" means the property conveyed to the Trust pursuant to Section
2.01(a).
"Undelivered" means, with respect to a Contract and any date of
determination, a Contract identified on the exception report attached to the
Acknowledgment delivered by the Indenture Trustee under Section 6.01(k) of the
Indenture on the Closing Date as a Contract as to which the Indenture Trustee
(a) did not receive the related contract or promissory note as of the Closing
Date and (b) has not received the related contract or promissory note and
remitted payment for it to the Company pursuant to Section 6.12.
"Undelivered Contract Account" means the account so designated,
established and maintained pursuant to Section 6.01(d).
"Underwriters" means Merrill Lynch, Pierce, Fenner & Smith Incorporated
and Lehman Brothers Inc.
"Underwriting Agreement" means the Underwriting Agreement dated as of
December 16, 1998 between the Company and the Underwriters relating to the Class
A Notes.
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"Unpaid Class A Interest Shortfall" means, as to any Payment Date, the sum
of the Unpaid Class A-1 Interest Shortfall and the Unpaid Class A-2 Interest
Shortfall.
"Unpaid Class A-1 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class A-1 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class A-1 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class A-1 Notes on
account of any Unpaid Class A-1 Interest Shortfall pursuant to Section
8.02(c)(1) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-1
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class A-2 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class A-2 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class A-2 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class A-2 Notes on
account of any Unpaid Class A-2 Interest Shortfalls pursuant to Section
8.02(c)(1) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-2
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class B-1 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class B-1 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class B-1 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class B-1 Notes on
account of any Unpaid Class B-1 Interest Shortfall pursuant to Section
8.02(c)(4) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class B-1
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, with respect
to 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 Interest
Rate.
"Unpaid Class B-2 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class B-2 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class B-2 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class B-2 Notes on
account of any Unpaid Class B-2 Interest Shortfall pursuant to Section
8.02(c)(10) of the Indenture on such immediately prior Payment Date, plus
accrued interest (to the extent payment thereof is legally permissible) at the
Class B-2 Interest Rate on such remainder from such immediately prior Payment
Date to the current Payment Date.
"Unpaid Class M-1 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class M-1 Interest Carryover
Shortfall, if any, for the immediately prior
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Payment Date, plus (y) the Unpaid Class M-1 Interest Shortfall determined as of
such immediately prior Payment Date, minus (z) all amounts distributed to the
Holders of Class M-1 Notes on account of any Unpaid Class M-1 Interest Shortfall
pursuant to Section 8.02(c)(2) of the Indenture on such immediately prior
Payment Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class M-1 Interest Rate on such remainder from such
immediately prior Payment Date to the current Payment Date.
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, with respect
to 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 Interest
Rate.
"Unpaid Class M-2 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class M-2 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class M-2 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class M-2 Notes on
account of any Unpaid Class M-2 Interest Shortfall pursuant to Section
8.02(c)(3) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class M-2
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class M-2 Liquidation Loss Interest Shortfall" means, with respect
to 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 Interest
Rate.
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ARTICLE II
TRANSFER OF CONTRACTS
SECTION 2.01. Transfer of Contracts.
(a) Subject to the terms and conditions of this Agreement, the Company
hereby irrevocably and unconditionally transfers, assigns, sets over and
otherwise conveys to the Trust by execution of an Assignment substantially in
the form of Exhibit A hereto all right, title and interest of the Company in and
to (1) the Contracts (including, without limitation, the Collateral Security),
and all moneys payable thereon or in respect to the Contracts, including any
liquidation proceeds therefrom but excluding payments due on the Contracts prior
to the Cut-off Date, (2) the Errors and Omissions Protection Policy as such
policy relates to the Contracts, (3) all items contained in the Contract Files,
(4) the Trust Accounts and all funds on deposit therein from time to time and
all investments and proceeds thereof (including all income thereon), and (5) all
proceeds and products of the foregoing.
(b) Although the parties intend that the conveyance pursuant to this
Agreement of the Company's right, title and interest in and to the Contracts
shall constitute a purchase and sale and not a pledge of security for loans from
the Certificateholders and/or the Noteholders, if such conveyance is deemed to
be a pledge of security for loans from the Certificateholders, the Noteholders
or any other Persons (the "Secured Obligations"), the parties intend that the
rights and obligations of the parties to the Secured Obligations shall be
established pursuant to the terms of this Agreement and that the Company shall
be deemed to have granted to the Trust, and the Company does hereby grant to the
Trust, a perfected first-priority security interest in the items designated in
Section 2.01(a)(1) through 2.01(a)(5) above, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement shall constitute a security
agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person under any
Certificate, any Note or the Secured Obligations, the security interest created
hereby shall continue in full force and effect and the Owner Trustee shall be
deemed to be the collateral agent for the benefit of such Person.
SECTION 2.02. Conditions to Acceptance by Owner Trustee.
As conditions to the Owner Trustee's execution and delivery of the Notes
on behalf of the Trust and the execution, authentication and delivery of the
Certificates on behalf of the Trust on the Closing Date, the Owner Trustee on
behalf of the Trust shall have received the following on or before the Closing
Date:
(a) The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the Company (which certification may be
part of the Assignment delivered pursuant to Section 2.02(f)).
(b) A letter from PriceWaterhouseCoopers LLP or another nationally
recognized accounting firm, stating that such firm has reviewed the Group
1 Contracts and the Initial (as defined in the prospectus relating to the
Notes) Group 2 Contracts on a statistical sampling
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basis and, based on such sampling, concluding that, except with respect to
those Contracts so specified in the letter, such Contracts conform in all
material respects to the List of Contracts, to a confidence level of
97.5%, with an error rate generally not in excess of 1.8%.
(c) Copies of resolutions of the board of directors of the Company
or of the executive committee of the board of directors of the Company
approving the execution, delivery and performance of this Agreement, its
Related Documents and the transactions contemplated hereunder, certified
in each case by the secretary or an assistant secretary of the Company.
(d) Officially certified recent evidence of due incorporation and
good standing of the Company under the laws of the State of Delaware.
(e) Evidence of filing of UCC-1 financing statements (a) with the
Secretary of State of Minnesota, executed by the Company as debtor, naming
the Trust as secured party and describing the Contracts as collateral and
(b) with the Secretary of State of Minnesota and Delaware executed by the
Trust as debtor, naming the Indenture Trustee as secured party and
describing the Indenture Collateral as collateral.
(f) An executed copy of the Assignment.
(g) Evidence of continued coverage of the Company under the Errors
and Omissions Protection Policy.
(h) Evidence of deposit in the Collection Account of all funds
received with respect to the Contracts prior to the Closing Date which
were due on or after the Cut-off Date, together with an Officer's
Certificate to the effect that such amount is correct.
(i) An Officer's Certificate confirming that the Company's internal
audit department has reviewed the original or a copy of each Contract and
each Contract File, that each Contract and Contract File conforms in all
material respects with the List of Contracts and that each Contract File
is complete in all material respects, except to the extent permitted by
this Agreement.
(j) An executed copy of each of the Insurance Agreement, the Note
Insurance Policy and the other Related Documents.
(k) Evidence of the deposit in the Undelivered Contract Account of
an amount equal to the aggregate of the Cut-off Date Principal Balances of
the Undelivered Contracts.
(l) An executed copy of the Indenture Trustee's Acknowledgment
delivered under Section 6.01(k) of the Indenture.
(m) Such other documents and certificates as the Trust may request.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties, effective
as of the Closing Date, on which the Trust will rely in accepting the Contracts
and the other Trust Property in trust and on which the Owner Trustee relies in
executing and delivering, on behalf of the Trust, the Certificates and the
Notes, and on which the Note Insurer relies in issuing the Note Insurance
Policy. The repurchase obligation of the Company set forth in Section 3.05
constitutes the sole remedy available to the Trust, the Owner Trustee, the
Indenture Trustee, and the Securityholders for a breach of a representation or
warranty of the Company set forth in Sections 3.02, 3.03 and 3.04 of this
Agreement or in the Officer's Certificate delivered pursuant to Section 2.02(i)
of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company and
Covenants of the Company. The representations and warranties set forth in this
Section 3.01 shall survive delivery by the Company of the Contracts and the
Contract Files. As promptly as practicable, but in any event, within 60 days of
its discovery or its receipt of notice from any Person of a material breach of
any representation or warranty in this Section 3.01, the Company shall cure such
breach in all material respects; provided, however, that if the Company can
establish to the reasonable satisfaction of the Note Insurer that it is
diligently pursuing remedial action, then the cure period may be extended for an
additional 90 days with the written approval of the Note Insurer.
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Company.
(b) Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and its Related
Documents and all of the transactions contemplated under this Agreement and
thereunder and to sell and assign the Trust Property to be sold and assigned to
the Trust by it and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and its Related Documents.
When executed and delivered, this Agreement and its Related Documents will
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies.
(c) No 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.
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(d) No Violations. The execution, delivery and performance by the Company
of this Agreement and its Related Documents and the fulfillment of their terms
will not violate any provision of any existing law or regulation or any order or
decree of any court or the Certificate of Incorporation or Bylaws of the
Company, or constitute a material 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 Related Documents, or the
Securities which, if adversely determined, would in the opinion of the Company
have a material adverse effect on the transactions contemplated by this
Agreement and Related Documents.
(f) Licensing. The Company is duly registered as a finance company in each
state in which Contracts were originated, to the extent such registration is
required by applicable law.
(g) Chief Executive Office. The chief executive office of the Company is
at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639.
(h) Absolute Sale. The Company intends that the transfer of Contracts and
the Collateral Security constitute a complete and absolute sale, removing the
Contracts and the Collateral Security from the Company's estate, for purposes of
Section 541 of the United States Bankruptcy Code, as amended.
(i) No Default. The Company is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Company or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under its other Related Documents. The Company is
not in default under any agreement involving financial obligations or on any
outstanding obligation which would materially adversely impact the financial
condition or operations of the Company or legal documents associated with the
transaction contemplated by this Agreement or the other Related Documents.
(j) No Material Adverse Change. To the best knowledge of the Company,
there has been no material adverse change in any information submitted by the
Company in writing to the Note Insurer with respect to the transactions
contemplated by this Agreement (unless such information was subsequently
supplemented in writing).
(k) Non-consolidation. For so long as Green Tree Second GP Inc. ("GTGP")
is the Certificateholder, the Company covenants that:
(i) it will at all times hold out to the public, including the
respective creditors of the Company and GTGP, is a separate entity from
the other. The Company and GTGP will not share a common logo. The Company
will not hold out or consider GTGP as a department or division of the
Company.
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(ii) Other than the payment of certain of the organizational
expenses of GTGP by the Company, GTGP will be responsible for the payment
of all its losses, obligations and expenses, and it will be adequately
capitalized to conduct its business.
(iii) All transactions and dealings between the Company and GTGP
will be on such terms and conditions as would be generally available to
entities unaffiliated with the Company in comparable transactions. All
such transactions have been and will be made only with prior approval of
GTGP's Board of Directors, at arm's length, in good faith, and without the
intent to hinder, delay or defraud creditors of either entity, and
transfers between the Company and GTGP will not be made if the party
making the transfer is insolvent or would be rendered insolvent by the
transfer.
(iv) Following the formation of the Trust, the Company will disclose
all material transactions associated with the transaction in
communications to its shareholders and in public announcements which will
disclose the separate corporate identity of GTGP and that the assets of
GTGP will not be available for payment of creditors' claims in the event
of the insolvency of the Company.
(v) GTGP will comport itself in a manner consistent with the factual
assumptions contained in the "nonconsolidation opinion" of Briggs and
Morgan dated December 30, 1998 rendered in connection with the issuance of
the Notes.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
(a) List of Contracts. The information set forth in the List of Contracts
is true, complete and correct as of its date.
(b) Payments. No scheduled payment due under the Contract was delinquent
over 59 days as of the Cut-off Date.
(c) Costs Paid and No Waivers. The terms of the Contract have not been
waived, altered or modified in any respect, except by instruments or documents
identified in the Contract File. All costs, fees and expenses incurred in
making, closing and perfecting the lien of the Contract have been paid. The
subject real property has not been released from the lien of such Contract.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
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(f) Insurance Coverage. The Company has been named as an additional
insured party under any hazard insurance on the property described in the
Contract, to the extent required by the Company's underwriting guidelines, which
coverage represents not less than the least of (i) the outstanding principal
balance of the Contract (together, in the case of a junior mortgage loan, with
the outstanding principal balance of all liens senior thereto), (ii) the minimum
amount required to compensate for damage or loss to the related real property on
a replacement cost basis, or (iii) the full insurable value of the related real
property. If upon origination of the Contract, the property securing the
Contract 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) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract pursuant to this Agreement, or pursuant to transfers of the
Securities, unlawful or render the Contract unenforceable.
(h) Compliance with Law. At the date of origination of the Contract, all
requirements of any federal and state laws, rules and regulations applicable to
the Contract, including, without limitation, usury, truth in lending and equal
credit opportunity laws, have been complied with, and the Company shall for at
least the period of this Agreement, maintain in its possession, available for
the Owner Trustee's inspection, and shall deliver to the Owner Trustee upon
demand, evidence of compliance with all such requirements.
(i) Contract in Force. The Contract has not been satisfied or subordinated
in whole or in part or rescinded, and the real property securing the Contract
has not been released from the lien of the Contract in whole or in part.
(j) Valid Lien. Each Contract has been duly executed and delivered by the
Obligor, and the lien created thereby has been duly recorded, or has been
delivered to the appropriate governmental authority for recording and will be
duly recorded within 180 days and constitutes a valid and perfected first,
second, third or fourth priority lien on the real estate described in such
Contract.
(k) Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal capacity to
execute the Contract.
(l) Good Title. The Company is the sole owner of the Contract and has the
authority to sell, transfer and assign such Contract to the Trust under the
terms of this Agreement. There has been no assignment, sale or hypothecation of
the Contract by the Company except the usual past hypothecation of the Contract
in connection with the Company's normal banking transactions in the conduct of
its business, which hypothecation terminates upon sale of the Contract to the
Trust. The Company has good and marketable title to the Contract, free and clear
of any encumbrance, equity, loan, pledge, charge, claim, lien or encumbrance of
any type and has full right to transfer the Contract to the Trust.
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(m) No Defaults. There is no default, breach, violation or event
permitting acceleration existing under the Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract
(except payment delinquencies permitted by clause (b) above). The Company has
not waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above.
(n) No Liens. There are, to the best of the Company's knowledge, no liens
or claims which have been filed for work, labor or materials affecting the
Collateral Security securing the Contract which are or may be liens prior to, or
equal or coordinate with, the lien of the Contract.
(o) Equal Installments. Each Contract has a fixed Contract Interest Rate
and provides for substantially level monthly payments which fully amortize the
loan over its term.
(p) Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
(q) One Original. There is only one original executed Contract, which
Contract has been delivered to the Trust or its custodian on or before the
Closing Date. Each Contract has been stamped to reflect the assignment of such
Contract to the Trustee or its Custodian on or before the Closing Date.
(r) Genuine Documents. All documents submitted are genuine, and all other
representations as to the Contract, including the List of Contracts, are true
and correct. Any copies of documents provided by the Company are accurate and
complete (except that, with respect to any Contract that was originated by a
contractor or lender other than the Company, the Company makes such
representation and warranty only to the best of the Company's knowledge).
(s) Origination. Each Home Improvement Contract was originated by a home
improvement contractor in the ordinary course of such contractor's business or
was originated by the Company directly. Each Home Equity Contract was originated
by a home equity lender in the ordinary course of such lender's business or was
originated by the Company directly.
(t) Underwriting Guidelines. The Contract was originated or purchased in
accordance with the Company's then-current underwriting guidelines.
(u) Good Repair. The property described in the Contract is, to the best of
the Company's knowledge, free of damage and in good repair.
(v) No Government Contracts. No Obligor is the United States government or
an agency, authority, instrumentality or other political subdivision of the
United States government.
(w) Consolidation of Advances. Any advances made after the date of
origination of the Contract but prior to the Cutoff Date have been consolidated
with the outstanding principal amount secured by the related mortgage, and the
secured principal amount, as consolidated, bears a single
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interest rate and single repayment term reflected on the List of Contracts. The
consolidated principal amount does not exceed the original principal amount of
the Contract. The Contract does not obligate the Servicer to make future
advances to the Obligor at the option of the Obligor.
(x) Condemnation. There is no proceeding pending or threatened for the
total or partial condemnation of the real property that is described in the
Contract, nor is such a proceeding currently occurring.
(y) Encroachments. Any improvements which were included for the purposes
of determining the appraised value of any real property securing the Contract
are wholly within the boundaries and building restriction lines of such real
property, and no improvements on adjoining properties encroach upon such real
property.
(z) Zoning. No improvement located on or part of any real property that is
described in the Contract is in violation of any applicable zoning law or
regulation, and all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities and such property is lawfully occupied
under the applicable law.
(aa) Deeds of Trust. If the Contract constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Contract, and no fees or
expenses are or will become payable by the Indenture Trustee to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the related Obligor.
(bb) Remedies. The Contract contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related property of the benefits of the security,
including (i) in the case of a mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption, other than any applicable redemption rights
available to the related Obligor, which would materially interfere with the
right to sell the related property at a trustee's sale or the right to foreclose
the related mortgage.
(cc) Appraisal. The Contract was, to the extent required by the Company's
underwriting guidelines, originated based upon a full appraisal, which included
an interior inspection of the subject property by a qualified appraiser, duly
appointed by the Company, who had no interest, direct or indirect in the related
real property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Contract.
(dd) Hazardous Substances. The Company has no actual knowledge that there
exist any hazardous substances, hazard wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on any real property described in the
Contract.
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(ee) Ground Lease. With respect to any real property described in the
Contract subject to a ground lease (i) the current ground lessor has been
identified and all ground rents which have previously become due and owing have
been paid, (ii) the ground lease term extends, or is automatically renewable,
for at least five years beyond the maturity date of the Contract, (iii) the
ground lease has been duly executed and recorded, (iv) the amount of the ground
rent and any increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times, (v) the ground rent payment is
included in the Obligor's monthly payment as an expense item in determining the
qualification of the borrower for the Contract, (vi) the Company has the right
to cure defaults on the ground lease, and (vii) the terms and conditions of the
leasehold do not prevent the free and absolute marketability of the property.
(ff) Defaults on Prior Liens. The Company has not received notice of
default of any prior mortgage loan secured by any real property described in the
Contract which default has not been cured by a party other than the Company.
(gg) Certain Advances. The Company has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of any real property described in the Contract or the Obligor, directly or
indirectly, for the payment of any amount required by any Contract.
(hh) Review of the Contract File. The Company has reviewed all of the
documents constituting the Contract File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein.
(ii) Knowledge of Certain Facts. The Company has no knowledge of any
circumstances or conditions not reflected in the representations set forth
herein, or in the Contract File with respect to the Contract, the related real
property or the related Obligor which, in the Company's opinion, could
reasonably be expected to affect materially and adversely the value of related
real property, the marketability of the Contract, or cause the Contract to
become delinquent or otherwise in default.
(jj) Manufactured Home. The Contract is not a loan in respect of a
manufactured home or the land on which a manufactured home or manufactured home
will be placed.
(kk) No Errors, Omissions, Etc. No error, omission, misrepresentation,
negligence, fraud or similar occurrence with respect to the Contract has taken
place on the part of any person, including without limitation the obligor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Contract or in the application of any insurance in relation
to the Contract.
(ll) Servicing. The Contract has been serviced in accordance with all
applicable laws and, to the best of the Company's knowledge, no fraud or
misrepresentation was committed by any Person in connection therewith.
(mm) Inspection. Upon completion of all home improvements in excess of
$5,000, the real property securing such Contract was inspected by the Company or
its agents.
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(nn) No Bankruptcies. The real property described in the Contract has not
been subject to any bankruptcy proceeding or foreclosure proceeding to which the
Obligor was a party, and the Obligor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Obligor which would interfere with the right to sell the real property at
a trustee's sale or the right to foreclose the related mortgage. The Obligor has
not notified the Company, and the Company has no knowledge of, any relief
requested or allowed to the Obligor under the Soldier's and Sailors' Civil
Relief Act of 1940, as amended.
(oo) Certain Disclosure Statements. Each Obligor has executed a statement
to the effect that it has received all disclosure materials required by
applicable law with respect to the making of fixed rate mortgage loans and
rescission materials with respect to home improvement loans, and such statement
will be retained.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
(a) Amounts. The aggregate principal amounts payable by Obligors under the
Contracts as of the Cut-off Date equal the Cut-off Date Pool Principal Balance.
(b) Characteristics. The Contracts will 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 a remaining maturity of more than
360 months; (iii) none has a final scheduled payment date later than November
2028; (iv) none has a Contract Interest Rate less than 6.99%; (v) none was
originated before March 1980; and (vi) none contains a provision for the
extension of the original term of the related note.
(c) Group 1 Contracts. The original principal balance of each Group 1
Contract did not exceed (i) $227,150, if secured by a first lien or (ii) 50% of
the aggregate principal balance of the prior liens, if secured by a junior lien.
(d) Geographic Concentrations. By Cut-off Date Principal Balance, 10.81%
of the Contracts are secured by property located in California, 7.28% in New
York, 6.43% in Florida, 5.51% in Illinois, and 5.10% in Virginia. No other state
represents more than 5% of the aggregate Cut-off Date Principal Balances of the
Contracts. No more than 1% of the Contracts by Cut-off Date Principal Balance
are secured by property located in an area with the same five-digit zip code.
(e) Computer Tape. The Computer Tape made available by the Company was
complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Contracts.
(f) Marking Records. The Company has caused the portions of the Electronic
Ledger relating to the Contracts to be clearly and unambiguously marked to
indicate that such Contracts constitute part of the Trust and are owned by the
Trust in accordance with the terms of the trust created hereunder.
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(g) No Adverse Selection. Except for the effect of the representations and
warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Contracts.
(h) Not Principally Real Estate Secured, etc. With respect to at least 50%
of the Contracts in the aggregate: (a) the fair market value of the interest in
the real property securing each such Contract is less than 80% of the adjusted
issue price of such Contract at the time the obligation was originated; and (b)
substantially all of the proceeds of each such Contract were not used to
acquire, improve or protect an interest in real property that, at the
origination date, was the only security for such Contract.
(i) Non-Owner Occupied. As of the Cut-off Date, no more than 0.06% and
0.05% of the aggregate Scheduled Principal Balances of the Group 1 Contracts and
Group 2 Contracts, respectively, are secured by real property that is non-owner
occupied property (i.e., investor-owned and vacation property).
(j) Ground Leases. As of the Cut-off Date, the aggregate Scheduled
Principal Balances of all Contracts subject to ground leases does not exceed 1%
of the Cut-off Date Pool Scheduled Principal Balance.
(k) Income Verification. No more than 1.05% and 0.52% of the aggregate
Scheduled Principal Balances of the Group 1 Contracts and Group 2 Contracts,
respectively, was originated under any non-income verification program of the
Company.
SECTION 3.04. Representations and Warranties Regarding the Contract
Files.
(a) Possession. Immediately prior to the Closing Date, the Company will
have possession of each original Contract and the related Contract File and
there are not and there will not be any custodial agreements in effect that
materially and adversely affect the rights of the Company to make, or cause to
be made, any delivery required hereunder.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files by the Company pursuant to this Agreement is
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction.
(c) Delivery. On or before January 15, 1999, the Company shall have
delivered to the Indenture Trustee the related contract or promissory note,
endorsed to the Indenture Trustee or in blank, for each Contract that was an
Undelivered Contract on the Closing Date and on or before March 1, 1999 the
Company shall have delivered the complete Contract File for each Contract to the
Indenture Trustee (or its custodian).
SECTION 3.05. Repurchase of Contracts for Breach of Representations and
Warranties.
(a) The Company shall repurchase a Contract, at its Repurchase Price, not
later than the last day of the Due Period prior to the Due Period that is 90
days after the day on which the Company, the Servicer, the Note Insurer, the
Owner Trustee or the Indenture Trustee first discovers,
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or the Company or the Servicer should have discovered, a breach of a
representation or warranty of the Company set forth in Sections 3.02, 3.03 or
3.04 of this Agreement or in the Officer's Certificate delivered pursuant to
Section 2.02(i) that materially adversely affects the interest of the Trust or
the Securityholders in such Contract and which breach has not been cured;
provided, however, that (i) in the event that a party other than the Company
first becomes aware of such a breach, such discovering party shall notify the
Company in writing within five Business Days of the date of such discovery
(although the failure of a party to give such notice shall not relieve the
Company of its repurchase obligation hereunder), (ii) with respect to any
Contract incorrectly described on the List of Contracts with respect to unpaid
principal balance, which the Company would otherwise be required to repurchase
pursuant to this Section, the Company may, in lieu of repurchasing such
Contract, deposit in the Collection Account no later than the first
Determination Date that is 90 or more days from the date of such discovery cash
in an amount sufficient to cure such deficiency or discrepancy, plus interest,
at the Contract Interest Rate, on the amount of such deficiency, from the
Cut-off Date to the date of deposit, (iii) a breach of the representation or
warranty set forth in Section 3.04(c) shall be conclusively deemed to materially
and adversely affect the interests of the Trust in the affected Contract(s) and
(iv) any repurchase of Contracts as a result of the breach of a representation
and warranty set forth in Section 3.03 shall be without adverse selection of
Contracts, as determined by the Note Insurer. Any such cash so deposited shall
be accounted for as a collection of principal or interest on such Contract,
according to the nature of the deficiency or discrepancy. Notwithstanding any
other provision of this Agreement, the obligation of the Company under this
Section shall not terminate upon a Service Transfer pursuant to Article VII.
(b) Upon receipt by the Trust by deposit in the Collection Account of the
Repurchase Price under subsection (a) above, and upon receipt of a certificate
of a Servicing Officer in the form attached hereto as Exhibit B, the Indenture
Trustee shall release its security interest in such Contract and the Owner
Trustee on behalf of the Trust shall convey and assign to the Company all of the
Securityholders' right, title and interest in the repurchased Contract without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of the Trust.
(c) The Company shall defend and indemnify the Owner Trustee, the Trust,
the Indenture Trustee, the Note Insurer and the Securityholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, arising out of any claims which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any representation set forth in Sections 3.02, 3.03 or 3.04
of this Agreement or in the Officer's Certificate delivered pursuant to Section
2.02(i) of this Agreement.
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ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
(a) The Trust appoints the Indenture Trustee to maintain custody of the
Contract Files for the Contracts, as further specified in Section 6.01(k) of the
Indenture.
(b) The Company has delivered to the Indenture Trustee the original copy
of each Contract that is not an Undelivered Contract, and within 60 days of the
Closing Date the Company shall deliver to the Indenture Trustee (if it has not
previously done so) with respect to each Contract an endorsement of the
Contract, an assignment in recordable form of each mortgage, deed of trust or
security deed securing the Contract, and the remainder of the Contract File for
each Contract.
(c) The Company has delivered to the Indenture Trustee and the Note
Insurer an Opinion of Counsel to the effect that the execution and recording of
the assignments of the mortgages, deeds of trust and security deeds securing the
Contracts is not necessary, in any jurisdiction other than the State of
Maryland, to effect the assignment to the Indenture Trustee of the Company's
lien on the real property securing each Contract. The Company will, or will
cause the Indenture Trustee, at the Company's expense, to file in the
appropriate recording offices within 90 days of the Closing Date, each mortgage,
deed of trust and security deed that encumbers real property located in
Maryland.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Company shall cause the UCC-1
financing statements referred to in Section 2.02(e) to be filed. The Servicer on
behalf of the Trust shall cause to be filed all necessary continuation
statements of the UCC-1 financing statements. From time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Securityholders' interests in the
Contracts, the Collateral Security and their proceeds against all other persons,
including, without limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer instruments and
the making of notations on or taking possession of all records or documents of
title. The Servicer will maintain the first priority perfected security interest
of the Trust in each Contract so long as the related Contract is property of the
Trust.
SECTION 4.03. Name Change or Relocation.
(a) During the term of this Agreement, the Company shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Owner Trustee, the Indenture Trustee, the Note
Insurer and the Servicer. In addition, following any such change in the name,
identity, structure or location of the chief executive office of the Company,
the Company shall give written notice of any such change to Standard & Poor's
and Moody's.
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(b) If any change in the Company's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause the security interest evidenced by any such financing or
continuation statement or notice of lien to become unperfected (whether
immediately or with lapse of time), the Company, no later than five days after
the effective date of such change, shall file, or cause to be filed, such
amendments or financing statements as may be required to preserve, perfect and
protect the Securityholders' interests in the Contracts, including the
Collateral Security and all proceeds thereof.
SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Company will maintain its chief
executive office in one of the States of the United States, except Tennessee.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Securityholders' right, title and interest in and to the
Contracts, including the Collateral Security and all proceeds thereof.
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ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Servicer may delegate duties under this Agreement to any of the
Servicer's Affiliates. In addition, the Servicer may at any time perform the
specific duty of foreclosing mortgage liens through subcontractors who are in
such business. The Servicer may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to each of the Trust,
the Indenture Trustee, the Note Insurer and the Rating Agencies of the use of
any such subcontractors; and provided further that no such delegation of duties
by the Servicer shall relieve the Servicer of its responsibility with respect
thereto. The Owner Trustee, on behalf of the Trust and at the request of a
Servicing Officer, shall furnish the Servicer with any powers of attorney or
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Company hereby appoints
itself the Servicer until such time as any Service Transfer shall be effected
under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care required consistent with the highest degree of skill and care
that the Servicer exercises with respect to similar contracts serviced by the
Servicer; provided, however, that notwithstanding the foregoing, the Servicer
shall not release or waive the right to collect the unpaid balance on any
Contract.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder, maintain
such books of account and other records as will enable the Trust and the
Indenture Trustee to determine the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Trust, the Note Insurer and Indenture Trustee and their authorized agents
reasonable access during normal business hours to the Servicer's records
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Trust, the Note Insurer and Indenture Trustee
or their authorized agents. The examination referred to in this Section will be
conducted in a manner which does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations. Without otherwise limiting
the scope of the examination the Trust, the Note Insurer and Indenture Trustee
may make, the Trust, the Note Insurer and Indenture Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Electronic Ledger and records
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relating thereto for conformity to Monthly Reports prepared pursuant to Section
5.14 and compliance with the standards represented to exist as to each Contract
in this Agreement.
The Servicer shall provide to any Securityholder such access to the
records relating to the Contracts only in such cases where the Servicer is
required by applicable statutes or regulations, whether applicable to the
Servicer or to such Securityholder, to permit such Securityholder to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section. Any
Securityholder, by its acceptance of a Certificate or Note (or by acquisition of
its beneficial interest therein), as applicable, shall be deemed to have agreed
to keep confidential and not to use for its own benefit any information obtained
by it pursuant to this Section, except as may be required by applicable law.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by the Trust, the Indenture Trustee and the Note Insurer.
(c) On or before the ninth Business Day of each month, the Servicer will
provide to the Indenture Trustee and the Note Insurer a Computer Tape setting
forth a list of all the outstanding Contracts and the outstanding principal
balance of each such Contract as of the end of the next preceding Due Period.
SECTION 5.05. Collections.
(a) The Servicer shall pay into the Collection Account as promptly as
practicable (not later than the next Business Day) following receipt thereof all
payments from Obligors and Net Liquidation Proceeds (other than late payment
penalty fees, extension fees and assumption fees, which shall be retained by the
Servicer as additional compensation for servicing the Contracts, and any
payments that were due prior to the Cut-off Date, which shall be remitted to the
Company).
(b) If the Servicer so directs, the institution maintaining the Collection
Account shall, in the name of the Indenture Trustee in its capacity as such,
invest the amounts in the Collection Account in Eligible Investments that mature
not later than one Business Day prior to the next succeeding Payment Date. Once
such funds are invested, such institution shall not change the investment of
such funds. All income and gain from such investments shall be added to the
Collection Account and distributed on such Payment Date pursuant to Section
6.06(a). The Company, the Note Insurer and the Indenture Trustee shall in no way
be liable for losses on amounts invested in accordance with the provisions
hereof. The Servicer shall deposit in the Collection Account an amount equal to
any net loss on such investments immediately as realized. Funds in the
Collection Account not so invested must be insured to the extent permitted by
law by the Federal Deposit Insurance Corporation.
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SECTION 5.06. Enforcement.
(a) The Servicer shall, consistent with customary servicing procedures and
the terms of this Agreement, act with respect to the Contracts in such manner as
will maximize the receipt of principal and interest on such Contracts and
Liquidation Proceeds with respect to Liquidated Contracts.
(b) In accordance with the standard of care specified in Section 5.02, the
Servicer may, in its own name, if possible, or as agent for the Trust, commence
proceedings for the foreclosure of any real estate securing a Contract, or may
take such other steps that in the Servicer's reasonable judgment will maximize
Liquidation Proceeds with respect to the Contract, including, for example, the
sale of the Contract to a third party for foreclosure or enforcement and, in the
case of any default on a related prior mortgage loan, the advancing of funds to
correct such default and the advancing of funds to pay off a related prior
mortgage loan, which advances are Liquidation Expenses that will be reimbursed
to the Servicer out of related Liquidation Proceeds before the related Net
Liquidation Proceeds are deposited in the Collection Account. The Servicer shall
also deposit in the Collection Account any Net Liquidation Proceeds received in
connection with any Contract which became a Liquidated Contract in a prior Due
Period.
(c) The Servicer may sue to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Contract, the act of commencement shall be
deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Owner Trustee on behalf of the Trust shall, at the Servicer's
expense, take such steps as the Servicer deems necessary to enforce the
Contract, including bringing suit in its name or the names of the
Securityholders.
(d) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. Without limitation of the foregoing, in exercising
recourse rights, the Servicer is authorized on behalf of the Trust to reassign
the Contract or to resell the related real property to the person against whom
recourse exists at the price set forth in the document creating the recourse.
(e) So long as the Company is the Servicer, the Servicer may grant to the
Obligor on any Contract any rebate, refund or adjustment out of the Collection
Account that the Servicer in good faith believes is required because of
prepayment in full of the Contract. The Servicer will not permit any rescission
or cancellation of any Contract.
(f) So long as the Company is the Servicer, the Servicer may, consistent
with its customary servicing procedures and consistent with Section 5.02, grant
to the Obligor on any Contract an extension of payments due under such Contract,
provided that Obligors may not be solicited for extensions and no more than one
extension of payments under a Contract may be granted in any twelve-month
period. The Servicer may not permit the extension of any payment beyond August
2027.
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(g) The Servicer shall enforce any due-on-sale clause in a Contract if
such enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related real property the Servicer shall use its best
efforts to obtain an assumption agreement in connection therewith.
(h) Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract, if such modification or waiver, when aggregated with all previous
modifications or waivers of the provisions of Contracts, would cause any Notes
to be treated as having been exchanged for other Notes in a taxable exchange
under Section 1001 of the Code or any proposed, temporary or final Treasury
Regulations issued thereunder.
SECTION 5.07. Satisfaction of Contracts.
Upon payment in full on any Contract, the Servicer will notify the Trust,
the Indenture Trustee, the Note Insurer 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 Collection Account pursuant to Section 5.05 have been so
deposited). The Servicer is authorized to execute an instrument in satisfaction
of such Contract and to do such other acts and execute such other documents as
the Servicer deems necessary to discharge the Obligor thereunder and eliminate
the lien on the related real property. The Servicer shall determine when a
Contract has been paid in full; to the extent that insufficient payments are
received on a Contract credited by the Servicer as prepaid or paid in full and
satisfied, the shortfall shall be paid by the Servicer out of its own funds.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its duties
hereunder, including all fees and expenses incurred in connection with the
enforcement of Contracts (including enforcement of Defaulted Contracts and
foreclosure of liens securing such Contracts) shall be paid by the Servicer and
the Servicer shall not be entitled to reimbursement hereunder, except that the
Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Contract for Liquidation Expenses incurred by it. The Servicer shall not incur
such Liquidation Expenses unless it determines in its good faith business
judgment that incurring such expenses will increase the Net Liquidation Proceeds
on the related Contract.
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained with respect to each Contract, hazard
insurance (excluding flood insurance coverage) if such Contract is secured by a
first priority mortgage, deed of trust or security deed or the initial balance
of such Contract exceeds $30,000, issued by a company authorized to issue such
policies in the state in which the related real property is located and in an
amount which is not less
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than the maximum insurable value of such real property or the principal balance
due from the Obligor on the related Contract, whichever is less; provided,
however, that the amount of coverage provided by each insurance policy shall be
sufficient to avoid the application of any co-insurance clause contained
therein; and provided, further, that such insurance policies may provide for
customary deductible amounts. Each insurance policy caused to be maintained by
the Servicer shall contain a standard loss payee clause in favor of the Servicer
and its successors and assigns.
(b) The Servicer shall keep in force throughout the term of this Agreement
(i) a policy or policies of insurance covering errors and omissions for failure
to maintain insurance as required by this Agreement and (ii) a fidelity bond.
Such policy or policies and such fidelity bond shall be in such form and amount
as is generally customary among Persons which service a portfolio of retail
installment sales contracts and home equity loan agreements having an aggregate
principal amount of $100,000,000 or more and which are generally regarded as
servicers acceptable to institutional investors.
SECTION 5.10. [RESERVED]
SECTION 5.11. Deposit of Funds.
So long as the Company is Servicer, any collections in respect of
Contracts collected by the Company shall, prior to the deposit thereof in the
Collection Account pursuant to Section 5.05, be held in bank accounts entitled
substantially as follows: "[name of depository], as agent for U.S. Bank Trust
National Association and other trustees and Green Tree Financial Corporation, as
their interests may appear."
SECTION 5.12. Retitling; Lien Holder.
(a) If, at any time, a Service Transfer has occurred and the Company is no
longer the Servicer and the new Servicer is unable to foreclose upon the related
real estate because the title document for such real property does not show such
Servicer or the Indenture Trustee as the holder of an interest in such real
property, such Servicer shall take all necessary steps to apply for a
replacement document showing it or the Indenture Trustee as a holder of an
interest in the real property.
(b) In order to facilitate the Servicer's actions, as described in
subsection (a) of this Section, the Company will provide the Servicer with any
necessary power of attorney permitting it to foreclose upon such related real
estate. If the Servicer is still unable to foreclose upon the real estate, the
Company will take all actions necessary to act with the Servicer to foreclose
upon the real estate.
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SECTION 5.13. [RESERVED].
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer.
(a) No later than 1:00 p.m. (Minnesota time) on each Determination Date,
the Servicer shall deliver to the Trust, the Indenture Trustee, the Paying
Agent, the Note Insurer, the Company (if the Company is not the Servicer), the
Rating Agencies and the Note Insurer a "Monthly Report," substantially in the
form of Exhibit C hereto.
(b) Each Monthly Report pursuant to Section 5.14(a) shall be accompanied
by a certificate of a Servicing Officer substantially in the form of Exhibit D,
certifying the accuracy of the Monthly Report and that no Servicer Termination
Event or event that with notice or lapse of time or both would become a Servicer
Termination Event has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
(c) The Company and (if different from the Company) the Servicer shall, on
request of the Trust, the Indenture Trustee, either of the Rating Agencies, the
Note Insurer or a Securityholder, furnish the Trust, the Indenture Trustee, the
Rating Agencies, the Note Insurer or a Securityholder such underlying data as
may be reasonably requested.
SECTION 5.15. Annual Report of Accountants.
On or before March 31 of each year, commencing March 31, 1999, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
make available to the Trust, the Indenture Trustee, the Note Insurer, Standard &
Poor's and Moody's a report stating that such firm has examined selected
documents and records relating to the servicing of home improvement contracts
and promissory notes and home equity loans, including the Contracts covered by
this Agreement, in accordance with the Mortgage Bankers Association of America's
Uniform Single Attestation Program for Mortgage Bankers, or any successor
uniform program, and that, on the basis of such examination, such servicing has
been conducted in compliance with the minimum servicing standards identified
therein, except for such significant exceptions or errors in records that, in
the opinion of such firm, generally accepted auditing standards requires it to
report.
SECTION 5.16. Certain Duties of the Servicer Under the Trust Agreement.
The Servicer shall, and hereby agrees that it will, monitor the Trust's
compliance with all applicable provisions of state and federal securities laws,
notify the Trust and the Administrator of any actions to be taken by the Trust
necessary for compliance with such laws and prepare on behalf of the Trust and
the Administrator all notices, filings or other documents or instruments
required to be filed under such laws.
SECTION 5.17. [RESERVED]
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SECTION 5.18. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Trust, the Indenture Trustee, the
Note Insurer and the Rating Agencies, on or before March 31 (or 90 days after
the end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 1999, an officer's certificate signed by an authorized
officer of the Servicer, dated as of December 31 (or other applicable date) of
the immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as shall
have elapsed from the Closing Date to the date of the first such certificate)
and of its performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Company or the Servicer shall deliver to the Trust, the Indenture
Trustee, the Servicer, the Note Insurer or the Company (as applicable) and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than 2 Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 7.01.
SECTION 5.19. [RESERVED]
SECTION 5.20. Maintenance of Lien Interests in Real Property.
(a) Consistent with the policies and procedures required by this Agreement
or as directed by the Note Insurer, the Indenture Trustee or their respective
counsel, the Servicer shall take such steps as are necessary to maintain
perfection of the lien interest created by each Contract in the related real
property on behalf of the Trust, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements,
mortgages, deeds of trust, and continuation statements as are necessary to
maintain the security interest granted by the Obligors under the respective
Contracts. In the event that the assignment of a Contract to the Trust is
insufficient, without a notation on the related real estate's certificate of
title, or without fulfilling any additional administrative requirements under
the laws of the state in which the real estate is located, to perfect a security
interest in the related real estate in favor of the Trust, the Servicer hereby
agrees that the Servicer's designation as the secured party on the certificate
of title is in its capacity as agent of the Trust.
(b) Upon the occurrence of a Servicer Termination Event, the Trust and the
Servicer shall take or cause to be taken such action as may, in the opinion of
the Note Insurer, the Indenture Trustee, their respective counsel or counsel to
the Trust, be necessary to perfect or re-perfect the lien interests in the real
estate securing the Contracts in the name of the Trust by amending the title
documents of real estate or by such other reasonable means as may, in the
opinion of the Note Insurer, the Indenture Trustee, their respective counsel or
counsel to the Trust, be necessary or prudent. The Servicer hereby agrees to pay
all expenses related to such perfection or re-perfection and to take all action
necessary therefor.
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SECTION 5.21. Covenants, Representations, and Warranties of Servicer. By
its execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants on which the Trust relies in accepting
the Contracts and issuing the Notes and the Certificates and on which the
Indenture Trustee relies in authenticating the Notes, the Note Insurer relies in
issuing the Note Insurance Policy, and the Owner Trustee relies in
authenticating the Certificates.
(a) Liens in Force. The real estate securing each Contract shall not be
released in whole or in part from the lien interest granted by the Contract,
except upon payment in full of the Contract or as otherwise contemplated herein;
(b) No Impairment. The Servicer shall do nothing to impair the rights of
the Trust, the Indenture Trustee, the Note Insurer, or the Securityholders in
the Contracts, the Note Insurance Policy or the other Trust Property; and
(c) No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Contract, except in accordance with Section 5.06.
SECTION 5.22. Purchase of Contracts Upon Breach of Covenant. Upon
discovery by any of the Servicer, Note Insurer, the Trust or the Indenture
Trustee of a breach of any of the covenants set forth in Section 5.20(a) or
5.21, the party discovering such breach shall give prompt written notice to the
others; provided, however, that the failure to give any such notice shall not
affect any obligation of the Servicer. Not later than the last day of the Due
Period that is 90 days after its discovery or receipt of notice of any breach of
any such covenant which materially and adversely affects the interests of the
Securityholders or the Trust in any Contract (including any Liquidated
Contract), the Servicer shall, unless it shall have cured such breach in all
material respects, purchase from the Trust the Contract affected by such breach
and pay the related Repurchase Price. It is understood and agreed that the
obligation of the Servicer to purchase any Contract (including any Liquidated
Contract) with respect to which such a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against the
Servicer for such breach available to the Securityholders, the Trust, the Note
Insurer, or the Indenture Trustee on behalf of the Noteholders; provided,
however, that the Servicer shall indemnify the Owner Trustee, the Trust, the
Indenture Trustee, the Note Insurer, and the Securityholders 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 third party claims arising out of the events or facts giving rise to
such breach.
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ARTICLE VI
DISTRIBUTIONS; TRUST ACCOUNTS; LIMITED GUARANTY;
STATEMENTS TO SECURITYHOLDERS
SECTION 6.01. Trust Accounts.
(a) The Servicer shall establish the Collection Account in the name of the
Indenture Trustee for the benefit of the Securityholders and the Note Insurer.
The Collection Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(b) The Servicer shall establish the Note Distribution Account in the name
of the Indenture Trustee for the benefit of the Noteholders and the Note
Insurer. The Note Distribution Account shall be an Eligible Account and
initially shall be a segregated trust account established with the Indenture
Trustee and maintained with the Indenture Trustee.
(c) The Servicer shall establish the Certificate Distribution Account in
the name of the Owner Trustee for the benefit of the Certificateholders. The
Certificate Distribution Account shall be an Eligible Account and initially
shall be a segregated trust account established with the Indenture Trustee and
maintained with the Indenture Trustee, so long as the Indenture Trustee is
acting as Paying Agent under Section 3.9 of the Trust Agreement.
(d) The Servicer shall establish the Undelivered Contract Account on
behalf of the Trust, which must be an Eligible Account, and shall deposit
therein the amount received from the Company pursuant to Section 2.02(k). The
Undelivered Contract Account shall be an Eligible Account and shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(e) All amounts held in the Collection Account, the Note Distribution
Account and the Undelivered Contract Account (but not the Certificate
Distribution Account) shall, to the extent permitted by applicable laws, rules
and regulations, be invested, as directed by the Servicer, in Eligible
Investments that mature not later than one Business Day prior to the Payment
Date for the Due Period to which such amounts relate. Any such written direction
shall certify that any such investment is authorized by this Section 6.01(e).
Such investments in Eligible Investments shall be made in the name of the
Indenture Trustee on behalf of the Note Insurer and the Trust, and such
investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Collection Account, the Note Distribution Account or
the Undelivered Contract Account shall be made in Eligible Investments held by a
financial institution with respect to which (a) such institution has noted the
Indenture Trustee's interest therein by book entry or otherwise and (b) a
confirmation of the Indenture Trustee's interest has been sent to the Indenture
Trustee by such institution, provided that such Eligible Investments are (i)
specific certificated securities (as such term is used in MN UCC ss.
336.8-313(1)(d)(i)), and (ii) either (A) in the possession of such institution
or (B) in the possession of a clearing corporation (as such term is used in MN
UCC ss. 336.8-313(1)(g)) in New York or Minnesota, registered in the name of
such clearing corporation, not endorsed for collection or surrender or any other
purpose not involving transfer, not containing any evidence of a right or
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interest inconsistent with the Indenture Trustee's security interest therein,
and held by such clearing corporation in an account of such institution. Subject
to the other provisions hereof, the Indenture Trustee shall have sole control
over each such investment and the income thereon, and any certificate or other
instrument evidencing any such investment, if any, shall be delivered directly
to the Indenture Trustee or its agent, together with each document of transfer,
if any, necessary to transfer title to such investment to the Indenture Trustee
in a manner which complies with this Section 6.01. All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Collection Account, the Note Distribution Account and the Undelivered
Contract Account shall be deposited in the Collection Account and distributed on
the next Payment Date pursuant to Section 6.06. The Servicer shall deposit in
the applicable Collection Account, the Note Distribution Account and the
Undelivered Contract Account an amount equal to any net loss on such investments
immediately as realized.
SECTION 6.02. Collection Account Deposits.
(a) Collections. The Servicer shall remit directly to the Collection
Account (no later than the next Business Day as specified in Section 5.05) all
payments by or on behalf of the Obligors on the Contracts and all Liquidation
Proceeds received by the Servicer.
(b) [Reserved].
(c) Repurchased Contracts. The Company shall deposit in the Collection
Account the Repurchase Price for each Contract repurchased by it under Section
3.05. The Servicer shall deposit in the Collection Account the Repurchase Price
for each Contract repurchased by it under Section 5.22.
SECTION 6.03. Permitted Withdrawals.
The Indenture Trustee may, from time to time as provided herein, make
withdrawals from the Collection Account of amounts deposited in said account
that are attributable to the Contracts only for the following purposes:
(a) to make payments in the amounts and in the manner provided for
in Section 6.06;
(b) to pay to the Company with respect to each Contract or property
acquired in respect thereof that has been repurchased pursuant to Section
3.05, all amounts received thereon and not required to be distributed to
Noteholders or Certificateholders as of the date on which the related
Scheduled Principal Balance or Repurchase Price is determined;
(c) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement is
permitted pursuant to Section 5.08;
(d) to withdraw any amount deposited in the Collection Account that
was not required to be deposited therein; or
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(e) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(e).
Since, in connection with withdrawals pursuant to clauses (a) and (b), the
Company's or the Servicer's entitlement thereto is limited to collections or
other recoveries on the related Contract, the Servicer shall keep and maintain a
separate accounting, on a Contract by Contract basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to such clauses.
SECTION 6.04. [RESERVED]
SECTION 6.05. Limited Guaranty.
(a) No later than the Determination Date prior to each Payment Date, the
Servicer (if other than the Company) shall notify the Company of the amount of
the Guaranty Payment (if any) for such Payment Date. Not later than the Business
Day preceding each Payment Date, the Company shall deposit the Guaranty Payment,
if any, for such Payment Date into the Collection Account.
(b) The obligations of the Company under this Section shall not terminate
upon or otherwise be affected by a Service Transfer pursuant to Article VII of
this Agreement.
(c) The obligation of the Company to provide the Limited Guaranty under
this Agreement shall terminate on the Final Scheduled Payment Date.
(d) The obligation of the Company to make the Guaranty Payments described
in subsection (a) above shall be unconditional and irrevocable. The Company
acknowledges that its obligation to make the Guaranty Payments described in
subsection (a) above shall be deemed a guaranty by the Company of that portion
of the Obligors' obligations under the Contracts that is allocable to the Class
B-2 Noteholders.
(e) If the Company fails to make a Guaranty Payment in whole or in part,
the Company shall promptly notify the Owner Trustee, and the Owner Trustee shall
promptly notify the Rating Agencies.
SECTION 6.06. Distributions.
(a) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Monthly Report delivered
pursuant to Section 5.14) to make the following deposits and distributions by
11:00 a.m. (Minnesota time), to the extent of the Amount Available for such
Payment Date and in the following order of priority, provided that any Insured
Payment shall be distributed solely to the Class A-1 and Class A-2 Noteholders
and any Guaranty Payment shall be distributed solely to the Class B-2
Noteholders:
(i) Servicing Fee. If the Company or an Affiliate is not the
Servicer, then to the Servicer, the Monthly Servicing Fee for the related
Due Period (not to exceed 1/12 of 0.75% of the Pool Scheduled Principal
Balance);
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(ii) Premium Amount. After payment of the amounts specified in
clause (i) above, the Premium Amount to the Note Insurer;
(iii) [Reserved].
(iv) Note Interest. After payment of the amounts specified in clause
(i) and (ii) above, to the Note Distribution Account, the sum of the Class
A-1, Class A-2, Class M-1, Class M-2 and Class B-1 Interest Amounts and
any Unpaid Class A-1, Class A-2, Class M-1, Class M-2 and Class B-1
Interest Shortfalls;
(v) Class A Principal Distribution Amount. After payment of the
amounts specified in clauses (i) through (iv) above, to the Note
Distribution Account, the Class A Principal Distribution Amount;
(vi) Reimbursement Amount. After payment of the amounts specified in
clauses (i) through (v) above, the Reimbursement Amount to the Note
Insurer;
(vii) Class M Principal Distribution Amount. After payment of the
amounts specified in clauses (i) through (vi) above, to the Note
Distribution Account, the Class M Principal Distribution Amount;
(viii)Class B-1 Principal Distribution Amount. After payment of the
amounts specified in clauses (i) through (vii) above, to the Note
Distribution Account the Class B-1 Principal Distribution Amount;
(ix) Liquidation Loss Interest. After payment of the amounts
specified in clauses (i) through (viii) above, to the Note Distribution
Account the sum of the Class M-1, Class M-2, and Class B-1 Liquidation
Loss Interest Amounts and Unpaid Class M-1, Class M-2, Class B-1
Liquidation Loss Interest Shortfalls;
(x) Class B-2 Interest. After payment of the amounts specified in
clauses (i) through (ix) above, to the Note Distribution Account, the sum
of the Class B-2 Interest Amount and any Unpaid Class B-2 Interest
Shortfall;
(xi) Class B-2 Principal. After payment of the amounts specified in
clauses (i) through (x) above, to the Note Distribution Account, the Class
B-2 Principal Distribution Amount;
(xii) Monthly Servicing Fee. After payment of the amounts specified
in clauses (i) through (xi) above, to the Company, if the Servicer, the
Monthly Servicing Fee;
(xiii)Supplementary Principal Distribution Amount. After payment of
the amounts specified in clauses (i) through (xii) above, to the Note
Distribution Account the Supplementary Principal Distribution Amount;
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(xiv) Additional Monthly Servicing Fee. After payment of the amounts
specified in clauses (i) through (xiii), above to the Servicer (if not the
Company or an Affiliate) any portion of the Monthly Servicing Fee in
excess of 1/12 of the product of 0.75% and the Pool Scheduled Principal
Balance; and
(xv) Certificate Distribution Amount. After payment of the amounts
specified in clauses (i) through (xiv) above, to the Certificate
Distribution Account the remaining Amount Available.
(b) Guaranty Payments. On each Payment Date the Servicer shall instruct
the Indenture Trustee to distribute to the Note Distribution Account any
Guaranty Payment deposited in the Collection Account pursuant to Section 6.05.
SECTION 6.07. Statements to Securityholders.
(a) On each Payment Date, the Indenture Trustee shall include with each
distribution to each Noteholder, and the Paying Agent shall include with each
distribution to each Certificateholder (with a copy to the Owner Trustee), a
statement (which statement shall also be provided to each Rating Agency and the
Note Insurer) based on information in the Monthly Report delivered on the
related Determination Date pursuant to Section 5.14, setting forth the following
information:
(i) the amount of such distribution to Holders of each Class of
Notes allocable to interest, separately identifying any Unpaid Class A-1
Interest Shortfall, Unpaid Class A-2 Interest Shortfall, Unpaid Class M-1
Interest Shortfall, Unpaid Class M-2 Interest Shortfall, Unpaid Class B-1
Interest Shortfall and Unpaid Class B-2 Interest Shortfall included in
such distribution and any remaining Unpaid Class A-1 Interest Shortfall,
Unpaid Class A-2 Interest Shortfall, Unpaid Class M-1 Interest Shortfall,
Unpaid Class M-2 Interest Shortfall, Unpaid Class B-1 Interest Shortfall
and Unpaid Class B-2 Interest Shortfall;
(ii) the Class A-1 Interest Carryover Shortfall, the Class A-2
Interest Carryover Shortfall, the Class M-1 Interest Carryover Shortfall,
the Class M-2 Interest Carryover Shortfall, the Class B-1 Interest
Carryover Shortfall and the Class B-2 Interest Carryover Shortfall, if
any, for such Payment Date;
(iii) the amount of such distribution to Holders of each Class of
Notes allocable to principal, separately identifying the Group 1 Formula
Principal Distribution Amount, the Group 2 Formula Principal Distribution
Amount, and the amount, if any, by which the Class A, Class M and Class B
Principal Distribution Amounts, respectively, exceed the respective Class
A, Class M and Class B Formula Principal Distribution Amounts;
(iv) the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class M-1 Principal Balance, the Class M-2 Principal Balance,
the Class B-1 Principal Balance and the Class B-2 Principal Balance after
giving effect to the distribution of principal on such Payment Date;
(v) the amount, if any, of the Guaranty Payment on such Payment
Date;
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(vi) the amount of the Monthly Servicing Fee with respect to such
Due Period;
(vii) the Certificate Distribution Amount;
(viii)the Pool Scheduled Principal Balance for such Payment Date;
(ix) the Note Pool Factor for each Class after giving effect to the
distribution of principal on such Payment Date;
(x) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days, (b) 60-89 days, and (c) 90 or more days;
(xi) the number and aggregate Scheduled Principal Balance of
Contracts that became Defaulted Contracts during the related Due Period;
(xii) the number and aggregate Scheduled Principal Balance of
Defaulted Contracts as of the last day of the related Due Period;
(xiii)the number and aggregate Scheduled Principal Balance of
Contracts that became Liquidated Contracts during the related Due Period
and the related Net Liquidation Losses;
(xiv) the number and aggregate principal balance of Contracts (x) in
foreclosure, (y) as to which foreclosure of the related real property lien
was completed during the related Due Period, exclusive of any such
Contracts that are Liquidated Contracts and (z) foreclosed upon and in the
Servicer's inventory ;
(xv) information relating to the satisfaction or non-satisfaction of
the Class B Principal Distribution Test, Servicer Termination Test and
Supplementary Principal Distribution Test; and
(xvi) the amount of any payment by the Note Insurer under the Note
Insurance Policy and any reimbursement paid to the Note Insurer.
In the case of information furnished pursuant to clauses (i) through (iv)
above, the amounts shall be expressed as a dollar amount per $1,000 denomination
of Note or per Note with a 1% Percentage Interest.
(b) The Indenture Trustee shall inform any of the Noteholders,
Certificateholders, Underwriters, Rating Agencies or Note Insurer inquiring by
telephone of the information contained in the most recent Monthly Report.
(c) Certificateholders may obtain copies of the statements delivered by
the Owner Trustee pursuant to subsection (a) above upon written request to the
Owner Trustee at the Corporate Trust Office (together with a certification that
such Person is a Certificateholder and payment of any expenses associated with
the distribution thereof). Noteholders may obtain copies of the statements
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delivered by the Indenture Trustee pursuant to subsection (a) above upon written
request to the Indenture Trustee at its Corporate Trust Office (together with a
certification that such Person is a Noteholder and payment of any expenses
associated with the distribution thereof).
SECTION 6.08. Claims Upon Policy.
(a) If, any Monthly Report delivered to the Indenture Trustee pursuant to
Section 5.14 discloses a Shortfall, the Indenture Trustee shall, promptly on the
Business Day it receives the Monthly Report, give notice to the Note Insurer of
the amount of the Shortfall. In the event that a payment becomes due pursuant to
the terms of the Note Insurance Policy, the Indenture Trustee shall submit a
Notice (in the form attached to such Note Insurance Policy) in accordance with
the terms of the Note Insurance Policy.
(b) The Indenture Trustee shall establish a separate special purpose trust
account for the benefit of the Holders of the Class A Notes and the Note Insurer
(the "Policy Payments Account") over which the Indenture Trustee shall have
exclusive control and sole right of withdrawal. The Indenture Trustee shall
deposit any amount paid under the Note Insurance Policy in the Policy Payments
Account and distribute such amount only for purposes of payment to the Holders
of the Class A Notes of the Scheduled Payments for which a claim was made and
such amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Seller, the Indenture Trustee or the Trust. Amounts paid under
the Note Insurance Policy shall be transferred to the Note Distribution Account
in accordance with the next succeeding paragraph and disbursed by the Indenture
Trustee to Holders of the Class A Notes in accordance with Section 8.02(c) of
the Indenture. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Insured Payments with other funds available to make such payment. However, the
amount of any payment of principal of or interest on the Class A Notes to be
paid from funds transferred from the Policy Payments Account shall be noted as
provided in paragraph (c) below in the Register and in the statement to be
furnished to Class A Noteholders pursuant to Section 6.07. Funds held in the
Policy Payments Account shall not be invested by the Indenture Trustee.
On any Payment Date with respect to which a claim has been made under the
Note Insurance Policy, the amount of funds received by the Indenture Trustee as
a result of any claim under the Note Insurance Policy, to the extent required to
make the Scheduled Payments on such Payment Date, shall be withdrawn from the
Policy Payments Account and deposited in the Note Distribution Account and
applied by the Indenture Trustee, together with the other funds to be withdrawn
from the Note Distribution Account, directly to the payment in full of the
Scheduled Payments due on the Class A Notes. Funds received by the Indenture
Trustee as a result of any claim under the Note Insurance Policy shall be
deposited by the Indenture Trustee in the Policy Payments Account and used
solely for payment to the Holders of the Class A Notes and may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Indenture Trustee or the Trust. Any funds remaining in the Policy Payments
Account on the first Business Day following a Payment Date shall be remitted to
the Note Insurer, pursuant to the instructions of the Note Insurer, by the end
of such Business Day.
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(c) The Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Note from moneys
received under the Note Insurance Policy. The Note Insurer shall have the right
to inspect such records at reasonable times during normal business hours upon
one Business Day's prior notice to the Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Note Insurer and the
Fiscal Agent (as defined in the Note Insurance Policy) of any proceeding or the
institution of any action, of which an authorized officer of the Indenture
Trustee has actual knowledge, seeking the avoidance as a preferential transfer
under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder of a Class A Note by its purchase of such Note, the Servicer and the
Indenture Trustee hereby agree that, the Note Insurer (so long as no Note
Insurer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Note Insurer shall be subrogated to the
rights of the Servicer, the Indenture Trustee and each Holder of a Class A Note
in the conduct of any such Preference Claim, including, without limitation, all
rights of any party to an adversary proceeding action with respect to any court
order issued in connection with any such Preference Claim.
(e) The Indenture Trustee shall, at the time it provides notice to the
Note Insurer, notify, by mail to the Class A Noteholders that, in the event the
any such Noteholder's scheduled payment is avoided as a preferential transfer,
such Noteholder will be entitled to payment pursuant to the terms of the Note
Insurance Policy, a copy of which shall be made available through the Indenture
Trustee, or the Fiscal Agent, if any, and the Indenture Trustee shall furnish to
the Note Insurer or its Fiscal Agent, if any, its records evidencing the
payments of principal of and interest on the Class A Notes, if any, which have
been made by the Indenture Trustee and subsequently recovered from Class A
Noteholders, and the dates on which such payments were made.
(f) The Indenture Trustee shall, upon retirement of the Class A Notes,
furnish to the Note Insurer a notice of such retirement, and, upon the
retirement of the Class A Notes and the expiration of the term of the Note
Insurance Policy, surrender the Note Insurance Policy to the Note Insurer for
cancellation.
SECTION 6.09. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect
to principal of or interest on any of the Class A Notes which is made with
moneys received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of such Notes from the Trust and shall not result in the
payment of or the provision for the payment of the principal of or interest on
such Notes within the meaning of Section 6.06. The Servicer and the Owner
Trustee acknowledge, and each Holder by its acceptance of a Class A Note agrees,
that without the need for any further action on the part of the Note Insurer,
the Seller, the Servicer, the Indenture Trustee or the Paying Agent (a) to the
extent the Note Insurer makes payments, directly or indirectly, on account of
principal of or interest on any Class A Notes to the Holder of such Class A
Notes, the Note Insurer will be fully subrogated to the rights of such
Noteholders to receive such principal and interest from the Trust and
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(b) the Note Insurer shall be paid such principal and interest but only from the
sources and in the manner provided herein for the payment of such principal and
interest.
The Indenture Trustee and the Servicer shall cooperate in all respects
with any reasonable request by the Note Insurer for action to preserve or
enforce the Note Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Class A Noteholders as
otherwise set forth therein.
SECTION 6.10. Notices to the Note Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Noteholders
shall also be sent to the Note Insurer.
SECTION 6.11. Rights of the Note Insurer To Exercise Rights of
Noteholders.
By accepting its Note, each Class A Noteholder agrees that unless a Note
Insurer Default exists and until payment in full of the Class A Notes and all
amounts owing to the Note Insurer under the Insurance Agreement, the Note
Insurer shall have the right to exercise all rights of the Class A Noteholders
as specified under this Agreement without any further consent of the Class A
Noteholders.
SECTION 6.12. Withdrawals From Undelivered Contract Account. Amounts on
deposit in the Undelivered Contract Account shall be withdrawn by the Indenture
Trustee as follows:
(a) If the Company delivers the related Contract for an Undelivered
Contract to the Indenture Trustee on or before January 14, 1999, the
Indenture Trustee shall withdraw an amount equal to 100% of the Cut-off
Date Principal Balance of such Contract and pay such amount to or upon the
order of the Company.
(b) The Company shall give the Indenture Trustee telephonic notice
of its intended delivery of such Contracts. The Indenture Trustee will use
reasonable efforts to process the Contracts and remit any amount payable
for them to the Company in a timely manner.
(c) On January 29, 1999, the Indenture Trustee shall deposit into
the Collection Account any amounts remaining in the Undelivered Contract
Account. Any amount so deposited shall constitute the payment of the
Repurchase Price for the related Undelivered Contract(s).
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ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Servicer Termination Event.
(a) Subject to Section 7.09, the Note Insurer or the Indenture Trustee
(with the prior written consent of the Note Insurer, or, except in the case of
item (vi) below, the Noteholders, with the consent of the Note Insurer, may
remove the Servicer (such removal being herein called a "Service Transfer") upon
the occurrence of any of the following events (each a "Servicer Termination
Event"):
(i) The Servicer shall (A) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (B) admit in writing its inability to
pay its debts generally as they become due, (C) make a general assignment
for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent,
(E) commence a voluntary case under the federal bankruptcy laws of the
United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or (F) take corporate
action for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Servicer an
order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if
such proceeding is being contested by the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
material obligations hereunder and shall continue in default thereof for a
period of thirty (30) days (one (1) Business Day in the case of a delay in
making a payment required of the Servicer under this Agreement), or the
Servicer shall fail to deliver the Monthly Report on any Determination
Date, after the earlier of (A) actual knowledge of an officer of the
Servicer or (B) receipt of notice from the Indenture Trustee or the Note
Insurer of said failure; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Note Insurer that it is
diligently pursuing remedial action, then the cure period may be extended
with the written approval of the Note Insurer; or
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(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 5.21 which materially
and adversely affects the interests of the Noteholders or the Note Insurer
for a period of sixty (60) days after the earlier of the Servicer's
discovery or receipt of notice thereof; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the Note
Insurer that it is diligently pursuing remedial action, then the cure
period may be extended with the written approval of the Note Insurer; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, unless (A) the Servicer or an Affiliate of
the Servicer is the surviving entity of such combination or (B) the
surviving entity (I) is servicing at least $300,000,000 of home equity
loans that are similar to the Contracts, (II) has equity of not less than
$10,000,000 (as determined in accordance with generally acceptable
accounting principles), (III) is consented to by the Note Insurer (such
consent not to be unreasonably withheld) and (IV) agrees to assume the
Servicer's obligations thereunder; or
(vi) The failure of the Servicer (except the Indenture Trustee in
its capacity as successor Servicer) to satisfy the Servicer Termination
Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall act as servicer under this Agreement, subject to the right of removal set
forth in subsection (a) hereof, for an initial period commencing on the date on
which such Servicer Termination Event occurred and ending on the last day of the
calendar quarter in which such Servicer Termination Event occurred, which period
may be extended by the Note Insurer in its sole discretion for a succeeding
quarterly period on December 31, March 31, June 30 and September 30 of each year
as provided below (each such quarterly period for which the Servicer shall be
designated to act as servicer hereunder, a "Term of Service"); provided that
nothing in this Section 7.01(a) shall prohibit the Note Insurer or the Indenture
Trustee from removing the Servicer pursuant to Section 7.01(a). Notwithstanding
the foregoing, the Note Insurer may, in its sole discretion, extend the period
for which the Servicer is to act as such for a period in excess of one quarter
(provided such extension shall be an additional one or more quarters), but any
such extension shall be revocable at any time by the Note Insurer upon written
notice delivered to the Indenture Trustee and the Servicer at least fifteen days
prior to the expiration of the related quarterly period.
(c) The Servicer agrees to use its best efforts to inform the Indenture
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of the Note Insurer from time to time.
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the Indenture Trustee and the Note Insurer at the expense of the
Servicer to such effect which shall be delivered to the Indenture Trustee and
the Note Insurer.
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(e) Notwithstanding any other provision in this Agreement, no removal or
resignation of the Servicer shall become effective until the Indenture Trustee
or a successor Servicer shall have assumed the Servicer's responsibilities and
obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, or expiration of its term
of service without renewal, the Servicer at its own expense also shall promptly
deliver or cause to be delivered to a successor servicer or the Indenture
Trustee all the books and records (including, without limitation, records kept
in electronic form) that the Servicer has maintained for the Contracts,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in the Servicer's
possession.
(g) Any collections then being held by the Servicer prior to its removal
and any collections received by the Servicer after removal or resignation shall
be endorsed by it to the Indenture Trustee and remitted directly and immediately
to the Indenture Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, or expiration of its term
of service without renewal, the Indenture Trustee shall, at the direction of the
Note Insurer, and may, if a Note Insurer Default exists and is continuing or the
Note Insurer's rights have been terminated as described in Section 11.21(b) of
the Indenture, (i) solicit bids for a successor servicer as described below or
(ii) appoint the Backup Servicer (or such other Person as may be designated by
the Note Insurer) as Servicer. If the Indenture Trustee solicits bids for a
successor Servicer, the Indenture Trustee agrees to act as Backup Servicer
during the solicitation process and shall assume all duties of the Servicer
(except as otherwise provided in this Agreement). The Indenture Trustee shall,
if it is unable to obtain a qualifying bid and is prevented by law from acting
as Servicer, appoint, or petition a court of competent jurisdiction to appoint,
any housing and home finance institution, bank or mortgage servicing institution
which has been designated as an approved seller-servicer by Fannie Mae or
Freddie Mac for first and second lien home equity loans and having equity of not
less than $15,000,000 (or such lower level as may be acceptable to the Note
Insurer), as determined in accordance with generally accepted accounting
principles and acceptable to the Note Insurer 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. The compensation of any successor
Servicer (other than the Indenture Trustee in its capacity as successor
Servicer) so appointed shall be the Monthly Servicing Fee, provided, however,
that if the Indenture Trustee becomes the successor Servicer it shall receive as
its compensation the same compensation paid to the Servicer immediately prior to
the Servicer's removal or resignation.
(i) In the event the Indenture Trustee solicits bids as provided above,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Section 5.08. Within thirty days after any such public announcement, the
Indenture Trustee shall negotiate and effect the sale, transfer and assignment
of the servicing rights and responsibilities hereunder to the qualified party
approved by the Note Insurer submitting the highest satisfactory bid as to the
price it will pay to obtain
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servicing. The Indenture Trustee shall deduct from any sum received by the
Indenture Trustee from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder. After such deductions, the remainder of such sum less any amounts due
the Indenture Trustee or the Trust from the Servicer shall be paid by the
Indenture Trustee to the Servicer at the time of such sale, transfer and
assignment to the Servicer's successor.
(j) The Indenture Trustee and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession, including the notification to all Obligors of the transfer of
servicing. The Servicer agrees to cooperate with the Indenture Trustee and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
Trustee or such successor Servicer, as applicable, all documents and records
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and shall promptly also transfer to the Indenture Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Collection Account by the Servicer or which are
thereafter received with respect to the Contracts. Neither the Indenture Trustee
nor any other successor Servicer shall be held liable by reason of any failure
to make, or any delay in making, any distribution hereunder or any portion
thereof caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer. If the Servicer
resigns or is replaced hereunder, or its term of service expires without
renewal, the Servicer agrees to reimburse the Trust, the Noteholders and the
Note Insurer for the costs and expenses associated with the transfer of
servicing to the replacement Servicer.
(k) The Indenture Trustee or any other successor Servicer, upon assuming
the duties of Servicer hereunder, shall at the expense of the previous Servicer
immediately record all assignments of Contracts not previously recorded in the
name of the Indenture Trustee or as directed by the Note Insurer.
SECTION 7.02. [RESERVED]
SECTION 7.03. [RESERVED]
SECTION 7.04. Notification to Securityholders.
(a) Promptly following the occurrence of any Servicer Termination Event,
the Servicer shall give written notice thereof to the Indenture Trustee, the
Trust, the Note Insurer, the Rating Agencies and the Obligors, to the extent
required by law.
(b) Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Owner Trustee on
behalf of the Trust shall give written notice thereof to the Rating Agencies,
the Note Insurer, and the Certificateholders at their respective addresses
appearing on the Certificate Register and the Indenture Trustee shall give
written notice thereof to Noteholders at their respective addresses appearing in
the Note Register.
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(c) The Owner Trustee on behalf of the Trust shall give written notice to
the Rating Agencies at least 30 days prior to the date upon which any Eligible
Servicer (other than the Indenture Trustee) is to assume the responsibilities of
Servicer pursuant to Section 7.01, naming such successor Servicer.
(d) The Indenture Trustee shall give notice to the Note Insurer, the
Noteholders, the Owner Trustee, the Seller, and the Rating Agencies of the
occurrence of any event described in Section 7.01(a) of which the Indenture
Trustee is aware.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the Indenture Trustee or new Servicer may
notify Obligors to make payments directly to the new Servicer that are due under
the Contracts after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article IX and Sections 3.05 and 5.22) other than
those relating to the management, administration, servicing or collection of the
Contracts.
SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.01, if the Collection Account
shall be maintained with the Servicer and a Servicer Termination Event shall
occur and be continuing, the Servicer shall, after five days' written notice
from the Indenture Trustee or the Note Insurer, or in any event within ten days
after the occurrence of the Servicer Termination Event, establish an Eligible
Account with an institution other than the Servicer and promptly transfer all
funds in the Collection Account to such new account, which shall thereafter be
deemed the Collection Account for the purposes hereof.
SECTION 7.07. Limits on Liability.
The Servicer will be liable to the Trust, the Owner Trustee, the Indenture
Trustee, the Note Insurer and the Securityholders only to the extent of the
obligations specifically undertaken by the Servicer under this Agreement and
will have no other obligations or liabilities hereunder. Neither the Servicer
nor any of its directors, officers, employees or agents will have any liability
to the Trust, the Owner Trustee, the Indenture Trustee or the Securityholders
(except as explicitly provided in this Agreement) for any action taken, or for
refraining from taking any action, pursuant to this Agreement, other than any
liability that would otherwise be imposed by reason of the Servicer's
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breach of this Agreement or willful misfeasance, bad faith or negligence
(including errors in judgment) in the performance of its duties, or by reason of
reckless disregard of obligations and duties under this Agreement or any
violation of law.
SECTION 7.08. Waiver of Past Defaults.
The Note Insurer or a Note Majority of each Class may, on behalf of all
Holders of Notes, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Termination Event
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
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<PAGE>
ARTICLE VIII
TERMINATION
SECTION 8.01. Company's or Servicer's Repurchase Option.
(a) Subject to the conditions in subsection (b) below, the Company, the
Note Insurer, or the Servicer may repurchase all of the Contracts and all real
property acquired in respect of any Contract remaining in the Trust at a price
equal to the greatest of:
(i) the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which title to the underlying real property
has been acquired and whose fair market value is included pursuant to
clause (y) below), plus (y) the fair market value of such acquired real
property (as determined by the Company);
(ii) the aggregate fair market value (as determined by the Company)
of all of the assets of the Trust (but in no event more than the amount
sufficient to pay all principal and interest outstanding on the
Securities, plus any unpaid fees and expenses of the Indenture Trustee and
the Owner Trustee); or
(iii) the aggregate Note Principal Balance;
plus, one month's interest at the applicable Contract Interest Rate on the
Scheduled Principal Balance of each Contract.
(b) The purchase by the Company or the Servicer of all of the Contracts
pursuant to Section 8.01(a) shall be at the option of the Company, or the
Servicer or the Note Insurer on any Payment Date, but shall be conditioned upon
(1) the Pool Scheduled Principal Balance, as of the end of the Due Period
immediately preceding such Payment Date, aggregating an amount equal to or less
than 10% of the Cut-off Date Pool Principal Balance, (2) the Company, the Note
Insurer or the Servicer having provided the Indenture Trustee and the Owner
Trustee and the Depository (if any) with at least 30 days' written notice (which
may be given prior to the end of the Due Period referred to in clause (1)
above), (3) the Company or the Servicer (as applicable) shall have delivered to
the Indenture Trustee and the Owner Trustee an unqualified Opinion of Counsel
stating that payment of the purchase price to the Securityholders will not
constitute a voidable preference or fraudulent transfer under the United States
Bankruptcy Code, and (4) unless the Note Insurer otherwise agrees in writing,
all Reimbursement Amounts owed to the Note Insurer shall have been paid in full.
In the event the notice described in the preceding sentence is given in
connection with the Company's election to purchase the Contracts, the Company
shall deposit in the Collection Account on the related Payment Date in
immediately available funds an amount equal to the above-described purchase
price and the Indenture Trustee shall distribute the amounts so deposited in
accordance with Section 6.06. Upon certification to the Indenture Trustee by a
Servicing Officer, following such final deposit, the Indenture Trustee shall
promptly release to the Company the Contract Files for the remaining Contracts,
and the Indenture Trustee and Owner Trustee on behalf of the Trust shall execute
all assignments, endorsements and other instruments necessary to effectuate such
transfer.
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SECTION 8.02. Liquidation of Trust Estate.
Upon any sale of the assets of the Trust pursuant to Section 10.03 of the
Indenture or Section 9.2 of the Trust Agreement, the Trust shall instruct the
Indenture Trustee or the Owner Trustee, as the case may be, to deposit the
proceeds from such sale after all payments and reserves therefrom have been made
in the Collection Account. On the Payment Date on which such proceeds are
deposited in the Collection Account (or, if such proceeds are not so deposited
on a Payment Date, on the Payment Date immediately following such deposit), the
Trust shall instruct the Indenture Trustee to distribute such funds, together
with all other amounts available, in accordance with the terms of Section
6.06(a).
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ARTICLE IX
INDEMNITIES
SECTION 9.01. Company's Indemnities.
The Company will defend and indemnify the Trust, the Owner Trustee, the
Indenture Trustee, the Note Insurer (including the paying agent and any other
agents of the Owner Trustee, the Note Insurer and the Indenture Trustee), and
the Securityholders against any and all costs, expenses, losses, damages, taxes,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation of any third-party claims arising out of or resulting
from (i) the origination of any Contract (including but not limited to truth in
lending requirements) or the servicing of such Contract prior to its transfer to
the Trust (but only to the extent such cost, expense, loss, damage, tax, claim
or liability is not provided for by the Company's repurchase of such Contract
pursuant to Section 3.05), (ii) the use or ownership of any real property
related to a Contract by the Company or the Servicer or any Affiliate of either,
or (iii) the Company's or the Trust's violation of federal or state securities
laws in connection with the offering and sale of the Securities. Notwithstanding
any other provision of this Agreement, the obligation of the Company under this
Section shall not terminate upon a Service Transfer pursuant to Article VII,
except that the obligation of the Company under this Section shall not relate to
the actions of any subsequent Servicer after a Service Transfer.
SECTION 9.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Owner Trustee, Indenture Trustee, the
Note Insurer or the Securityholders under or as a result of this Agreement and
the transactions contemplated hereby and, to the maximum extent permitted and
valid under mandatory provisions of law, the Trust, the Owner Trustee, Indenture
Trustee, the Note Insurer and the Securityholders expressly disclaim such
assumption.
SECTION 9.03. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Owner Trustee, the
Indenture Trustee (including the Paying Agent and any other agents of the Owner
Trustee, the Note Insurer and the Indenture Trustee) and the Securityholders
against any and all costs, expenses, losses, damages, taxes, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation, in respect of any action taken or omitted to be taken by the
Servicer with respect to any Contract. This indemnity shall survive any Service
Transfer (but the original Servicer's obligations under this Section 9.03 shall
not relate to any actions of any subsequent Servicer after a Service Transfer)
and any payment of the amount owing under, or any repurchase by the Company of,
any such Contract.
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SECTION 9.04. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments pursuant to this Article
and the recipient thereafter collects any of such amounts from others, the
recipient will repay such amounts collected to the Company or the Servicer, as
the case may be, without interest.
9-2
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Duties.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee payable to it. The Servicer shall not resign from the obligations
and duties hereby imposed on it except upon determination that the performance
of its duties hereunder is no longer permissible under applicable law or is in
material conflict by reason of applicable law with any other activities carried
on by it. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel for the Servicer to such effect
addressed and delivered to the Trust, the Indenture Trustee and the Note
Insurer. No such resignation shall become effective until the Indenture Trustee
or a successor servicer shall have assumed the responsibilities and obligations
of the Servicer in accordance with Sections 7.01.
Notwithstanding the foregoing:
(a) Any person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be the successor of the
Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or
surviving Person to the Servicer shall satisfy the criteria set forth in
the definition of Eligible Servicer. The Servicer shall promptly notify
Standard & Poor's, Moody's and the Note Insurer of any such merger to
which it is a party.
(b) The Servicer may, with the consent of the Note Insurer, delegate
duties under this Agreement to any of the Servicer's Affiliates. In
addition, the Servicer may at any time perform the specific duty of
foreclosing real property liens through subcontractors who are in the
business of servicing home improvement contracts and promissory notes or
home equity loans, and may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to the Trust and
the Indenture Trustee and each of Standard & Poor's and Moody's, and
provided further that no such delegation of duties by the Servicer shall
relieve the Servicer of its responsibility with respect thereto.
SECTION 10.02. Assignment or Delegation by Company.
Except as specifically authorized hereunder, the Company may not convey
and assign or delegate any of its rights or obligations hereunder absent the
prior written consent of the Note Insurer or, if a Note Insurer Event of Default
exists, a Note Majority of each Class of Notes and a Certificate Majority, and
any attempt to do so without such consent shall be void. It is understood that
the foregoing does not prohibit the pledge or assignment by the Company of any
right to payment pursuant to Article VI.
10-1
<PAGE>
Notwithstanding the foregoing, any person into which the Company may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Company shall be a party, or any Person succeeding
to the business of the Company, shall be the successor of the Company hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Company shall promptly notify Standard & Poor's and Moody's of any such merger
to which it is a party.
SECTION 10.03. Amendment.
(a) This Agreement may be amended from time to time by the Company, the
Servicer and the Trust, with the prior written consent of the Indenture Trustee
and the Note Insurer but without the consent of any of the Securityholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, including, without limitation, to add or amend any provision as
required by Standard & Poor's, Moody's, or any other nationally recognized
statistical rating organization in order to improve or maintain the rating of
any Class of Notes or the Certificates, provided, however, that such action
shall not, as evidenced by an Opinion of Counsel for the Company, adversely
affect in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the Company,
the Servicer and the Trust with the prior written consent of the Indenture
Trustee and the Note Insurer and with the consent of the Holders of Notes
representing a majority of the aggregate Outstanding Amount of the Notes (which
consent of any Holder of a Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Note and of any Note issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Holders of
Notes; provided, however, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Contracts or distributions required to be made on any Note or the
Class A-1 Interest Rate, Class A-2 Interest Rate, Class M-1 Interest Rate, Class
M-2 Interest Rate, Class B-1 Interest Rate or Class B-2 Interest Rate, (b) amend
any provisions of Section 6.06 in such a manner as to affect the priority of
payment of interest, principal or premium to Noteholders, or (c) reduce the
aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Notes then Outstanding, and
provided further, that the Rating Agency Condition has been satisfied.
(c) Concurrently with the solicitation of any consent pursuant to this
Section 10.03, the Indenture Trustee shall furnish written notification to
Standard & Poor's and Moody's of such solicitation. Promptly after the execution
of any amendment pursuant to this Section 10.03, the Indenture Trustee shall
furnish written notification of the substance of such amendment to Standard &
Poor's, Moody's and each Securityholder.
(d) It shall not be necessary for the consent of Securityholders under
this Section 10.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent
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<PAGE>
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Securityholders
shall be subject to such reasonable requirements as the Indenture Trustee may
prescribe.
(e) Each of the Owner Trustee and Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects its own rights, duties
or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section, the Owner
Trustee and Indenture Trustee shall be entitled to receive an unqualified
Opinion of Counsel to the Servicer to the effect that such amendment is
authorized or permitted by the Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 10.03, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Securityholder hereunder shall be bound thereby.
SECTION 10.04. Notices.
All communications and notices pursuant hereto to the Servicer, the
Company, the Trust, the Owner Trustee, the Indenture Trustee, Standard & Poor's,
Moody's and the Note Insurer shall be in writing and delivered (by facsimile or
other means) or mailed to it at the appropriate following address:
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 Trust or Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopier Number: 302-651-8882
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If to the Indenture Trustee:
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration, Structured Finance
Telecopier Number: (651) 244-0089
If to Standard & Poor's:
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Attention: Asset-Backed Surveillance
Telecopier Number: (212) 208-8208
If to Moody's:
Moody's Investors Services, Inc.
99 Church Street
New York, New York 10007
Attention: Extension Mortgage Group
Telecopier Number: (212) 553-4392
If to Note Insurer:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: Green Tree Home Improvement
and Home Equity Loan Trust 1998-F
Loan-Backed Notes
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518, (212) 339-3529
(in each case in which notice or other communication to the
Note Insurer refers to a Servicer Termination Event, a claim
on the Note Insurance Policy or with respect to which failure
on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice
or other communication should also be sent to the attention of
each of the General Counsel and the Head-Financial Group of
the Note Insurer and shall be marked on the outside "URGENT
MATERIAL ENCLOSED")
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<PAGE>
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Securityholder shall
be in writing and delivered or mailed at the address shown in the Note Register
or the Certificate Register, as applicable.
SECTION 10.05. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 10.06. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 10.07. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
SECTION 10.08. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of Green Tree Home Improvement
and Home Equity Loan Trust 1998-F under the Trust Agreement, in the exercise of
the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or the other Related Documents.
SECTION 10.09. The Note Insurer.
Any right conferred to the Note Insurer hereunder shall be suspended and
shall run to the benefit of the Class A Noteholders during any period in which
there exists a Note Insurer Default; provided, that the right of the Note
Insurer to receive the Premium Amount shall not be suspended
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if such Note Insurer Default was a default other than a default under clause (a)
of the definition thereof. At such time as the Notes are no longer outstanding
hereunder and the Note Insurer has received all Reimbursement Amounts, the Note
Insurer's rights hereunder shall terminate.
SECTION 10.10. Third Party Rights.
The Seller, the Issuer, the Servicer, and the Securityholders agree that
the Note Insurer shall be deemed a third-party beneficiary of this Agreement as
if it were a party hereto. The Seller, the Issuer, the Servicer, and the
Securityholders agree that the Indenture Trustee shall be deemed a third-party
beneficiary of this Agreement as if it were a party hereto.
SECTION 10.11. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
issuer under this Agreement or any other related documents.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 30th
day of December, 1998.
ISSUER:
GREEN TREE HOME IMPROVEMENT AND HOME
EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By:_____________________________
Name:___________________________
Title:__________________________
SELLER AND SERVICER:
GREEN TREE FINANCIAL CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
Acknowledged and Accepted:
U.S. BANK TRUST NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:_____________________________
Name:___________________________
Title:__________________________
By:_____________________________
Name:______________________
Title:_____________________
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<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1998 between Green Tree Financial Corporation (the
"Company") and Green Tree Home Improvement and Home Equity Loan Trust 1998-F,
the Company does hereby transfer, assign, set over and otherwise convey to the
Trust all right, title and interest of the Company in (i) the home improvement
contracts and promissory notes and home equity loans (collectively, the
"Contracts") identified in the List of Contracts, a copy of which is attached
hereto, including, without limitation, all related Collateral Security, all
liens and security interests created thereby and any and all rights to receive
payments which are due pursuant thereto from and after the Cut-off Date, but
excluding any rights to receive payments which were due pursuant thereto prior
to the Cut-off Date, (ii) the Errors and Omissions Protection Policy as such
policy relates to the Contracts, (iii) all items contained in the Contract
Files, (iv) the Trust Accounts and all funds on deposit therein from time to
time and all investments and proceeds thereof (including all income thereon),
and (v) all proceeds in any way derived from any of the foregoing. Capitalized
terms used herein but not defined herein have the meanings assigned to them in
the Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ____ day of December, 1998.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
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<PAGE>
EXHIBIT B
FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"); he is duly authorized to
execute and deliver this certificate on behalf of the Servicer pursuant to
Section 3.05 of the Sale and Servicing Agreement (the "Agreement"), dated as of
December 1, 1998 between the Company and Green Tree Home Improvement and Home
Equity Loan Trust 1998-F (the "Trust") (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement):
1. The Contracts on the attached schedule are to be repurchased by
the [Company] [Servicer] on the date hereof pursuant to Section [3.05]
[5.22] of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to Section [3.05] [5.22] of the Agreement, be
assigned by the Trust to the [Company] [Servicer].
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
December, 1998.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
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<PAGE>
EXHIBIT C
FORM OF MONTHLY REPORT
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
Payment Date: ________
1. Amount Available ________
2. Note Insurance Policy
(a) Shortfall ________
(b) Insured Payment ________
3. Monthly Servicing Fee (if Green Tree is not the Servicer)
(up to 1/12 of 0.75% of Pool Scheduled Principal Balance) ________
4. Premium Amount ________
Interest
- --------
Class A
-------
5. Class A-1 Interest Rate (6.62%)
6. Class A-1 Interest Amount ________
7. Unpaid Class A-1 Interest Shortfall ________
8. Class A-1 Interest paid ________
9. Class A-1 Interest Carryover Shortfall ________
10. Class A-2 Interest Rate (6.62%)
11. Class A-2 Interest Amount ________
12. Unpaid Class A-2 Interest Shortfall ________
13. Class A-2 Interest paid ________
14. Class A-2 Interest Carryover Shortfall ________
Class M-1
15. Interest on Class M-1 Adjusted Principal Balance
(a) Class M-1 Adjusted Principal Balance ________
(b) Class M-1 Interest Rate (7.43%)
(c) Class M-1 Interest Amount ________
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<PAGE>
(d) Unpaid Class M-1 Interest Shortfall ________
(e) Class M-1 Interest paid ________
(f) Class M-1 Interest Carryover Shortfall ________
Class M-2
---------
16. Interest on Class M-2 Adjusted Principal Balance
(a) Class M-2 Adjusted Principal Balance ________
(b) Class M-2 Interest Rate (8.16%)
(c) Class M-2 Interest Amount ________
(d) Unpaid Class M-2 Interest Shortfall ________
(e) Class M-2 Interest paid ________
(f) Class M-2 Interest Carryover Shortfall ________
Class B-1
---------
17. Interest on Class B-1 Adjusted Principal Balance
(a) Class B-1 Adjusted Principal Balance ________
(b) Class B-1 Interest Rate (8.99%)
(c) Class B-1 Interest Amount ________
(d) Unpaid Class B-1 Interest Shortfall ________
(e) Class B-1 Interest paid ________
(f) Class B-1 Interest Carryover Shortfall ________
Principal
- ---------
18. Group I Formula Principal Distribution Amount
(a) Scheduled principal ________
(b) Principal Prepayments ________
(c) Liquidated Contracts ________
(d) Repurchases ________
(e) Previously undistributed (a)-(d) amounts ________
19. Group 2 Formula Principal Distribution Amount ________
(a) Scheduled principal ________
(b) Principal Prepayments ________
(c) Liquidated Contracts ________
(d) Repurchases ________
(e) Previously undistributed (a)-(d) amounts ________
20. Senior Percentage ________
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<PAGE>
21. Senior Formula Principal Distribution Amount ________
(a) Senior Percentage of Formula
Principal Distribution Amount plus ________
(b) Class B Floor Reduction Amount ________
Class A Principal
-----------------
22. Amount Available less prior distributions ________
23. Class A Formula Principal Distribution Amount ________
24. Class A Principal Distribution Amount1 ________
(a) Class A-1 principal paid ________
(b) Class A-2 principal paid ________
25. Class A Principal Balance (after distributions of principal on
current Payment Date) ________
(a) Class A-1 ________
(b) Class A-2 ________
Note Insurer
------------
26. Reimbursement Amount to Note Insurer ________
Class M-1 Principal
-------------------
27. Remaining Amount Available ________
28. Class M-1 Formula Principal Distribution Amount ________
29. Class M-1 Principal Distribution Amount ________
30. Class M-1 Principal Balance (after distributions of principal
on current Payment Date) ________
- ------------------
(1)If there is a Class A Principal Deficiency not covered by an Insured
Payment, the remaining Amount Available pro rata to the Class A-1 Notes and the
Class A-2 Notes based on their respective principal balances. If there is no
such Principal Deficiency and the Senior Formula Principal Distribution Amount
exceeds the remaining Amount Available, pro rata to the Class A-1 Notes and
Class A-2 Notes based on the amount that would have been distributed had the
remaining Amount Available been equal to the Senior Formula Principal
Distribution Amount. Otherwise, the Senior Percentage of the Group 1 Formula
Principal Distribution Amount to the Class A-1 Noteholders and the Senior
Percentage of the Group 2 Formula Principal Distribution Amount to the Class A-2
Noteholders, plus to the Class A-1 and Class A-2 Noteholders, its pro rata share
of any Class B Floor Reduction Amount, until either Class of Class A Notes has
been paid in full; and thereafter to the unpaid Class of Class A Notes until
paid in full, the Senior Formula Principal Distribution Amount.
C-3
<PAGE>
Class M-2 Principal
-------------------
31. Remaining Amount Available ________
32. Class M-2 Formula Principal Distribution Amount ________
33. Class M-2 Principal Distribution Amount ________
34. Class M-2 Principal Balance (after distributions of principal
on current Payment Date) ________
Class B Principal Distribution Tests
- ------------------------------------
(tests must be satisfied on and after the
Payment Date occurring in January 2003)
35. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date ________
(b) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month
and two preceding months; may not exceed
4.5%) ________
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
7.5%) ________
37. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Payment Date ________
(b) Cumulative Realized Loss Ratio (Cumulative
Realized Losses divided by Cut-off Date Pool
Principal Balance; may not exceed 13%) ________
38. Current Realized Losses Test
(a) Current Realized Losses
for current Payment Date ________
C-4
<PAGE>
(b) Current Realized Loss Ratio (total Realized
Losses for most recent three months,
multiplied by 4, divided by arithmetic
average of Pool Scheduled Principal Balance
for third preceding Payment Date and for
current Payment Date; may not exceed 5.0%) ________
39. Class: B Principal Balance Test
Class B Principal Balance (before any
distributions on current Payment Date)
divided by Pool Scheduled Principal Balance
for prior Payment Date (must equal or exceed
22%) ________
40. Class B Percentage ________
Class B-1 Principal
-------------------
41. Amount Available less all prior
distributions ________
42. Class B-1 Formula Principal Distribution Amount ________
43. Class B-1 Principal Distribution Amount ________
44. Class B-1 Principal Balance (after distributions of
principal on current Payment Date) ________
Liquidation Loss Interest; Total Distribution
Class M-1
---------
45. (a) Amount Available less all prior distributions ________
(b) Class M-1 Formula Liquidation Loss Interest
Distribution Amount ________
(c) Amount applied to Unpaid Class M-1 Liquidation
Loss Interest Shortfall ________
(d) Remaining Unpaid Class M-1 Liquidation Loss
Interest Shortfall ________
46. Amount by which Class M-1 Formula Distribution Amount (lines
15(c) and (d), 28, 45(b)) exceeds Class M-1 Distribution
Amount (lines 15(e), 29, 45(c)) ________
C-5
<PAGE>
Class M-2 Notes
---------------
47. (a) Amount Available less all prior
distributions ________
(b) Class M-2 Formula Liquidation Loss Interest
Distribution Amount ________
(c) Amount applied to Unpaid Class M-2 Liquidation
Loss Interest Shortfall ________
(d) Remaining Unpaid Class M-2 Liquidation Loss
Interest Shortfall ________
48. Amount by which Class M-2 Formula Distribution Amount (lines
16(c) and (d), 32, 47(b)) exceeds Class M-2 Distribution
Amount (lines 16(e), 33, 47(c)) ________
49. Class B-1
(a) Amount Available less all preceding distributions ________
(b) Class B-1 Formula Liquidation Loss Interest
Distribution Amount ________
(c) Amount applied to Unpaid Class B-1 Liquidation Loss
Interest Shortfall ________
(d) Remaining Unpaid Class B -1 Liquidation Loss
Interest Shortfall ________
50. Amount by which Class B-1 Formula Distribution Amount (lines
17(c) and (d), 42, 49(b)) exceeds Class B-1 Distribution
Amount (lines 17(e), 43, 49(c)) ________
Class B-2
---------
51. Amount Available less all prior distributions ________
Interest
52. (a) Class B-2 Interest Rate (10.08%)
(b) Class B-2 Interest Amount ________
(c) Unpaid Class B-2 Interest Shortfall ________
(d) Class B-2 interest paid ________
(e) Class B-2 Interest Carryover Shortfall ________
Principal
53. Amount Available after prior distributions ________
54. Class B-2 Formula Principal Distribution Amount ________
C-6
<PAGE>
55. Class B-2 Liquidation Loss Principal Amount ________
56. Guaranty Payment ________
57. Class B-2 Principal Distribution Amount ________
58. Class B-2 Principal Balance
(after distributions of principal on current Payment Date) ________
59. Amount by which Class B-2 Formula Distribution Amount (lines
52(b) and (c), 54 and 55) exceeds Class B-2 Distribution
Amount (lines 52(d) and 57)) ________
60. Monthly Servicing Fee
(if Company is Servicer) ________
Supplementary Principal Distribution
------------------------------------
Class A
-------
61. Supplementary Principal Distribution Amount ________
(a) Class A-1 ________
(b) Class A-1 Principal Balance (after of payment of (a)) ________
(c) Class A-2 ________
(d) Class A-2 Principal Balance (after payment of (c)) ________
62. Supplementary Principal Distribution Test; to be "satisfied,"
Cumulative Realized Loss Ratio (line 37(b)) may not exceed the
following ratio:
Payment Date Ratio
------------ -----
On or before December 1999 8.0%
After December 1999 and
on or before December 2000 12.0%
After December 2000 17.0%
63. Monthly Servicing Fee (portion, if any, in excess of 1/12 of
0.75% of Pool Scheduled Principal Balance; Company or
Affiliate not Servicer) ________
C-7
<PAGE>
Certificate Distribution Amount
64. Amount Available remaining after prior distributions ________
Class A, Class M, Class B Notes
65. Pool Scheduled Principal Balance ________
66. Pool Factor ________
67. Note Pool Factor
Class A-1 ________
Class A-2 ________
Class M-1 ________
Class M-2 ________
Class B-1 ________
Class B-2 ________
68. Contracts delinquent by number and aggregate Scheduled
Principal Balance:
(a) 30 - 59 days ________
(b) 60 - 89 days ________
(c) 90 or more days ________
69. Defaulted Contracts, by number and Scheduled Principal Balance:
(a) That became Defaulted Contracts during related
Due Period ________
________
(b) As of last day of related Due Period ________
________
(c) That became Liquidated Contracts during related
Due Period ________
________
Net Liquidation Losses ________
(d) In foreclosure ________
________
(e) Foreclosure completed ________
during related Due Period ________
C-8
<PAGE>
(f) Foreclosed upon and held by Servicer ________
________
70. Servicer Termination Test; to be "satisfied,"
(a) the Average Sixty-Day Delinquency Ratio may
not exceed 7.5%, ________
(b) the sum of the Realized Losses for the preceding
twelve Payment Dates may not exceed 7.5% of the Pool
Scheduled Principal Balance as of the first Payment
Date in such 12-month period, and ________
(c) the Cumulative Realized Loss Ratio (line 37(b)) may
not exceed the following ratio:
Payment Date Ratio
----------------------------- -----
On or before December 1999 8.0%
After December 1999 and on or 12.0%
before December 2000
After December 2000 and on or 15.0%
before December 2001
After December 2001 and on or 18.0%
before December 2002
After December 2002 21.0%
The amounts of principal and interest distributions set out above are
expressed as a dollar amount per Note with a 1% Class Percentage Interest or per
$1,000 denomination of Note or Certificate.
Please contact ____________________ of U.S. Bank Trust National
Association, ____________________ with any questions regarding this Statement or
your Distribution.
C-9
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE OF SERVICING OFFICER
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Servicer"), and that as such he is
duly authorized to execute and deliver this certificate on behalf of the
Servicer pursuant to Section 5.14 of the Sale and Servicing Agreement (the
"Agreement") dated as of , 1998 between the Company and Green Tree Home
Improvement and Home Equity Loan Trust 1998-F (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:
1. The Monthly Report for the period from to attached to this
certificate is complete and accurate in accordance with the requirements
of Section 5.14 of the Agreement; and
2. As of the date hereof, no Servicer Termination Event or event
that with notice or lapse of time or both would become an Servicer
Termination Event has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this day of
December, 1998.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
D-1
<PAGE>
Exhibit 4.2
GREEN TREE HOME IMPROVEMENT AND
HOME EQUITY LOAN TRUST 1998-F
--------------------
INDENTURE
Dated as of December 1, 1998
--------------------
U.S. BANK TRUST NATIONAL ASSOCIATION
Indenture Trustee
<PAGE>
CROSS REFERENCE TABLE
TIA Indenture
Section Section
------- ---------
310(a)(1)......................................................... 6.11
(a)(2)......................................................... 6.11
(a)(3)......................................................... 6.10
(a)(4)......................................................... N.A.
(a)(5)......................................................... 6.11
(b)............................................................ 6.08; 6.11
(c)............................................................ N.A.
311(a)............................................................ 6.12
(b)............................................................ 6.12
(c)............................................................ N.A.
312(a)............................................................ 7.01
(b)............................................................ 7.02
(c)............................................................ 7.02
313(a)............................................................ 7.04
(b)(1)......................................................... 7.04
(b)(2)......................................................... 7.04
(c)............................................................ 11.05
(d)............................................................ 7.04
314(a)............................................................ 7.03
(b)............................................................ 3.06 11.15
(c)(1)......................................................... 11.01
(c)(2)......................................................... 11.01
(c)(3)......................................................... 11.01
(d)............................................................ 11.01
(e)............................................................ 11.01
(f)............................................................ 11.01
315(a)............................................................ 6.01
(b)............................................................ 6.05 11.05
(c)............................................................ 6.01
(d)............................................................ 6.01
(e)............................................................ 5.14
316(a)(last sentence)............................................. 1.01
(a)(1)(A)...................................................... 5.12
(a)(1)(B)...................................................... 5.13
(a)(2)......................................................... N.A.
(b)............................................................ 5.08
(c)............................................................ N.A.
317(a)(1)......................................................... 5.03
(a)(2)......................................................... 5.03
(b)............................................................ 3.03
318(a)............................................................ 11.07
- ---------------
Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS AND INCORPORATION BY REFERENCE.....................1 - 1
SECTION 1.01 Definitions............................................1 - 1
SECTION 1.02 Incorporation by Reference of Trust Indenture Act......1 - 9
SECTION 1.03 Rules of Construction..................................1 - 9
ARTICLE II - THE NOTES.....................................................2 - 1
SECTION 2.01 Form...................................................2 - 1
SECTION 2.02 Execution, Authentication and Delivery.................2 - 1
SECTION 2.03 Temporary Notes........................................2 - 2
SECTION 2.04 Registration; Registration of Transfer and Exchange....2 - 2
SECTION 2.05 Mutilated, Destroyed, Lost or Stolen Notes.............2 - 3
SECTION 2.06 Person Deemed Owner....................................2 - 4
SECTION 2.07 Payment of Principal and Interest; Defaulted Interest..2 - 4
SECTION 2.08 Cancellation...........................................2 - 5
SECTION 2.09 Book-Entry Notes.......................................2 - 5
SECTION 2.10 Notices to Depository..................................2 - 6
SECTION 2.11 Definitive Notes.......................................2 - 6
SECTION 2.12 No Additional Notes....................................2 - 7
ARTICLE III - COVENANTS....................................................3 - 1
SECTION 3.01 Payment of Principal, Interest and Premium.............3 - 1
SECTION 3.02 Maintenance of Office or Agency........................3 - 1
SECTION 3.03 Money for Payments To Be Held in Trust.................3 - 1
SECTION 3.04 Existence..............................................3 - 2
SECTION 3.05 Protection of Trust Estate.............................3 - 3
SECTION 3.06 Opinions as to Trust Estate............................3 - 3
SECTION 3.07 Performance of Obligations; Servicing of Contracts.....3 - 4
SECTION 3.08 Negative Covenants.....................................3 - 5
SECTION 3.09 Annual Statement as to Compliance......................3 - 6
SECTION 3.10 Issuer May Consolidate, etc. Only on Certain Terms.....3 - 6
SECTION 3.11 Successor or Transferee................................3 - 8
SECTION 3.12 No Other Business......................................3 - 8
SECTION 3.13 No Borrowing...........................................3 - 8
SECTION 3.14 Servicer's Obligations.................................3 - 8
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities......3 - 8
SECTION 3.16 Capital Expenditures...................................3 - 9
SECTION 3.17 Restricted Payments....................................3 - 9
SECTION 3.18 Notice of Events of Default............................3 - 9
SECTION 3.19 Further Instruments and Acts...........................3 - 9
SECTION 3.20 Compliance with Laws...................................3 - 9
SECTION 3.21 Amendments of Sale and Servicing Agreement and
Trust Agreement........................................3 - 9
i
<PAGE>
SECTION 3.22 Removal of Administrator...............................3 - 9
SECTION 3.23 Income Tax Characterization............................3 - 9
SECTION 3.24 Investment Company Act................................3 - 10
ARTICLE IV - SATISFACTION AND DISCHARGE....................................4 - 1
SECTION 4.01 Satisfaction and Discharge of Indenture................4 - 1
SECTION 4.02 Application of Trust Money.............................4 - 2
SECTION 4.03 Repayment of Moneys Held by Paying Agent...............4 - 2
SECTION 4.04 Release of Trust Estate................................4 - 2
ARTICLE V - REMEDIES.......................................................5 - 1
SECTION 5.01 Events of Default......................................5 - 1
SECTION 5.02 Rights upon Event of Default...........................5 - 2
SECTION 5.03 Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; Authority of Indenture Trustee......5 - 2
SECTION 5.04 Remedies...............................................5 - 4
SECTION 5.05 Optional Preservation of the Contracts.................5 - 5
SECTION 5.06 Priorities.............................................5 - 5
SECTION 5.07 Limitation of Suits....................................5 - 5
SECTION 5.08 Unconditional Rights of Noteholders To Receive
Principal and Interest.................................5 - 6
SECTION 5.09 Restoration of Rights and Remedies.....................5 - 6
SECTION 5.10 Rights and Remedies Cumulative.........................5 - 6
SECTION 5.11 Delay or Omission Not a Waiver.........................5 - 7
SECTION 5.12 Control by the Note Insurer............................5 - 7
SECTION 5.13 Waiver of Past Defaults................................5 - 7
SECTION 5.14 Undertaking for Costs..................................5 - 8
SECTION 5.15 Waiver of Stay or Extension Laws.......................5 - 8
SECTION 5.16 Action on Notes........................................5 - 8
SECTION 5.17 Performance and Enforcement of Certain Obligations.....5 - 8
ARTICLE VI - THE TRUSTEE...................................................6 - 1
SECTION 6.01 Duties of Indenture Trustee............................6 - 1
SECTION 6.02 Rights of Indenture Trustee............................6 - 3
SECTION 6.03 Individual Rights of Indenture Trustee.................6 - 4
SECTION 6.04 Indenture Trustee's Disclaimer.........................6 - 4
SECTION 6.05 Notice of Defaults.....................................6 - 4
SECTION 6.06 Reports by Indenture Trustee to Holders................6 - 4
SECTION 6.07 Compensation and Indemnity.............................6 - 4
SECTION 6.08 Replacement of Indenture Trustee.......................6 - 5
SECTION 6.09 Successor Indenture Trustee by Merger..................6 - 6
SECTION 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee......................................6 - 6
SECTION 6.11 Eligibility; Disqualification..........................6 - 8
SECTION 6.12 Preferential Collection of Claims Against Issuer.......6 - 8
ii
<PAGE>
SECTION 6.13 Indenture Trustee to Cooperate........................6 - 8
SECTION 6.14 Sale and Servicing Agreement..........................6 - 8
ARTICLE VII - NOTEHOLDERS' LISTS AND REPORTS...............................7 - 1
SECTION 7.01 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders..............................7 - 1
SECTION 7.02 Preservation of Information; Communications to
Noteholders...........................................7 - 1
SECTION 7.03 Reports by Issuer.....................................7 - 1
SECTION 7.04 Reports by Indenture Trustee..........................7 - 2
ARTICLE VIII - ACCOUNTS, DISBURSEMENTS AND RELEASES........................8 - 1
SECTION 8.01 Collection of Money...................................8 - 1
SECTION 8.02 Trust Accounts........................................8 - 1
SECTION 8.03 General Provisions Regarding Accounts.................8 - 5
ARTICLE IX - SUPPLEMENTAL INDENTURES.......................................9 - 1
SECTION 9.01 Supplemental Indentures Without Consent of
Noteholders...........................................9 - 1
SECTION 9.02 Supplemental Indentures With Consent of Noteholders...9 - 2
SECTION 9.03 Execution of Supplemental Indentures..................9 - 3
SECTION 9.04 Effect of Supplemental Indenture......................9 - 3
SECTION 9.05 Conformity With Trust Indenture Act...................9 - 4
SECTION 9.06 Reference in Notes to Supplemental Indentures.........9 - 4
ARTICLE X - REDEMPTION OF NOTES...........................................10 - 1
SECTION 10.01. Redemption...........................................10 - 1
SECTION 10.02. Form of Redemption Notice............................10 - 1
SECTION 10.03. Notes Payable on Redemption Date.....................10 - 1
ARTICLE XI - MISCELLANEOUS................................................11 - 1
SECTION 11.01. Compliance Certificates and Opinions, etc. ..........11 - 1
SECTION 11.02. Form of Documents Delivered to Indenture Trustee.....11 - 2
SECTION 11.03. Acts of Noteholders..................................11 - 3
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer, the
Note Insurer and Rating Agencies.....................11 - 4
SECTION 11.05. Notices to Noteholders; Waiver.......................11 - 4
SECTION 11.06. Alternate Payment and Notice Provisions..............11 - 5
SECTION 11.07. Conflict with Trust Indenture Act....................11 - 5
SECTION 11.08. Effect of Headings and Table of Contents.............11 - 5
SECTION 11.09. Successors and Assigns...............................11 - 5
SECTION 11.10. Severability.........................................11 - 5
SECTION 11.11. Benefits of Indenture................................11 - 5
SECTION 11.12. Legal Holidays.......................................11 - 6
SECTION 11.13. Governing Law........................................11 - 6
SECTION 11.14. Counterparts.........................................11 - 6
SECTION 11.15. Recording of Indenture...............................11 - 6
iii
<PAGE>
SECTION 11.16. Trust Obligation...................................11 - 6
SECTION 11.17. No Petition........................................11 - 6
SECTION 11.18. Inspection.........................................11 - 7
SECTION 11.19. Grant of Owner Rights to Note Insurer..............11 - 7
SECTION 11.20. Third Party Beneficiary............................11 - 7
SECTION 11.21. Suspension and Termination of Note Insurer's
Rights.............................................11 - 7
EXHIBIT A-1 - Form of Indenture Trustee Acknowledgment.....................A-1
EXHIBIT A-2 - Form of Indenture Trustee Acknowledgment.....................A-2
EXHIBIT B - Form of Depository Agreement...................................B-1
EXHIBIT C-1 - Form of Class A Certificate................................C-1-1
EXHIBIT C-2 - Form of Class M Certificate................................C-2-1
EXHIBIT C-3 - Form of Class B Certificate................................C-3-1
iv
<PAGE>
INDENTURE, dated as of December 1, 1998, between Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, a Delaware business trust (the
"Issuer"), and U.S. Bank Trust National Association, a national banking
association organized and existing under the laws of the United States of
America, in its capacity as trustee (the "Indenture Trustee") and not in its
individual capacity.
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Issuer's Class A-1 Notes
(the "Class A-1 Notes"), Class A-2 Notes (the "Class A-2 Notes"), Class M-1
Notes (the "Class M-1 Notes"), Class M-2 Notes (the "Class M-2 Notes"), Class
B-1 Notes (the "Class B-1 Notes"), and the Class B-2 Notes (the "Class B-2
Notes") (collectively, the "Notes") and the Note Insurer.
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer has agreed to assign
the Indenture Collateral (as defined below) as collateral for the benefit of the
Indenture Trustee on behalf of the Noteholders and the Note Insurer:
GRANTING CLAUSE
The Issuer hereby Grants, transfers and assigns to the Indenture Trustee
on the Closing Date, on behalf of and for the benefit of the Noteholders and the
Note Insurer, without recourse, all of the Issuer's right, title and interest in
and to: (a) the Contracts (including but not limited to the Collateral
Security), and all moneys payable thereon or in respect to the Contracts,
including any liquidation proceeds therefrom but excluding payments due on the
Contracts prior to the Cut-off Date; (b) the Errors and Omissions Protection
Policy as such policy relates to the Contracts; (c) all items contained in the
Contract Files; (d) the Trust Accounts (other than the Certificate Distribution
Account) and all funds on deposit therein from time to time, and all investments
and proceeds thereof (including all income thereon); (e) the Issuer's rights and
benefits, but none of its obligations, under the Sale and Servicing Agreement;
(f) the Issuer's rights and benefits, but none of its obligations, under the
Insurance Agreement; and (g) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing and all payments on
or under and all proceeds and products of every kind and nature whatsoever in
respect of any or all of the foregoing, including all proceeds of the
conversion, voluntary or involuntary, into cash or other liquid property, all
cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, insurance proceeds, condemnation
awards, rights to payment of any and every kind and other forms of obligations
and Contracts, instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the foregoing
(collectively, the "Indenture Collateral").
The foregoing Grant is made in trust to secure the payment of principal of
and interest on, and any other amounts owing in respect of, the Notes, equally
and ratably without prejudice, priority or distinction, and to secure compliance
with the provisions of this Indenture, all as provided in this Indenture.
The Indenture Trustee, for the benefit of the Holders of the Notes and the
Note Insurer , acknowledges such Grant, accepts the trusts under this Indenture
in accordance with the provisions
1
<PAGE>
of this Indenture and agrees to perform its duties required in this Indenture to
the best of its ability to the end that the interests of the Holders of the
Notes and the Note Insurer may be adequately and effectively protected. The
Indenture Trustee shall hold the Note Insurance Policy in trust and shall hold
any proceeds of any claim relating to the Class A Notes made upon the Note
Insurance Policy solely for the use and benefit of the Class A Noteholders in
accordance with the terms hereof and the terms of the Note Insurance Policy.
2
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture. Except as otherwise defined herein, all terms
defined in the Sale and Servicing Agreement or the Trust Agreement have the
meanings given them in such Related Document.
"Act" has the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as of
December 1, 1998, among the Administrator, the Issuer, and the Indenture
Trustee, as the same may be amended and supplemented from time to time.
"Administrator" means Green Tree Financial Servicing Corporation, a
Delaware corporation, or any successor Administrator under the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee in matters relating
to the Issuer and who is identified on the list of Authorized Officers delivered
by the Owner Trustee to the Indenture Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Book-Entry Note" means any Note registered in the name of the Depository
or its nominee, ownership of which is reflected on the books of the Depository
or on the books of a person maintaining an account with such Depository
(directly or as an indirect participant in accordance with the rules of such
Depository).
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banking institutions in Minneapolis, Minnesota,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee or successor Indenture Trustee are authorized
or obligated by law, executive order or governmental decree to remain closed.
"Certificate of Trust" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit A to the Trust Agreement.
1 - 1
<PAGE>
"Certificate" means the Certificate issued under the Trust Agreement.
"Class A Notes"means the Class A-1 Notes and Class A-2 Notes.
"Class A-1 Interest Rate" means a per annum rate of interest equal to
6.62%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-1 Notes" means the Class A-1 Notes substantially in the form of
Exhibit C-1.
"Class A-2 Interest Rate" means a per annum rate of interest equal to
6.62%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-2 Notes" means the Class A-2 Notes substantially in the form of
Exhibit C-1.
"Class B-1 Interest Rate" means 8.99% per annum, computed on the basis of
a year of 360 days consisting of twelve 30-day months.
"Class B-1 Notes" means the Class B-1 Notes substantially in the form of
Exhibit C-3.
"Class B-2 Interest Rate" means 10.08% per annum, computed on the basis of
a 360-day year consisting of twelve 30-day months.
"Class B-2 Notes" means the Class B-2 Notes substantially in the form of
Exhibit C-3.
"Class M-1 Interest Rate" means a per annum rate of interest equal to
7.43%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
"Class M-1 Notes" means the Class M-1 Notes substantially in the form of
Exhibit C-2.
"Class M-2 Interest Rate" means a per annum rate of interest equal to
8.16%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
"Class M-2 Notes" means the Class M-2 Notes substantially in the form of
Exhibit C-2.
"Closing Date" means December 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account established and maintained pursuant
to Section 6.01 of the Sale and Servicing Agreement.
"Company" means Green Tree Financial Corporation.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered which office at date of the execution
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of this Indenture is located at 180 East Fifth Street, St. Paul, Minnesota
55101, Attention: Corporate Trust Administration, Structured Finance; or at such
other address as the Indenture Trustee may designate from time to time by notice
to the Noteholders and the Issuer, or the principal corporate trust office of
any successor Indenture Trustee (and such successor Indenture Trustee will
notify the Noteholders and the Issuer of its address).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.09.
"Depository" means the initial Depository, The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of $245,280,000 in
aggregate principal amount of the Class A-1 Notes, $99,645,000 in aggregate
principal amount of the Class A-2 Notes, $24,075,000 in aggregate principal
amount of the Class M-1 Notes, $31,500,000 in aggregate principal amount of the
Class M-2 Notes, $24,750,000 in aggregate principal amount of the Class B-1
Notes and $24,750,000 in aggregate principal amount of the Class B-2 Notes, as
of the Closing Date, and any permitted successor depository. The Depository
shall at all times be a "clearing corporation" as defined in the Uniform
Commercial Code of the State of New York.
"Depository Agreement" means the agreement among the Issuer, the Indenture
Trustee, the Administrator, and The Depository Trust Company, as the initial
Depository, dated as of the Closing Date, relating to the Notes, substantially
in the form of Exhibit B.
"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.
"Event of Default" has the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, any Responsible Officer, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
"Final Scheduled Payment Date" means with respect to each Class of Notes,
the Payment Date occurring in the month and year indicated: Class A-1 -- April
2018; Class A-2 -- May 2018; Class M-1 -- October 2020; Class M-2 -- July 2023;
Class B-1 -- January 2017; and Class B-2 -- August 2028.
"General Partner" has the meaning given in the Trust Agreement.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, and grant a lien upon and a security
interest in and right of set-off against,
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deposit, set over and confirm pursuant to this Indenture. A Grant of the
Indenture Collateral or of any other agreement or instrument shall include all
rights, powers and options (but none of the obligations) of the Granting party
thereunder, including the immediate and continuing right to claim for, collect,
receive and give receipt for principal and interest payments in respect of the
Indenture Collateral and all other moneys payable thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Indenture Collateral" has the meaning specified in the Granting Clause of
this Indenture.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Company and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Company or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Company or any Affiliate of any of the foregoing Persons as
an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
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"Interest Rate" means the Class A-1 Interest Rate, the Class A-2 Interest
Rate, the Class M-1 Interest Rate, the Class M-2 Interest Rate, the Class B-1
Interest Rate or the Class B-2 Interest Rate, as applicable.
"Issuer" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class M-1 Note, a Class
M-2 Note, a Class B-1 Note or a Class B-2 Note.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01 of the Sale and Servicing
Agreement.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Depository,
or on the books of a Person maintaining an account with such Depository
(directly as a Depository participant or as an indirect participant, in each
case in accordance with the rules of such Depository) and with respect to any
Definitive Notes, the Holder.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"Officers' Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to,
the Indenture Trustee. Unless otherwise specified, any reference in this
Indenture to an Officers' Certificate shall be to an Officers' Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Issuer and who shall be satisfactory to the Indenture Trustee
and the Note Insurer and which shall comply with any applicable requirements of
Section 11.01, and shall be in form and substance satisfactory to the Indenture
Trustee and the Note Insurer.
"Original Class A-1 Principal Balance" means $245,280,000.
"Original Class A-2 Principal Balance" means $99,645,000.
"Original Class M-1 Principal Balance" means $24,075,000.
"Original Class M-2 Principal Balance" means $31,500,000.
"Original Class B-1 Principal Balance" means $24,750,000.
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"Original Class B-2 Principal Balance" means $24,750,000.
"Original Note Principal Balance" means the sum of the Original Class A-1
Principal Balance, Original Class A-2 Principal Balance, Original Class M-1
Principal Balance, Original Class M-2 Principal Balance, Original Class B-1
Principal Balance and Original Class B-2 Principal Balance.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such redemption
has been duly given pursuant to this Indenture or provision therefor,
satisfactory to the Indenture Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that Class A Notes which have been paid with proceeds of the
Note Insurance Policy shall continue to remain Outstanding for purposes of this
Indenture until the Note Insurer has been paid as subrogee hereunder or
reimbursed pursuant to the Sale and Servicing Agreement or the Insurance
Agreement as evidenced by a written notice from the Note Insurer delivered to
the Indenture Trustee, and the Note Insurer shall be deemed to be the Holder
thereof to the extent of any payments thereon made by the Note Insurer,
provided, further, however, that in determining whether the Holders of the
requisite Outstanding Amount of the Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any
Related Document, Notes owned by the Issuer, any other obligor upon the Notes,
the Company or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee knows to be so owned shall be so disregarded. Notes
so owned that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, any other obligor upon the Notes, the Company or any Affiliate of
any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
owner trustee under the Trust Agreement.
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"Payment Date" means the fifteenth day of each calendar month during the
term of this Indenture or if such day is not a Business Day, the next succeeding
Business Day, commencing in January 1999.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11
and is authorized by the Issuer, with the consent of the Note Insurer, to make
the distributions from the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency" means each of Standard & Poor's and Moody's, so long as
such Persons maintain a rating on the Notes; and if either Standard & Poor's or
Moody's no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization selected by the Company.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days (or such shorter period as is
acceptable to each Rating Agency) prior notice thereof and that each of the
Rating Agencies shall have notified the Company, the Servicer, the Indenture
Trustee, the Owner Trustee, the Note Insurer and the Issuer in writing that such
action will not result in a reduction or withdrawal of the then current rating
of the Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date,
the close of business on the last Business Day immediately preceding such
Payment Date or Redemption Date.
"Redemption Date" means in the case of a redemption of the Notes pursuant
to Section 10.01, the Payment Date specified by the Servicer or the Issuer
pursuant to Section 10.01.
"Redemption Price" means the sum of (a) (i) in the case of a redemption of
the Notes pursuant to Section 10.01, an amount equal to the principal amount of
the Notes redeemed plus accrued and unpaid interest on the principal amount of
each class of Notes at the respective Interest Rate for each such class of Notes
being so redeemed to but excluding the Redemption Date, or (ii) in the case of a
payment made to Noteholders pursuant to Section 10.01(b), the amount on deposit
in the Note Distribution Account, but not in excess of the amount specified in
clause (a) (i) above,
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plus (b) any and all amounts then owing to the Note Insurer pursuant to the
Insurance Agreement, after giving effect to such payment or redemption.
"Registered Holder" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"Related Documents" means the Trust Agreement, the Certificate, the Notes,
the Sale and Servicing Agreement, the Administration Agreement, the Insurance
Agreement, the Depository Agreement and the Underwriting Agreement. The Related
Documents executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer of the Indenture Trustee assigned by the Indenture Trustee to administer
its corporate trust affairs relating to the Trust Estate.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of December 1, 1998, among the Issuer, the Company and the Servicer.
"Schedule of Contracts" means the listing of the Contracts set forth in
Exhibit A.
"Secured Obligations" means all amounts and obligations which the Issuer
may at any time owe to or on behalf of the Indenture Trustee for the benefit of
the Noteholders or the Note Insurer under this Indenture or the Notes or the
Note Insurance Policy.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Termination Date" means the date on which the Indenture Trustee shall
have received payment and performance of all Secured Obligations.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, the Indenture Collateral Granted to the Indenture Trustee),
including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Indenture Trustee" means U.S. Bank Trust National Association, a national
banking association organized under the laws of the United States, as Indenture
Trustee under this Indenture, or any successor Indenture Trustee under this
Indenture.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
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SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Indenture
Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless otherwise specified:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in the
plural include the singular; and
(vi) references to Sections, Subsections, Schedules and Exhibits
shall refer to such portions of this Indenture.
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ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A-1 Notes, the Class A-2 Notes, the Class
M-1 Notes, the Class M-2 Notes, the Class B-1 Notes and the Class B-2 Notes, in
each case together with the Indenture Trustee's certificate of authentication,
shall be in substantially the forms set forth in Exhibits C-1, C-2 and C-3,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibits C-1, C-2 and C-3 are part of the terms of this
Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes shall be
executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order, authenticate
and deliver for original issue Class A-1 Notes in an aggregate principal amount
of $245,280,000, Class A-2 Notes in an aggregate principal amount of
$99,645,000, Class M-1 Notes in an aggregate principal amount of $24,075,000,
Class M-2 Notes in an aggregate principal amount of $31,500,000, Class B-1 Notes
in an aggregate principal amount of $24,750,000 and Class B-2 Notes in an
aggregate principal amount of $24,750,000. The aggregate principal amount of
Class A-1 Notes, Class A-2 Notes, Class M-1 Notes, Class M-2 Notes, Class B-1
Notes and Class B-2 Notes outstanding at any time may not exceed that amount
except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples thereof.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for herein executed by the
Indenture Trustee by the manual signature of one of its authorized signatories,
and such certificate upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
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SECTION 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes
and transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer, with the consent of the Note Insurer, shall promptly
appoint a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If, with the consent of the Note Insurer, a Person other than the
Indenture Trustee is appointed by the Issuer as Note Registrar, the Issuer will
give the Indenture Trustee prompt written notice of the appointment of such Note
Registrar and of the location, and any change in the location, of the Note
Register, and the Indenture Trustee and the Note Insurer, shall have the right
to inspect the Note Register at all reasonable times and to obtain copies
thereof, and the Indenture Trustee and the Note Insurer shall have the right to
rely upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Holders of the Notes and
the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office or
agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Issuer shall execute, and the Indenture Trustee
shall authenticate and the Noteholder shall obtain from the Indenture Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
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All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in The City of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require.
Each Noteholder, by acceptance of a Note and each Note Owner, by
acceptance of a beneficial interest in a Note, shall be deemed to have
represented that either (1) it is not, and is not acquiring the Note or a
beneficial interest therein on behalf of or with "plan assets" (as such term is
defined for purposes of Title I of the Employee Retirement Income Security Act
of 1974, as amended) of, an employee benefit plan (as such term is defined for
purposes of Title I of the Employee Retirement Income Security Act of 1974, as
amended) or a "plan" (as such term is defined for purposes of section 4975 of
the Code) or (2) its acquisition and holding of the Note, or beneficial interest
therein, will not give rise to a non-exempt prohibited transaction under section
406 of the Employee Retirement Income Security Act of 1974, as amended, or
section 4975 of the Code.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 9.06 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee such security or
indemnity as may be required by them to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Note
Registrar or the Indenture Trustee that such Note has been acquired by a bona
fide purchaser, the Issuer shall execute and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide
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purchaser of the original Note in lieu of which such replacement Note was issued
presents for payment such original Note, the Issuer and the Indenture Trustee
shall be entitled to recover such replacement Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Note from
such Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
or the Indenture Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Indenture Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement of
any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Person Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Note Insurer and any agent of the Issuer or the Indenture Trustee or the Note
Insurer may treat the Person in whose name any Note is registered (as of the day
of determination) as the owner of such Note for the purpose of receiving
payments of principal of and interest, if any, on such Note and for all other
purposes whatsoever, whether or not such Note is overdue, and none of the
Issuer, the Indenture Trustee nor any agent of the Issuer, the Indenture Trustee
or the Note Insurer shall be affected by notice to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the Class
A-1 Note, the Class A-2 Note, the Class M-1 Note, the Class M-2 Note, the Class
B-1 Note, and the Class B-2 Note set forth in Exhibits C-1, C-2 and C-3,
respectively, and such interest shall be payable on each Payment Date as
specified therein, subject to Section 3.01. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Payment Date shall be paid to the Person in
whose name such Note (or one or more Predecessor Notes) is registered on the
Record Date, by check mailed first-class, postage prepaid to such Person's
address as it appears on the Note Register on such Record Date, except that,
unless Definitive Notes have been issued pursuant to Section 2.11, with respect
to Notes registered on the Record Date in the name of the nominee of the
Depository, payment will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for (i) the final
installment of principal payable with respect to such Note on a Payment Date and
(ii) the
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Redemption Price for any Note called for redemption pursuant to Section 10.01,
which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Payment Date as provided in the forms of the Class A-1 Note, the Class A-2 Note,
the Class M-1 Note, the Class M-2 Note, the Class B-1 Note and the Class B-2
Note set forth in Exhibits C-1, C-2 and C-3, respectively. Notwithstanding the
foregoing, the entire unpaid principal amount of the Notes shall be due and
payable, if not previously paid, on the date on which an Event of Default shall
have occurred and the Notes shall have been declared to be immediately due and
payable in the manner provided in Section 5.02. All principal payments on a
Class of Notes shall be made pro rata to the Noteholders of such Class entitled
thereto. The Indenture Trustee shall notify the Person in whose name a Note is
registered (with a copy to the Note Insurer if such Note is a Class A Note) at
the close of business on the Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest on such
Note will be paid. Such notice shall be mailed no later than five days prior to
such final Payment Date and shall specify that such final installment will be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemptions of Notes shall be mailed to
Noteholders and the Note Insurer as provided in Section 10.02.
(c) Promptly following the date on which all principal of and interest on
the Class A-1 Notes and/or Class A-2 Notes has been paid in full and such Notes
have been surrendered to the Indenture Trustee, the Indenture Trustee shall, if
the Note Insurer has paid any amount in respect of such Notes under the Note
Insurance Policy that has not been reimbursed to the Note Insurer, deliver such
surrendered Notes to the Note Insurer.
SECTION 2.08. Cancellation. Subject to Section 2.07(c), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Indenture Trustee, be delivered to
the Indenture Trustee and shall be promptly canceled by the Indenture Trustee.
Subject to Section 2.07(c), the Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled Notes may be held or disposed of by the Indenture Trustee in accordance
with its standard retention or disposal policy as in effect at the time unless
the Issuer shall direct by an Issuer Order that they be destroyed or returned to
it, provided that such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance, will be
issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository,
by, or on behalf of, the Issuer. Each such Note shall initially be registered on
the Note Register in the name of Cede & Co., the nominee of the initial
Depository, and no Note Owner will receive a Definitive Note representing such
Note Owner's
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interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Note Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be entitled to
deal with the Depository for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Depository and shall be limited to those established by law and agreements
between such Note Owners and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until
Definitive Notes are issued pursuant to Section 2.11, the initial
Depository will make book-entry transfers among the Depository Participants
and receive and transmit payments of principal of and interest on the Notes
to such Depository Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Depository
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Depository
Participants owning or representing, respectively, such required percentage
of the beneficial interest in the Notes and has delivered such instructions
to the Indenture Trustee.
SECTION 2.10. Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Holders of the Notes to the Depository and shall
have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Administrator advises the
Indenture Trustee in writing that the Depository is no longer willing or able
properly to discharge its responsibilities with respect to the Notes, and the
Administrator is unable to locate a qualified successor, (ii) the Administrator
at its option advises the Indenture Trustee in writing that it elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, a Note Majority of each Class advises the
Depository in writing that the continuation of a book-entry system through the
Depository is no longer in the best interests of the Note Owners, then the
Depository shall notify all Note Owners, the Note Insurer and the Indenture
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Indenture Trustee of the Note or Notes representing the Book-Entry Notes by the
Depository, accompanied by registration instructions, the Issuer shall execute
and the Indenture Trustee shall authenticate the Definitive Notes in accordance
with the instructions of the Depository.
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None of the Issuer, the Note Registrar, the Note Insurer or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.
SECTION 2.12. No Additional Notes. No Notes in addition to the Class A
Notes, Class M Notes and Class B Notes shall be issued under this Indenture.
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ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Interest and Premium. The Issuer will
duly and punctually pay the principal and interest on the Notes in accordance
with the terms of the Notes and this Indenture. Without limiting the foregoing,
the Issuer will cause to be distributed all amounts on deposit in the Note
Distribution Account on a Payment Date in accordance with Section 8.02(c).
Amounts properly withheld under the Code by any Person from a payment to any
Noteholder of interest and/or principal shall be considered as having been paid
by the Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will maintain an
office or agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of the
Notes and this Indenture may be served. The Issuer hereby initially appoints the
Indenture Trustee to serve as its agent for the foregoing purposes. Such office
will initially be located at the Corporate Trust Office. The Issuer will give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made pursuant to Section 8.02(c) from amounts withdrawn from the
Note Distribution Account shall be made on behalf of the Issuer by the Indenture
Trustee or by another Paying Agent, and no amounts so withdrawn from the Note
Distribution Account for payment of Notes shall be paid over to the Issuer.
On or before each Payment Date or Redemption Date, the Issuer shall
deposit or cause to be deposited in the Note Distribution Account an aggregate
sum sufficient to pay the amounts then becoming due, such sum to be held in
trust for the benefit of the Persons entitled thereto and shall promptly notify
the Note Insurer and (unless the Paying Agent is the Indenture Trustee) the
Indenture Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee an instrument in which such
Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes or the Note Insurer in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such Persons
as herein provided;
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(ii) give the Indenture Trustee or the Note Insurer notice of any
default (of which it has actual knowledge) by the Issuer (or any other
obligor upon the Notes) in the making of any payment required to be made
with respect to the Notes;
(iii) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Indenture Trustee all sums held by it in trust for the payment of Notes if
at any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and upon Issuer Request shall be deposited by the Indenture Trustee in the
Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and all
liability of the Indenture Trustee or such Paying Agent with respect to such
trust money shall thereupon cease; provided, however, that the Indenture Trustee
or such Paying Agent, before being required to make any such repayment, may at
the expense of the Issuer cause to be published once, in a newspaper published
in the English language, customarily published on each Business Day and of
general circulation in The City of New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to or for the account of the Issuer. The Indenture
Trustee may also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Notes have been called but
have not been surrendered for redemption or whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the
Indenture Trustee or of any Paying Agent, at the last address of record for each
such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
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franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Indenture Collateral and each
other instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer intends the security
interest Granted pursuant to this Indenture in favor of the Indenture Trustee to
be prior to all other liens in respect of the Trust Estate, and the Issuer shall
take all actions necessary to obtain and maintain, in favor of the Indenture
Trustee, for the benefit of the Noteholders, a first lien on and a first
priority, perfected security interest in the Trust Estate. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, all as prepared by the Servicer and delivered
to the Issuer, or otherwise upon the direction of the Note Insurer, and will
take such other action necessary or advisable to:
(i) grant more effectively all or any portion of the Trust Estate;
(ii) maintain or preserve the lien and security interest (and the
priority thereof) created by this Indenture or carry out more effectively
the purposes hereof;
(iii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture, including the filing of continuation
statements with respect to any UCC financing statements covering the
Indenture Collateral filed in favor of the Indenture Trustee;
(iv) enforce any of the Indenture Collateral;
(v) preserve and defend title to the Trust Estate and the rights of
the Indenture Trustee in such Trust Estate against the claims of all
persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the Trust
Estate when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required by the Indenture Trustee pursuant to this Section.
SECTION 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the
Issuer shall furnish to the Indenture Trustee and the Note Insurer an Opinion of
Counsel to the effect that, in the opinion of such counsel, either (i) all
financing statements and continuation statements have been executed and filed
that are necessary to create and continue the Indenture Trustee's first priority
perfected security interest in the Indenture Collateral for the benefit of the
Noteholders and the Note Insurer, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (ii)
no such action shall be necessary to perfect such security interest; and
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(b) Within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cut-off
Date, the Issuer shall furnish to the Indenture Trustee and the Note Insurer an
Opinion of Counsel, dated as of a date during such 90-day period, to the effect
that, in the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Indenture Trustee's first priority perfected security
interest in the Indenture Collateral for the benefit of the Noteholders, and
reciting the details of such filing or referring to prior Opinions of Counsel in
which such details are given, or (ii) no such action shall be necessary to
perfect such security interest. Such Opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien and security interest
of this Indenture until the 90th day following the end of such calendar year.
SECTION 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts not
to permit any action to be taken by others that would release any Person from
any of such Person's material covenants or obligations under any instrument or
agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer has contracted with the Servicer and the Administrator to
assist the Issuer in performing its duties under this Indenture. With the prior
written consent of Note Insurer, the Issuer may contract with other Persons to
assist it in performing its duties under this Indenture, and any performance of
such duties by a Person identified to the Indenture Trustee and the Note Insurer
in an Officers' Certificate of the Issuer shall be deemed to be action taken by
the Issuer.
(c) The Issuer will punctually perform and observe all of its obligations
and agreements contained in this Indenture, the Related Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the Sale and Servicing Agreement in accordance with and within the time periods
provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of a "Servicer
Termination Event" under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Note Insurer and the Rating Agencies
thereof, and shall specify in such notice the action, if any, the Issuer is
taking with respect of such default. If a "Servicer Termination Event" shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with respect to the
Contracts, the Issuer shall take all reasonable steps available to it to remedy
such failure.
(e) If the Issuer has given notice of termination to the Servicer of the
Servicer's rights and powers pursuant to Section 7.01 of the Sale and Servicing
Agreement, as promptly as possible
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thereafter, the Issuer shall with the prior written consent of, or upon the
direction of the Note Insurer, appoint a successor servicer in accordance with
Section 7.01 of the Sale and Servicing Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Sale and Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee and the Note Insurer. As soon as a successor Servicer is appointed, the
Issuer shall notify the Indenture Trustee and the Note Insurer of such
appointment, specifying in such notice the name and address of such successor
Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer, the Indenture Trustee or the Company of their
respective duties under the Related Documents without the prior written consent
of the Note Insurer or if the effect thereof would adversely affect the Holders
of the Notes.
SECTION 3.08. Negative Covenants. Until the Termination Date, the Issuer
shall not, except as expressly permitted by this Indenture or the Sale and
Servicing Agreement or any Related Document,
(i) sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Estate, unless directed to do so by the Indenture Trustee or the Note
Insurer;
(ii) claim any credit on, or make any deduction from the principal,
interest or premium payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code) or assert any claim
against any present or former Noteholder by reason of the payment of the
taxes levied or assessed upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien in favor of the Indenture Trustee created by
this Indenture to be amended, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released from any covenants or
obligations with respect to the Notes under this Indenture, (B) permit any
lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than the lien in favor of the Indenture Trustee created
by this Indenture) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other liens
that arise by operation of law, in each case on the real property securing
a Contract and arising solely as a result of an action or omission of the
related Obligor), (C) permit the lien in favor of the Indenture Trustee
created by this Indenture not to constitute a valid first priority (other
than with respect to any such tax, mechanics' or other lien) security
interest in the Trust Estate, or (D) amend, modify or fail to comply with
the provisions of the Related Documents without the prior written consent
of the Indenture Trustee and the Note Insurer; or
(iv) take any other action or fail to take any action that may cause
the Issuer or the Trust (or any portion thereof) to be characterized as (a)
an association (or a publicly traded limited partnership) taxable as a
corporation pursuant to Section 7701 or 7704 of the Code
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and the corresponding regulations or (b) a taxable mortgage pool pursuant
to Section 7701(i) of the Code and the corresponding regulations.
SECTION 3.09. Annual Statement as to Compliance. The Issuer will deliver to
the Indenture Trustee and the Note Insurer, within 120 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year ended December
31, 1999), an Officers' Certificate stating, as to the Authorized Officer
signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on such
review, the Issuer has complied with all conditions and covenants under
this Indenture throughout such year, or, if there has been a default in the
compliance of any such condition or covenant, specifying each such default
known to such Authorized Officer and the nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form and substance satisfactory to the Indenture
Trustee, the due and punctual payment of the principal of and interest on
all Notes and the performance or observance of every agreement and covenant
of this Indenture and each other Related Document on the part of the Issuer
to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Indenture Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Indenture Trustee by this Indenture shall
have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause
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(a)(v) of this Section 3.10 or that no such actions will be taken) each
stating that such consolidation or merger and such supplemental indenture
comply with this Article III and that all conditions precedent herein
provided for relating to such transaction have been compiled with
(including any filing required by the Exchange Act);
(vii) the Issuer or the Person (if other than the Issuer) formed by or
surviving such consolidation or merger has a net worth, immediately after
such consolidation or merger, that is (a) greater than zero and (b) not
less than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger; and
(viii) the Note Insurer shall have given its prior written consent.
(b) The Issuer shall not convey or transfer all or substantially all of its
properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Indenture, the Sale and Servicing
Agreement or any Related Document), unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or
any State, (B) expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form and substance
satisfactory to the Indenture Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or observance of
every agreement and covenant of this Indenture and each Related Document on
the part of the Issuer to be performed or observed, all as provided herein,
(C) expressly agree by means of such supplemental indenture that all right,
title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless the Issuer and the Indenture Trustee against and
from any loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly agree by means of such
supplemental indenture that such Person (or if a group of Persons, then one
specified Person) shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with the
Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel which shall
be delivered to and shall be satisfactory to the Indenture Trustee to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created in favor of the Indenture Trustee by this Indenture shall
have been taken;
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(vi) the Issuer shall have delivered to the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel (which shall describe the
actions taken as required by clause (b)(v) of this Section 3.10 or that no
such actions will be taken) each stating that such conveyance or transfer
and such supplemental indenture comply with this Article III and that all
conditions precedent herein provided for relating to such transaction have
been complied with (including any filing required by the Exchange Act);
(vii) the Person acquiring by conveyance or transfer the properties or
assets of the Issuer has a net worth, immediately after such conveyance or
transfer, that is (a) greater than zero and (b) not less than the net worth
of the Issuer immediately prior to giving effect to such conveyance or
transfer; and
(viii) the Note Insurer shall have given its prior written consent.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Indenture Trustee and the Note Insurer stating that the Issuer is
to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the Related Documents
and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Related Documents. The proceeds of the Notes and the
Certificates shall be used exclusively to fund the Issuer's purchase of the
Contracts and the other assets specified in the Sale and Servicing Agreement,
and to pay the Issuer's organizational, transactional and start-up expenses.
SECTION 3.14. Servicer's Obligations. The Issuer shall cause the Servicer
to fulfill its obligations under the Sale and Servicing Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Sale and Servicing Agreement or this Indenture, the Issuer
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuming another's payment
or performance on any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly or indirectly, in
connection with the obligations,
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stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, any
other interest in, or make any capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Restricted Payments. Except as expressly permitted by this
Indenture or the Sale and Servicing Agreement, the Issuer shall not, directly or
indirectly, (i) make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account except in accordance with this Indenture and the Related Documents.
SECTION 3.18. Notice of Events of Default. The Issuer agrees to give the
Indenture Trustee, the Note Insurer and the Rating Agencies prompt written
notice of each Event of Default hereunder and each default on the part of the
Servicer or the Company of its obligations under the Sale and Servicing
Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of the Indenture
Trustee or the Note Insurer, the Issuer will execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
SECTION 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the noncompliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Related Document.
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 10.03 of the
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Indenture Trustee, the Note Insurer or the
Holders of the Notes consent to amendments thereto as provided therein.
SECTION 3.22. Removal of Administrator. So long as any Notes are issued
and Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal and the Issuer shall have obtained the prior written consent of the
Note Insurer.
SECTION 3.23. Income Tax Characterization. For purposes of federal income,
state and local income and franchise and any other income taxes, the Issuer will
treat the Notes as indebtedness of the Issuer. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of its Note (and each Note
Owner by its acceptance of an interest in the applicable
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Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
SECTION 3.24. Investment Company Act. The Issuer shall not become an
"investment company" or under the "control" of an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended (or any
successor or amendatory statute), and the rules and regulations thereunder
(taking into account not only the general definition of the term "investment
company" but also any available exceptions to such general definition);provided,
however, that the Issuer shall be in compliance with this Section 3.24 if it
shall have obtained an order exemption it from regulation as an "investment
company" so long as it is in compliance with the conditions imposed in such
order.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal, interest and premium, if any, thereon, (iv) Sections 3.03, 3.04,
3.05, 3.07, 3.08, 3.10, 3.12, 3.13, 3.20, 3.21 and 3.23, (v) the rights,
obligations and immunities of the Indenture Trustee hereunder (including the
rights of the Indenture Trustee under Section 6.07 and the obligations of the
Indenture Trustee under Section 4.02) and of the Note Insurer hereunder and (vi)
the rights of Noteholders as beneficiaries hereof with respect to the property
so deposited with the Indenture Trustee payable to all or any of them, and the
Indenture Trustee, on demand of and at the expense of the Issuer, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other than (i)
Notes that have been destroyed, lost or stolen and that have been replaced
or paid as provided in Section 2.05 and (ii) Notes for whose payment money
has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such
trust, as provided in Section 3.03) have been delivered to the Indenture
Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Indenture Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at the applicable Final
Scheduled Payment Date within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of
notice of redemption by the Indenture Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee
as part of the Trust Estate cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to the
date such amounts are payable), in trust in an Eligible Account in the name
of the Indenture Trustee for such purpose, in an amount sufficient to pay
and discharge (a) the entire indebtedness on such Notes not theretofore
delivered to the Indenture Trustee for cancellation when due to the
applicable Final Scheduled Payment Date or Redemption Date (if Notes shall
have been called for redemption pursuant to Section 10.01), as the case may
be and (b) all amounts due to the Note Insurer pursuant to the Insurance
Agreement;
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(B) the Issuer has paid or caused to be paid all Secured Obligations; and
(C) the Issuer has delivered to the Indenture Trustee and the Note Insurer
an Officers' Certificate, an Opinion of Counsel and (if required by the TIA or
the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section 11.01(a)
and each stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied with and the
Rating Agency Condition has been satisfied.
SECTION 4.02. Application of Trust Money. All moneys deposited with the
Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such moneys need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by
law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
moneys then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 4.04. Release of Trust Estate. The Indenture Trustee shall, on or
after the Termination Date, release any remaining portion of the Trust Estate
from the lien created by this Indenture and deposit in the Collection Account
any funds then on deposit in any other Trust Account. The Indenture Trustee
shall release property from the lien created by this Indenture pursuant to this
Section 4.04 only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA ss.ss. 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.01.
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ARTICLE V
REMEDIES
SECTION 5.01. Events of Default. "Event of Default," wherever used herein,
means any one of the following events (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable, provided that the determination of a default
shall be made without regard to payments made by the Note Insurer; or
(ii) default in the payment of the principal of any Note when the
same becomes due and payable, provided that the determination of a default
shall be made without regard to payments made by the Note Insurer; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been
given, by registered or certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture Trustee by the Note Insurer or
by the Holders of at least 25% of the Outstanding Amount of the Notes,
with the prior written consent of the Note Insurer, a written notice
specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(iv) the commencement of an involuntary case against the Issuer
under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, and such case is not dismissed
within 60 days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, the entry of an order for relief in an
involuntary case against the Issuer under any such law, the consent by the
Issuer to the entry of any such order for relief, the consent by the
Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, the making by the
Issuer of any general assignment for the benefit of creditors, the failure
by the Issuer generally to pay its debts as such debts become due, or the
taking of action by the Issuer in furtherance of any of the foregoing.
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The Issuer shall deliver to the Indenture Trustee and the Note Insurer,
within five days after obtaining knowledge of the occurrence thereof, written
notice in the form of an Officers' Certificate of any event which with the
giving of notice and the lapse of time would become an Event of Default under
clause (iii), its status and what action the Issuer is taking or proposes to
take with respect thereto.
SECTION 5.02. Rights upon Event of Default.
If an Event of Default shall have occurred and be continuing, the
Indenture Trustee (x) shall, upon the direction or with the prior written
consent of the Note Insurer if the Event of Default relates in whole or in part
to or affects the Class A-1 Notes or the Class A-2 Notes, or (y) if a Note
Insurer Event of Default has occurred and is continuing may, and if so requested
in writing by Holders holding Notes representing at least 66-2/3% of the
Outstanding Amount of each Class of Notes then Outstanding shall, or (z) if the
Event of Default relates solely to or solely affects a Class of Notes other than
the Class A-1 Notes or the Class A-2 Notes, the Indenture Trustee may, and if so
requested in writing by the Holders of (i) 66-2/3% of the Outstanding Amount of
each Class of Notes to which the Event of Default relates or which it affects
and (ii) 66-2/3% of the Outstanding Amount of each Class of Notes which is
senior in priority to the Class of Notes to which the Event of Default relates
or which it affects, shall, upon prior written notice to the Rating Agencies,
declare by written notice to the Issuer that the Notes become due, whereupon
they shall become, immediately due and payable at par, together with accrued
interest thereon. Notwithstanding anything to the contrary in this Section, if
an Event of Default specified in Section 5.01(iv) or (v) shall occur and be
continuing the Notes shall become immediately due and payable at par, together
with accrued interest thereon. If an Event of Default shall have occurred and be
continuing, the Indenture Trustee may, subject to the provisions of Section
5.04(a), exercise any of the remedies specified in Section 5.04(a).
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee; Authority of Indenture Trustee.
(a) The Issuer covenants that if any Notes are accelerated following the
occurrence of an Event of Default, the Issuer will, upon demand of the Indenture
Trustee or at the direction of the Note Insurer, pay to the Indenture Trustee,
for the benefit of the Holders of such Notes and the Note Insurer, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Indenture
Trustee and the Note Insurer and their respective agents and counsel.
(b) If an Event of Default occurs and is continuing, the Indenture Trustee
shall at the direction of the Note Insurer, and if a Note Insurer Default has
occurred and is continuing, the Indenture Trustee may, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders and
the Note Insurer, by such appropriate Proceedings as the Indenture Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein,
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or to enforce any other proper remedy or legal or equitable right vested in the
Indenture Trustee by this Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespective of whether the
principal of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal, interest and premium, if any, owing and unpaid in respect of
the Notes and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture Trustee
and each predecessor Indenture Trustee and the Note Insurer, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith), the Note Insurer and of the Noteholders allowed
in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders, the Note Insurer and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee, the Note Insurer or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders and the
Note Insurer to make payments to the Indenture Trustee, and, in the event that
the Indenture Trustee shall consent to the making of payments directly to such
Noteholders and the Note Insurer, to pay to the Indenture Trustee such amounts
as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or bad faith.
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(d) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder or the Note Insurer any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder
thereof or the Note Insurer or to authorize the Indenture Trustee to vote in
respect of the claim of any Noteholder in any such proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.
(e) All rights of action and of asserting claims under this Indenture or
under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders of the Notes or the Note Insurer.
(f) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all the Holders of the Notes,
and it shall not be necessary to make any Noteholder a party to any such
Proceedings.
SECTION 5.04. Remedies. If an Event of Default shall have occurred and be
continuing, the Indenture Trustee shall, at the direction of the Note Insurer,
or if a Note Insurer Event of Default has occurred and is continuing may
(subject to Section 5.05):
(i) institute Proceedings in its own name and as or on behalf of a
trustee of an express trust for the collection of all amounts then payable
on the Notes or to the Note Insurer or under this Indenture with respect
thereto, whether by declaration or otherwise, enforce any judgment
obtained, and collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and any
other remedy available to the Indenture Trustee and take any other
appropriate action to protect and enforce the rights and remedies of the
Indenture Trustee on behalf of the Noteholders and the Note Insurer; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; provided, however, that the
Indenture Trustee may not sell or otherwise liquidate the Trust Estate
following an Event of Default unless so directed by the Note Insurer or,
if a Note Insurer Event of Default has occurred and is continuing, (A)
such Event of Default is of the type described in Section 5.01(i) or (ii),
or (B) either (I) the Holders of 100% of the Outstanding Amount of the
Notes consent thereto, (II) the proceeds of such sale or liquidation
distributable to the Noteholders will be sufficient to discharge in full
all amounts
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then due and unpaid upon such Notes for principal and interest, or (III)
the Indenture Trustee determines that the Trust Estate will not continue
to provide sufficient funds for the payment of principal of and interest
on the Notes as they would have become due if the Notes had not been
declared due and payable, and in each case the Indenture Trustee provides
prior written notice to the Rating Agencies and obtains the consent of
Holders of 66-2/3% of the Outstanding Amount of each Class of Notes. In
determining such sufficiency or insufficiency with respect to clause (II)
or (III), the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as
to the sufficiency of the Trust Estate for such purpose.
SECTION 5.05. Optional Preservation of the Contracts. If any Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee may, but need not, elect to maintain possession
of the Trust Estate. It is the desire of the parties hereto and the Noteholders
that there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the Trust
Estate. In determining whether to maintain possession of the Trust Estate, the
Indenture Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.06. Priorities.
If the Indenture Trustee collects any money or property pursuant to this
Article V, including any money or property in respect of the liquidation of the
Trust Estate pursuant to Section 5.04(a)(iv), the Indenture Trustee shall pay
out the money or property as promptly as practicable in the order and in the
amounts set forth in Section 6.06(a) of the Sale and Servicing Agreement.
SECTION 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder for so long as no Note Insurer Event of Default has occurred
and is continuing. No Holder of any Note shall have any right to institute any
Proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder if a
Note Insurer Event of Default has occurred and is continuing, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Indenture Trustee to institute
such Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
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(iii) such Holder or Holders have offered to the Indenture Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.08. Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest on such Note on or after the respective
due dates thereof expressed in such Note or in this Indenture (or, in the case
of redemption, on or after the Redemption Date) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Indenture
Trustee, the Note Insurer or any Noteholder has instituted any Proceeding to
enforce any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee, the Note Insurer or to such Noteholder, then and in every
such case the Issuer, the Indenture Trustee, the Note Insurer and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Indenture Trustee, the Note Insurer and the
Noteholders shall continue as though no such Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Note Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
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SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of the
Indenture Trustee, the Note Insurer or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
V or by law to the Indenture Trustee, the Note Insurer or to the Noteholders may
be exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Note Insurer or by the Noteholders, as the case may be.
SECTION 5.12. Control by the Note Insurer. The Note Insurer, or if a Note
Insurer Default exists, the Owners of a majority of the Outstanding Amount of
the Notes, shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee with
respect to the Notes or exercising any trust or power conferred on the Indenture
Trustee; provided that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture;
(b) if a Note Insurer Default exists, subject to the express terms
of Section 5.04, any direction to the Indenture Trustee to sell or
liquidate the Indenture Collateral shall be by Owners of Notes
representing not less than 100% of the Outstanding Amount of the Notes;
(c) if the conditions set forth in Section 5.05 have been satisfied
and the Indenture Trustee elects to retain the Indenture Collateral
pursuant to such Section, then any direction to the Indenture Trustee by
Holders of Notes representing less than 100% of the Outstanding Amount of
the Notes to sell or liquidate the Indenture Collateral shall be of no
force and effect; and
(d) if a Note Insurer Default exists, the Indenture Trustee may take
any such action deemed proper by the Indenture Trustee that is not
inconsistent with such direction.
Notwithstanding the rights of the Note Insurer and the Noteholders set
forth in this Section, subject to Section 6.01, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.13. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the Note
Insurer, or if a Note Insurer Default exists, Noteholders representing not less
than a Note Majority of each Class of Notes, may waive any past Default or Event
of Default and its consequences except a Default (a) in the payment of principal
of or interest on any of the Notes or (b) in respect of a covenant or provision
hereof that cannot be modified or amended without the consent of the Note
Insurer or the Holder of each Note, as applicable. In the case of any such
waiver, the Issuer, the Indenture Trustee, the Note Insurer and the Noteholders
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereto.
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SECTION 5.14. Undertaking for Costs. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee or the Note Insurer, (b) any suit instituted by any
Noteholder, or group of Noteholders, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Notes or (c) any suit instituted by
any Noteholder for the enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants (to
the extent that it may lawfully do so) that it will not at any time insist upon,
or plead or in any manner whatsoever, claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, that may affect the covenants or the performance of this Indenture; and
the Issuer (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantages of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Indenture Trustee, but will suffer and permit the execution of every such power
as though no such law had been enacted.
SECTION 5.16. Action on Notes. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer.
SECTION 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee or the Note
Insurer to do so and at the Administrator's expense, the Issuer agrees to take
all such lawful action as the Indenture Trustee may request to compel or secure
the performance and observance by the Company or the Servicer, as applicable, of
each of their obligations to the Issuer under or in connection with the Sale and
Servicing Agreement in accordance with the terms thereof, and to exercise any
and all rights, remedies, powers and privileges lawfully available to the Issuer
under or in connection with the Sale and Servicing Agreement to the extent and
in the manner directed by the Indenture Trustee or the Note Insurer, including
the transmission of notices of default on the part of the Company or the
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Company or the Servicer of
each of their obligations under the Sale and Servicing Agreement.
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(b) If an Event of Default has occurred and is continuing, the Indenture
Trustee (i) shall, at the direction of the Note Insurer, and (ii) if a Note
Insurer Default exists may, and at the direction (which direction shall be in
writing, including facsimile) of the Holders of 66-2/3% of the Outstanding
Amount of each Class of Notes shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Company or the Servicer under or
in connection with the Sale and Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Company or the Servicer of each of their obligations to the Issuer thereunder
and to give any consent, request, notice, direction, approval, extension or
waiver under the Sale and Servicing Agreement, and any right of the Issuer to
take such action shall be suspended.
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ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, the Indenture
Trustee shall exercise the rights and powers vested in it by this Indenture with
the same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and, if applicable, the
Indenture Trustee's other Related Documents.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Sale and Servicing Agreement.
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(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) In no event shall the Indenture Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Sale and Servicing Agreement unless and
until appointed successor Servicer in accordance with Section 7.01 thereof.
(j) The Indenture Trustee shall, and hereby agrees that it will, perform
all of the obligations and duties required of it under the Sale and Servicing
Agreement.
(k) The Indenture Trustee shall maintain the Contract Files at the
Corporate Trust office or with a duly appointed custodian, who shall not be an
Affiliate of the Company and shall act as the agent of the Indenture Trustee on
behalf of the Noteholders; provided that the Contract Files shall be maintained
in Minnesota unless, prior to their removal therefrom, the Indenture Trustee
shall have delivered to the Note Insurer an opinion of counsel satisfactory to
the Note Insurer to the effect that all UCC financing statements and other
actions have been taken so as to maintain in effect the perfected security
interest of the Indenture Trustee in the Indenture Collateral. The Indenture
Trustee may release Contract Files pursuant to Section 6.13 hereof. The
Indenture Trustee will on the Closing Date acknowledge receipt of the Contract
Files by execution and delivery of an Acknowledgment in the form of Exhibit A-1
hereto. On or before March 5, 1999, the Indenture Trustee will deliver to the
Company and the Note Insurer an Acknowledgment in the form of Exhibit A-2
hereto.
(l) Without limiting the generality of this Section 6.01, the Indenture
Trustee shall have no duty (i) to see to any recording, filing or depositing of
this Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in any real property securing a Contract, or to
see to the maintenance of any such recording or filing or depositing or to any
recording, refiling or redepositing of any thereof, (ii) to see to any insurance
of real property securing a contract or Obligors or to effect or maintain any
such insurance, (iii) to see to the payment or discharge of any tax, assessment
or other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against any part of the Trust, (iv) to confirm or
verify the contents of any reports or certificates delivered to the Indenture
Trustee pursuant to this Indenture or the Sale and Servicing Agreement believed
by the Indenture Trustee to be genuine and to have been signed or presented by
the proper party or parties, or (v) to inspect the real property securing any
Contract at any time or ascertain or inquire as to the performance of observance
of any of the Issuer's, the Company's or the Servicer's representations,
warranties or covenants or the Servicer's duties and obligations as Servicer and
as custodian of the Contract Files under the Sale and Servicing Agreement.
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SECTION 6.02. Rights of Indenture Trustee.
(a) The Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officers' Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officers'
Certificate or Opinion of Counsel, as applicable, or as directed by the
requisite amount of Noteholders as provided herein.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to institute,
conduct or defend any litigation under this Indenture or in relation to this
Indenture, at the request, order or direction of the Note Insurer or any of the
Holders of Notes, pursuant to the provisions of this Indenture, unless the Note
Insurer or such Holders of Notes shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; provided, however, that the Indenture
Trustee shall, upon the occurrence of an Event of Default (that has not been
cured), exercise the rights and powers vested in it by this Indenture with
reasonable care and skill.
(g) The Indenture 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 to do so by the Note
Insurer or Holders of Notes evidencing not less than 25% of the Outstanding
Amount thereof; provided, however, that if the payment within a reasonable time
to the Indenture 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
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Indenture Trustee may require reasonable indemnity against such
cost, expense or liability as a condition to
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so proceeding; the reasonable expense of every such examination shall be paid by
the Person making such request, or, if paid by the Indenture Trustee, shall be
reimbursed by the Person making such request upon demand.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee is required to comply with Sections 6.11 and
6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Trust Estate or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in the Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to the Note Insurer and to each Noteholder notice
of the Default within 90 days after it occurs. Except in the case of a Default
in payment of principal of or interest on any Note (including payments pursuant
to the mandatory redemption provisions of such Note), the Indenture Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as may be required to
enable such holder to prepare its federal and state income tax returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall or shall cause
the Administrator to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall or shall cause the Administrator to reimburse the Indenture Trustee for
all reasonable out-of-pocket expenses incurred or made by it, including the
costs of collection, in addition to the compensation for its services. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Indenture Trustee's agents, counsel, accountants and
experts. The Issuer shall or shall cause the Administrator to indemnify the
Indenture Trustee against any and all loss, liability or expense (including
attorneys' fees) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Indenture Trustee shall
notify the Issuer and the Administrator promptly of any claim for which it may
seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder. The Issuer shall or shall cause the Administrator to
defend any such claim, and the Indenture Trustee may have separate counsel and
the Issuer shall or shall cause the Administrator to pay the fees and expenses
of such counsel. Neither the Issuer not the Administrator need reimburse any
expense or
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indemnify against any loss, liability or expense incurred by the Indenture
Trustee through the Indenture Trustee's own wilful misconduct, negligence or bad
faith.
The Issuer's payment obligations to the Indenture Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.01(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Indenture Trustee. The Indenture Trustee may
resign at any time by so notifying the Issuer. The Issuer (with the prior
written consent or at the direction of the Note Insurer) may remove the
Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of the
Indenture Trustee in an involuntary case or proceeding under federal or
state banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar
law, shall have entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
sequestrator (or similar official) for the Indenture Trustee or for any
substantial part of the Indenture Trustee's property, or ordering the
winding-up or liquidation of the Indenture Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law is commenced with respect to the
Indenture Trustee and such case is not dismissed within 60 days;
(iv) the Indenture Trustee commences a voluntary case under any
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) for the Indenture
Trustee or for any substantial part of the Indenture Trustee's property, or
makes any assignment for the benefit of creditors or fails generally to pay
its debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing; or
(v) the Indenture Trustee otherwise becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the Note
Insurer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring
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Indenture Trustee shall become effective, and the successor Indenture Trustee
shall have all the rights, powers and duties of the Indenture Trustee under this
Indenture. The successor Indenture Trustee shall mail a notice of its succession
to Noteholders. The retiring Indenture Trustee shall promptly transfer all
property held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Note Insurer or the Holders of a majority in
Outstanding Amount of the Notes may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, the Note
Insurer or any Noteholder may petition any court of competent jurisdiction for
the removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
successor Indenture Trustee pursuant to any of the provisions of this Section
shall not become effective until acceptance of appointment by the successor
Indenture Trustee pursuant to this Section and payment of all fees and expenses
owed to the retiring Indenture Trustee. Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section, the retiring Indenture Trustee shall
be entitled to payment or reimbursement of such amounts as such Person is
entitled pursuant to Section 6.07.
SECTION 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Note
Insurer and the Rating Agencies prompt notice of any such transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust may at the time be located, the Indenture Trustee shall
have the power, with prior written consent of Note Insurer, and may execute and
deliver all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such
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Person or Persons, in such capacity and for the benefit of the Noteholders, such
title to the Trust Estate, or any part hereof, and, subject to the other
provisions of this Section, such powers, duties, obligations, rights and trusts
as the Indenture Trustee may consider necessary or desirable. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor Indenture Trustee under Section 6.11 and no notice to Noteholders of
the appointment of any co-trustee or separate trustee shall be required under
Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and exercised
or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any
such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Indenture
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in this Indenture, the appointment of any separate trustee or
co-trustee shall not relieve the Indenture Trustee of its obligations and duties
under this Indenture.
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SECTION 6.11. Eligibility; Disqualification. The Indenture Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall have a combined capital and surplus of at least $50,000,000 as set forth
in its most recent published annual report of condition and shall not be an
Affiliate of the Company. The Indenture Trustee shall comply with TIA ss.
310(b), including the optional provision permitted by the second sentence of TIA
ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13. Indenture Trustee to Cooperate.
(a) Upon payment in full on any Contract, the Servicer will notify the
Indenture Trustee and the Company (if the Company is not the Servicer) on the
next succeeding Distribution Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Collection Account pursuant to Section 5.05 of the Sale and Servicing Agreement
have been so deposited) and shall request delivery of the Contract and Contract
File to the Servicer. Upon receipt of such delivery and request, the Indenture
Trustee shall promptly release or cause to be released such Contract and
Contract File to the Servicer. Upon receipt of such Contract and Contract File,
each of the Company (if different from the Servicer) and the Servicer is
authorized to execute an instrument in satisfaction of such Contract and to do
such other acts and execute such other documents as the Servicer deems necessary
to discharge the Obligor thereunder and eliminate any lien on the related real
estate. The Servicer shall determine when a Contract has been paid in full;
provided that, to the extent that insufficient payments are received on a
Contract credited by the Servicer as prepaid or paid in full and satisfied, the
shortfall shall be paid by the Servicer out of its own funds, without any right
of reimbursement therefor (except from additional amounts recovered from the
related Obligor or otherwise in respect of such Contract), and deposited in the
Collection Account.
(b) The Servicer's receipt of a Contract and/or Contract File shall
obligate the Servicer to return the original Contract and the related Contract
File to the Indenture Trustee when its need by the Servicer has ceased unless
the Contract shall be liquidated or repurchased as described in Section 3.05 or
8.02 of the Sale and Servicing Agreement.
SECTION 6.14. Sale and Servicing Agreement. Insofar as such provisions
describe rights or duties of the Indenture Trustee, the Indenture Trustee
acknowledges and agrees to the terms of Sections 3.05, 4.01, 5.22, and 10.03 and
Articles VI, VII and VIII of the Sale and Servicing Agreement. Such provisions
are incorporated herein by reference.
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ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Holders of Notes as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes received by the
Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may
destroy any list furnished to it as provided in such Section 7.01 upon receipt
of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
SECTION 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Indenture Trustee and the Note Insurer, within 15
days after the Issuer is required to file the same with the Securities and
Exchange Commission (the "Commission"), copies of the annual reports and
of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Issuer may be required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act;
(ii) file with the Indenture Trustee, and the Note Insurer and the
Commission in accordance with rules and regulations prescribed from time
to time by the Commission such additional information, documents and
reports with respect to compliance by the Issuer with the conditions and
covenants of this Indenture as may be required from time to time by such
rules and regulations; and
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(iii) supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to the Note Insurer and to all Noteholders
described in TIA ss. 313(c)) such summaries of any information, documents
and reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and regulations
prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
SECTION 7.04. Reports by Indenture Trustee. If required by TIA ss. 313(a),
within 60 days after each March 31 beginning with March 31, 1999, the Indenture
Trustee shall mail to the Note Insurer and to each Noteholder as required by TIA
ss. 313(c) a brief report dated as of such date that complies with TIA ss.
313(a). The Indenture Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall be
filed by the Indenture Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall notify the Indenture
Trustee and the Note Insurer if and when the Notes are listed on any stock
exchange.
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ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.
(a) Except as otherwise expressly provided herein, the Indenture Trustee
may demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture. The Indenture Trustee shall apply all such money
received by it as provided in this Indenture. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of this Indenture
or the Notes, the Indenture Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V;
(b) Claims Under Note Insurance Policy. The Class A Notes are insured by
the Note Insurance Policy pursuant to the terms set forth therein,
notwithstanding any provisions to the contrary contained in this Indenture or
the Sale and Servicing Agreement. All amounts received under the Note Insurance
Policy in respect of the Class A Notes shall be used solely for the payment of
Insured Payments to the Holders of the Class A Notes.
The Indenture Trustee shall make claims under the Note Insurance Policy
pursuant to Section 6.08 of the Sale and Servicing Agreement and in accordance
with the Note Insurance Policy. The Indenture Trustee shall deposit any Insured
Payment received from the Note Insurer in respect of the Class A Notes in the
Policy Payments Account. All amounts received under the Note Insurance Policy in
respect of the Class A Notes shall be used solely for the payment to Holders of
the Class A Notes of principal and interest on the Class A notes, and shall not
be applied for any other purpose.
The Indenture Trustee acknowledges and agrees to the terms of Sections
6.08 and 6.09 of the Sale and Servicing Agreement which are incorporated herein
by reference.
SECTION 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall establish, or caused
to be established, and maintain, in the name of the Indenture Trustee, for the
benefit of the Noteholders and the Certificateholders, the Trust Accounts as
provided in Section 6.01 of the Sale and Servicing Agreement.
(b) All collections in respect of the Contracts will be deposited in the
Collection Account as provided in Section 6.02 of the Sale and Servicing
Agreement.
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(c) On each Payment Date, the Indenture Trustee shall distribute all
amounts on deposit in the Note Distribution Account to Noteholders in respect of
the Notes to the extent of amounts due and unpaid on the Notes for principal and
interest, in accordance with the information provided by the Servicer in the
following order of priority and in accordance with Section 8.02(d):
(1) to pay the Class A Interest Amount and any Unpaid Class A
Interest Shortfall as follows:
(i) to the Class A-1 Noteholders, the Class A-1 Interest
Amount and to the Class A-2 Noteholders, the Class A-2 Interest
Amount; or, if the amount available therefor is less than the amount
necessary to pay the Class A-1 Interest Amount and the Class A-2
Interest Amount, pro rata to the Class A-1 and Class A-2 Noteholders
in accordance with their respective entitlements to interest; and
(ii) to the Class A-1 Noteholders, the amount, if any, of the
Unpaid Class A-1 Interest Shortfall and to the Class A-2 Noteholders
the amount, if any, of the Unpaid Class A-2 Interest Shortfall or,
if the amount available therefor is less than the amount necessary
to pay the Unpaid Class A-1 Interest Shortfall and the Unpaid Class
A-2 Interest Shortfall, pro rata to the Class A-1 and Class A-2
Noteholders based on the Unpaid Interest Shortfall of each Class;
(2) after payment of the amounts specified in clause (1) above, to
the Class M-1 Noteholders as follows:
(i) the Class M-1 Interest Amount; and
(ii) any Unpaid Class M-1 Interest Shortfall;
(3) after payment of the amounts specified in clauses (1) and (2)
above, to the Class M-2 Noteholders as follows:
(i) the Class M-2 Interest Amount; and
(ii) any Unpaid Class M-2 Interest Shortfall;
(4) after payment of the amounts specified in clauses (1) through
(3) above, to the Class B-1 Noteholders as follows:
(i) the Class B-1 Interest Amount; and
(ii) any Unpaid Class B-1 Interest Shortfall;
(5) after payment of the amounts specified in clauses (1) through
(4) above, to pay principal in respect of the Class A-1 Notes and Class
A-2 Notes as follows:
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(i) if there is a Class A Principal Deficiency Amount as to
such Payment Date not covered by an Insured Payment, the amount
remaining on deposit in the Note Distribution Account, pro rata to
the Class A-1 Notes and Class A-2 Notes based on the Class Principal
Balance of each such Class (but in no event more than the related
Class Principal Balance); and
(ii) if there is no Class A Principal Deficiency Amount as to
such Payment Date:
(A) if the amount remaining on deposit in the Note
Distribution Account is less than the Senior Formula Principal
Distribution Amount, such remaining amount, pro rata to the
Class A-1 and Class A-2 Noteholders based upon the amounts
that would have been distributed pursuant to clause (B),
below, had there been no such deficiency;
(B) if the amount remaining on deposit in the Note
Distribution Account is not less than the Senior Formula
Principal Distribution Amount, then
(a) to the Class A-1 Noteholders, the Senior
Percentage of the Group 1 Formula Principal Distribution
Amount, plus, on and after the Payment Date on which the
Class A-2 Notes are paid in full, the Senior Percentage
of the Group 2 Formula Principal Distribution Amount
(less, on such Payment Date, any amount paid to reduce
the Class A-2 Principal Balance to zero), but in no
event more than is necessary to reduce the Class A-1
Principal Balance to zero;
(b) to the Class A-2 Noteholders, the Senior
Percentage of the Group 2 Formula Principal Distribution
Amount, plus, on and after the Payment Date on which the
Class A-1 Notes are paid in full, the Senior Percentage
of the Group 1 Formula Principal Distribution Amount
(less, on such Payment Date, any amount paid to reduce
the Class A-1 Principal Balance to zero), but in no
event more than is necessary to reduce the Class A-2
Principal Balance to zero; and
(c) to the Class A-1 and Class A-2 Noteholders,
the Class B Floor Reduction Amount pro rata based upon
their respective entitlement to payment pursuant to
clauses (a) and (b), above, but in no event more than is
necessary to reduce the Class A-1 Principal Balance or
Class A-2 Principal Balance to zero.
(iii) Any Supplementary Principal Distribution Amount
deposited in the Note Distribution Account to the Class A-1
Noteholders and Class A-2 Noteholders pro rata based on their
entitlement pursuant to clause (ii)(B), above;
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(6) after payment of the amounts specified in clauses (1) through
(5) above, to the Class M-1 Noteholders the Class M Principal Distribution
Amount until payment in full of the Class M-1 Principal Balance;
(7) after payment of the amounts specified in clauses (1) through
(6) above, to the Class M-2 Noteholders any remaining Class M Principal
Distribution Amount;
(8) after payment of the amounts specified in clauses (1) through
(7) above, to the Class B-1 Noteholders the Class B-1 Principal
Distribution Amount;
(9) after payment of the amounts specified in clauses (1) through
(8) above, to the Class M-1, Class M-2 and Class B-1 Noteholders as
follows:
(i) any Class M-1 Liquidation Loss Interest Amount; and
(ii) any Unpaid Class M-1 Liquidation Loss Interest
Shortfall;
(iii) any Class M-2 Liquidation Loss Interest Amount; and
(iv) any Unpaid Class M-2 Liquidation Loss Interest
Shortfall;
(v) any Class B-1 Liquidation Loss Interest Amount; and
(vi) any Unpaid Class B-1 Liquidation Loss Interest
Shortfall;
(10) after payment of the amounts specified in clauses (1) through
(9) above, to the Class B-2 Noteholders as follows:
(i) the Class B-2 Interest Amount;
(ii) any Unpaid Class B-2 Interest Shortfall; and
(iii) the Class B-2 Principal Distribution Amount.
(d) If the Indenture Trustee shall not have received the applicable
Monthly Report by any Payment Date, the Indenture Trustee shall distribute all
funds then in the Note Distribution Account to Noteholders in accordance with
Section 8.02(c), to the extent of such funds, on such Payment Date. Any Guaranty
Payment shall be used solely to pay the Class B-2 Noteholders. Any Insured
Payment shall be used solely to pay the Class A Noteholders.
(e) The Indenture Trustee agrees, to the extent required by the Code, to
withhold from each payment due hereunder or under any Note, United States
withholding taxes at the appropriate rate, and, on a timely basis, to deposit
such amounts with an authorized depository and make such returns, filings and
other reports in connection therewith as are required of it under the Code. Any
Noteholder which is eligible for an exemption from or reduction of withholding
of United States federal income taxes shall, from time to time, provide to the
Indenture Trustee in a timely manner
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all appropriate and properly completed forms indicating such eligibility, as may
be necessary to permit the Indenture Trustee not to withhold taxes from payments
due to such Noteholder. In connection with the foregoing, the Indenture Trustee
shall promptly furnish to each Noteholder in a timely fashion such U.S. Treasury
forms as are required by the Code to be furnished to such Noteholder indicating
payment of any taxes withheld from any payments by the Indenture Trustee to such
Noteholder. The Indenture Trustee shall be fully protected in relying upon, and
each Noteholder by its acceptance of a Note hereunder agrees to indemnify and
hold the Indenture Trustee harmless against all claims or liability of any kind
arising in connection with or related to the Indenture Trustee's reliance upon
any documents, forms or information provided by any Noteholder to the Indenture
Trustee. In addition, if the Indenture Trustee has not withheld taxes on any
payment made to any Noteholder, and the Indenture Trustee is subsequently
required to remit to any taxing authority any such amount not withheld, such
Noteholder shall return such amount to the Indenture Trustee upon written demand
by the Indenture Trustee. In no event shall the Indenture Trustee be liable for
consequential damages to any Noteholder.
SECTION 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and be
continuing, all or a portion of the funds in the Collection Account and Note
Distribution Account shall be invested and reinvested in Eligible Investments in
accordance with the provisions of Section 6.01(d) of the Sale and Servicing
Agreement. All income or other gain from investments of moneys deposited in such
accounts shall be deposited by the Indenture Trustee in the Collection Account,
and any loss resulting from such investments shall be charged to the account.
The Issuer will not direct the Indenture Trustee to make any investment of any
funds or to sell any investment held in either the Collection Account or the
Note Distribution Account unless the security interest Granted and perfected in
such account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as Indenture Trustee, in accordance with their
terms.
(c) If (i) the Issuer shall have failed to give investment directions for
any funds on deposit in the Collection Account and Note Distribution Account to
the Indenture Trustee by 11:00 a.m., New York City time (or such other time as
may be agreed by the Issuer and Indenture Trustee), on any Business Day or (ii)
a Default or Event of Default shall have occurred and be continuing with respect
to the Notes but the Notes shall not have been declared due and payable pursuant
to Section 5.02 or (iii) if such Notes shall have been declared due and payable
following an Event of Default, amounts collected or receivable from the Trust
Estate are being applied in accordance with Section 5.05 as if there had not
been such a declaration, then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Collection Account and Note
Distribution Account in one or more Eligible Investments.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice
to the Rating Agencies and with the prior written consent of the Note Insurer,
the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any
time and from time to time, may enter into one or more indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien created by this Indenture, or to subject to the
lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action
shall not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor Indenture Trustee with respect to the Notes and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under the TIA or under any similar federal statute
hereafter enacted and to add to this Indenture such other provisions as
may be expressly required by the TIA.
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The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Holders of the Notes but with
prior notice to the Rating Agencies and prior written consent of the Note
Insurer, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder.
SECTION 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies, and with the consent of the Note
Insurer and of Holders of not less than a majority of the Outstanding Amount of
the Notes, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Holders of the Notes under this Indenture; provided, however,
that, no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Note affected thereby and the Note Insurer if affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal
of or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions
of this Indenture requiring the application of funds available therefor,
as provided in Article V, to the payment of any such amount due on the
Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
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(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Related Documents cannot be modified
or waived without the consent of the Holder of each Outstanding Note
affected thereby;
(vi) modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Payment Date (including the calculation
of any of the individual components of such calculation) or to affect the
rights of the Holders of Notes to the benefit of any provisions for the
mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part of
the Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien created by this Indenture on any property at any time
subject hereto or deprive the Holder of any Note of the security provided
by the lien created by this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture, and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Holders of the Notes to which such amendment or supplemental
indenture relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive, and
subject to Sections 6.01 and 6.02 shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
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Indenture Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.05. Conformity With Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
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ARTICLE X
REDEMPTION OF NOTES
SECTION 10.01. Redemption. In the event that the Company or the Servicer
or the Note Insurer pursuant to Article VIII of the Sale and Servicing Agreement
purchases the corpus of the Trust, the Notes are subject to redemption in whole,
but not in part, on the Payment Date on which such repurchase or sale occurs,
for a purchase price equal to the Redemption Price; provided, however, that the
Issuer has available funds sufficient to pay the Redemption Price. The Company,
the Servicer or the Issuer shall furnish the Note Insurer and the Rating
Agencies notice of such redemption. If the Notes are to be redeemed pursuant to
this Section 10.01, the Servicer or the Issuer shall furnish notice of such
election to the Indenture Trustee and the Note Insurer not later than 25 days
prior to the Redemption Date, and the Issuer shall deposit with the Indenture
Trustee in the Note Distribution Account the Redemption Price of the Notes to be
redeemed, whereupon all such Notes shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 10.02 to each Holder
of the Notes.
SECTION 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date with respect to the Payment Date immediately preceding the
applicable Redemption Date, at such Holder's address appearing in the Note
Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency
of the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture Trustee
in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions, etc.
Upon any application or request by the Issuer to the Indenture Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Indenture Trustee (i) an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
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erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, the
Company or the Issuer, stating that the information with respect to such factual
matters is in the possession of the Servicer, the Company or the Issuer, unless
such counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Noteholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee, and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Noteholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Notes shall bind the Holder of every Note
issued upon the registration thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
11 - 2
<PAGE>
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer, the Note
Insurer and Rating Agencies. Any request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders or other documents provided or
permitted by this Indenture to be made upon, given or furnished to or filed
with:
(a) the Indenture Trustee by any Noteholder or by the Issuer shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Indenture Trustee at its Corporate Trust
Office, or
(b) the Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if made in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: Green Tree Home
Improvement and Home Equity Loan Trust 1998- F, in care of Wilmington
Trust Company, as Owner Trustee, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration or at any other address previously furnished in writing to
the Indenture Trustee by the Issuer. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Indenture Trustee,
or
(c) the Rating Agencies by the Issuer, the Indenture Trustee or the
Owner Trustee shall be sufficient for every purpose hereunder if made in
writing, personally delivered or mailed by certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: 99
Church Street, New York, New York 10007, Attention: ABS Monitoring
Department and (ii) in the case of Standard & Poor's, at the following
address: Standard & Poor's Ratings Service, 25 Broadway, New York, New
York 10004; or as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties, or
(d) the Note Insurer by the Issuer, the Indenture Trustee or the
Owner Trustee shall be sufficient for every purpose hereunder if made in
writing, personally delivered or mailed by certified mail, return receipt
requested, to Financial Security Assurance Inc., 350 Park Avenue, New
York, New York 10022, Attn: Surveillance Department Re: Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, or at such other address as
shall be designated by written notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver
11 - 3
<PAGE>
shall be the equivalent of such notice. Waivers of notice by Noteholders shall
be filed with the Indenture Trustee but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
SECTION 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control. The provisions of TIA ss.ss. 310
through 317 that impose duties on any Person (including the provisions
automatically deemed included herein unless expressly excluded by this
Indenture) are a part of and govern this Indenture, whether or not physically
contained herein.
SECTION 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors.
SECTION 11.10. Severability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim
11 - 4
<PAGE>
under this Indenture, except that Note Insurer is an express third party
beneficiary, as provided in Section 11.20.
SECTION 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee,) to the effect that such recording is
necessary either for the protection of the Noteholders or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Indenture Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Indenture
Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any successor or assign of the Indenture Trustee or the Owner Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Owner Trustee have no such
obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Company, the Issuer or any
General Partner, or join in any institution against the Company, the Issuer or
any General Partner of, any bankruptcy, reorganization, arrangement,
11 - 5
<PAGE>
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the Related
Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
SECTION 11.19. Grant of Owner Rights to Note Insurer. In consideration for
the guarantee of the Class A Notes by the Note Insurer pursuant to the Note
Insurance Policy, the Class A Noteholders hereby grant to the Note Insurer the
right to act as the Noteholder of 100% of the Outstanding Class A Notes for the
purpose of exercising the rights of the Holders of the Class A Notes hereunder,
including the voting rights of such Holders, but excluding those rights
requiring the consent of all such Noteholders under Section 9.02 and any rights
of such Holders to distributions under Section 8.02 hereof; provided that the
preceding grant of rights to the Note Insurer by the Class A Noteholders shall
be subject to Section 11.21 hereof. The rights of the Note Insurer to direct
certain actions and consent to certain actions of the Noteholders hereunder will
terminate at such time as the Class A Principal Balance has been reduced to zero
and the Note Insurer has been reimbursed for all Insured Payments and any other
amounts owed under the Note Insurance Policy and the Insurance Agreement and the
Note Insurer has no further obligation under the Note Insurance Policy.
SECTION 11.20. Third Party Beneficiary. The parties hereto acknowledge
that the Note Insurer is an express third party beneficiary hereof entitled to
enforce any rights reserved to it hereunder as if it were actually a party
hereto.
SECTION 11.21. Suspension and Termination of Note Insurer's Rights.
(a) During the continuation of a Note Insurer Default, rights granted or
reserved to the Note Insurer hereunder shall vest instead in the Noteholders;
provided that the Note Insurer shall be entitled to any distributions in
reimbursement of the Reimbursement Amount, and the Note Insurer shall retain
those rights under Section 9.02 hereof to consent to any supplement to this
Indenture.
(b) At such time as either (i) the Class A Principal Balance has been
reduced to zero or (ii) the Note Insurance Policy has been terminated following
a Note Insurer Default, and in either case of (i) or (ii) the Note Insurer has
been reimbursed for all Insured Payments and any other amounts owed under the
Note Insurance Policy and the Insurance Agreement (and the Note Insurer no
longer has any obligation under the Note Insurance Policy, except for breach
thereof by the Note
11 - 6
<PAGE>
Insurer), then the rights and benefits granted or reserved to the Note Insurer
hereunder (including the rights to direct certain actions and receive certain
notices) shall terminate and the Noteholders shall be entitled to the exercise
of such rights and to receive such benefits of the Note Insurer following such
termination to the extent that such rights and benefits are applicable to the
Noteholders.
SECTION 11.22. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of Green Tree Home Improvement and Home Equity Loan Trust 1998-F, in the
exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or any other related documents.
11 - 7
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
GREEN TREE HOME IMPROVEMENT AND
HOME EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By:
------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By:
----------------------------------
Name:
Title:
11 - 8
<PAGE>
EXHIBIT A-1
Form of Indenture Trustee Acknowledgment
U.S. Bank Trust National Association, a national banking association
organized under the laws of the United States, acting as Indenture Trustee (the
"Indenture Trustee") under the Indenture dated as of December 1, 1998 between
Green Tree Home Improvement and Home Equity Loan Trust 1998-F and the Indenture
Trustee (the "Indenture") (all capitalized terms used herein without definition
having the respective meanings specified in the Indenture) acknowledges that the
Indenture Trustee has received the original contract or promissory note for each
of the home improvement contracts and promissory notes and home equity loans
identified in the List of Contracts, except for any identified on Schedule A
hereto.
IN WITNESS WHEREOF, U.S. Bank Trust National Association, as Indenture
Trustee, has caused this acknowledgment to be executed by its duly authorized
officer and its corporate seal affixed hereto as of this 30th day of December,
1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely
as Indenture Trustee
By
----------------------------------------
Its
-------------------------------------
A-1
<PAGE>
EXHIBIT A-2
Form of Indenture Trustee Acknowledgment
U.S. Bank Trust National Association, a national banking association
organized under the laws of the United States, acting as Indenture Trustee (the
"Indenture Trustee") under the Indenture dated as of December 1, 1998 between
Green Tree Home Improvement and Home Equity Loan Trust 1998-F and the Indenture
Trustee (the "Indenture") (all capitalized terms used herein without definition
having the respective meanings specified in the Indenture) acknowledges that the
Indenture Trustee has received the Contract Files for the home improvement
contracts and promissory notes and home equity loans identified in the List of
Contracts, except for any identified on Schedule A hereto.
The Trustee acknowledges that it has conducted a cursory review of the
Contract Files and hereby confirms that, except as noted on the document
exception listing attached hereto, each Contract File contained (a) an original
contract or promissory note endorsed to the Indenture Trustee or in blank, (b)
an original or a copy of the mortgage, deed of trust or similar evidence of a
lien on the related improved real estate (each, a "mortgage"), (c) in the case
of a Contract originated by a contractor, an original or a copy of an assignment
of the mortgage by the contractor to Green Tree, (d) an assignment of the
mortgage by the Company to the Indenture Trustee or in blank, and (e) originals
of any extension, modification or waiver agreement.. The Trustee has not
otherwise reviewed the Contracts and Contract Files for compliance with the
terms of the Indenture or the Sale and Servicing Agreement.
IN WITNESS WHEREOF, U.S. Bank Trust National Association, as
Indenture Trustee, has caused this acknowledgment to be executed by its duly
authorized officer and its corporate seal affixed hereto as of this 30th day of
December, 1998.
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely
as Indenture Trustee
By
----------------------------------------
Its
-------------------------------------
A-2
<PAGE>
EXHIBIT B
Form of Depository Agreement
B - 1
<PAGE>
EXHIBIT C-1
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
CLASS A-[1][2] __________% NOTE
REGISTERED $___________
NO. R-___ CUSIP NO.________
Green Tree Home Improvement and Home Equity Loan Trust 1998-F, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to Cede
& Co., or registered assigns, the principal sum of _________________________
DOLLARS ($___________) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction, the numerator of which is
$__________ and the denominator of which is $__________ by (ii) the aggregate
amount, if any, payable from the Note Distribution Account in respect of
principal on the Class A-[1][2] Notes pursuant to Section 3.01 of the Indenture
(the "Indenture") dated as of December 1, 1998, between the Issuer and U.S. Bank
Trust National Association (the "Indenture Trustee"); provided, however, that
the entire unpaid principal amount of this Note shall be due and payable on the
earlier of the __________ Payment Date (the "Class A-[1][2] Final Scheduled
Payment Date") and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture referred to on the reverse hereof.
The Issuer will pay interest on this Note at the Class A-[1][2] Interest
Rate on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date). Interest on this Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid to but
excluding such Payment Date or, if no interest has yet been paid, from December
30, 1998. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
C - 1 - 1
<PAGE>
All payments made by the Issuer with respect to this Note shall be applied first
to interest due and payable on this Note as provided above and then to the
unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture and Related Documents, none of Wilmington Trust
Company in its individual capacity, U.S. Bank Trust National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, the
Seller, the Servicer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in the
Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, agrees that, except as
expressly provided in the Indenture and Related Documents, in the case of an
Event of Default under the Indenture, it shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
C - 1 - 2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: ____________________
GREEN TREE HOME IMPROVEMENT AND
HOME EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By
---------------------------------
Name:
Title:
C - 1 - 3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By
---------------------------------
Authorized Signatory
C - 1 - 4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class A- [1][2] __________% Notes (herein called the "Class
A-[1][2] Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Class A-[1][2] Notes. The Class A-[1][2] Notes
are subject to all terms of the Indenture. All terms used in this Note that are
defined in the Indenture, as supplemented or amended, shall have the meanings
assigned to them in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class M-1 Notes, the Class
M-2 Notes, the Class B-1 Notes and the Class B-2 Notes (collectively the
"Notes") are secured by the collateral pledged as security therefor as provided
in the Indenture.
Principal of the Class A-[1][2] Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 15, 1999.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class A-[1][2] Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture. All principal payments on the Class A-[1][2] Notes shall be made pro
rata to the Class A-[1][2] Noteholders entitled thereto.
Financial Security Assurance Inc. (the "Note Insurer") has issued a Note
Insurance Policy in the name of the Indenture Trustee for the benefit of the
Holders of the Class A-1 and Class A-2 Notes (the "Class A Notes"). Unless a
Note Insurer Default shall be continuing, subject to Section 11.19 of the
Indenture, the Note Insurer shall be deemed to be the Holder of 100% of the
Outstanding Amount of Class A Notes for the purpose of exercising the rights,
including voting rights, under the Indenture. In addition, on each Payment Date,
after the Holders of the Class A Notes have been paid all amounts to which they
are entitled, the Note Insurer will be entitled to be reimbursed for any
unreimbursed Insured Payments and any other amounts owed under the Note
Insurance Policy in respect of the Class A Notes.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Notes registered on the Record Date in the name of the
nominee of the Depository (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Payment Date
shall be binding upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof,
C - 1 - 5
<PAGE>
whether or not noted hereon. If funds are expected to be available, as provided
in the Indenture, for payment in full of the then remaining unpaid principal
amount of this Note on a Payment Date, then the Indenture Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the Record Date with respect to the Payment Date immediately
preceding such Redemption Date by notice mailed within five days of such
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's principal
Corporate Trust Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-[1][2] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Company, the Servicer or the Note Insurer on any Payment Date on or after the
date on which the Pool Scheduled Principal Balance is less than or equal to 10%
of the Cut-off Date Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in the city in which
the Corporate Trust Office is located, or a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, Servicer, Indenture Trustee or the Owner
Trustee in its individual capacity, (ii) any owner of a beneficial interest in
the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or
employee of the Seller, Servicer, Indenture Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Seller, Servicer, Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
C - 1 - 6
<PAGE>
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, will be deemed to represent that
either (1) it is not acquiring the Note (or beneficial interest in a Note) with
the assets of an "employee benefit plan" within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a
"plan" within the meaning of section 4875 of the Code; or (2) the acquisition
and holding of the Note (or beneficial interest in a Note) will not give rise to
a nonexempt prohibited transaction under Section 406(a) of ERISA or Section 4975
of the Code.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Company, the Issuer or any
General Partner, or join in any institution against the Company, the Issuer or
any General Partner of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Indenture Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of Notes, on behalf of the Holders of all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
C - 1 - 7
<PAGE>
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holder of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C - 1 - 8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: ____________ ______________________________________
**
Signature Guaranteed:
______________________________________
- --------------
** NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C - 1 - 9
<PAGE>
EXHIBIT C-2
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
CLASS M-[1][2] __________% NOTE
REGISTERED $___________
NO. R-___ CUSIP NO.________
Green Tree Home Improvement and Home Equity Loan Trust 1998-F, a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to Cede
& Co., or registered assigns, the principal sum of _________________________
DOLLARS ($____________) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction, the numerator of which is
$__________ and the denominator of which is $__________ by (ii) the aggregate
amount, if any, payable from the Note Distribution Account in respect of
principal on the Class M-[1][2] Notes pursuant to Section 3.01 of the Indenture
(the "Indenture") dated as of December 1, 1998, between the Issuer and U.S. Bank
Trust National Association (the "Indenture Trustee"); provided, however, that
the entire unpaid principal amount of this Note shall be due and payable on the
earlier of the __________ Payment Date (the "Class M-[1][2] Final Scheduled
Payment Date") and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture referred to on the reverse hereof.
The Issuer will pay interest on this Note at the Class M-[1][2] Interest
Rate on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date). Interest on this Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid to but
excluding such Payment Date or, if no interest has yet been paid, from December
30, 1998. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
C - 2 - 1
<PAGE>
All payments made by the Issuer with respect to this Note shall be applied first
to interest due and payable on this Note as provided above and then to the
unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture and Related Documents, none of Wilmington Trust
Company in its individual capacity, U.S. Bank Trust National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, the
Seller, the Servicer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in the
Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, agrees that, except as
expressly provided in the Indenture and Related Documents, in the case of an
Event of Default under the Indenture, it shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
C - 2 - 2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: ______________________
GREEN TREE HOME IMPROVEMENT AND
HOME EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By
---------------------------------
Name:
Title:
C - 2 - 3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By
----------------------------------
Authorized Signatory
C - 2 - 4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class M-[1][2] _____% Notes (herein called the "Class M-[1][2]
Notes"), all issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Holders of the Class M-[1][2] Notes. The Class M-[1][2] Notes are subject to all
terms of the Indenture. All terms used in this Note that are defined in the
Indenture, as supplemented or amended, shall have the meanings assigned to them
in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class M-1 Notes, the Class
M-2 Notes, the Class B-1 Notes and the Class B-2 Notes (collectively the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class M-[1][2] Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 15, 1999.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class M-[1][2] Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture. All principal payments on the Class M-[1][2] Notes shall be made pro
rata to the Class M-[1][2] Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Notes registered on the Record Date in the name of the
nominee of the Depository (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Payment Date
shall be binding upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date with respect to the Payment Date
immediately preceding such Redemption Date by notice mailed within five days of
such Redemption Date and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the Indenture Trustee's
principal Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes located in The City of New York.
C - 2 - 5
<PAGE>
The Issuer shall pay interest on overdue installments of interest at the
Class M-[1][2] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Company or the Servicer on any Payment Date on or after the date on which the
Pool Scheduled Principal Balance is less than or equal to 10% of the Cut-off
Date Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in the city in which
the Corporate Trust Office is located, or a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, will be deemed to represent that
either (1) it is not acquiring the Note (or beneficial interest in a Note) with
the assets of an "employee benefit plan" within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a
"plan" within the meaning of section 4875 of the Code; or (2) the acquisition
and holding of the Note (or beneficial interest in a Note) will not give rise to
a nonexempt prohibited transaction under Section 406(a) of ERISA or Section 4975
of the Code.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture
C - 2 - 6
<PAGE>
and such Note that such Noteholder or Note Owner will not at any time institute
against the Company, the Issuer or any General Partner, or join in any
institution against the Company, the Issuer or any General Partner of, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
under any United States Federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Indenture or the Related
Documents.
It is the intent and agreement of the Issuer, the Indenture Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of Notes, on behalf of the Holders of all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holder of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
C - 2 - 7
<PAGE>
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C - 2 - 8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: __________ ______________________________________
**
Signature Guaranteed:
______________________________________
- ----------
** NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C - 2 - 9
<PAGE>
EXHIBIT C-3
Unless this Note is presented by an authorized representative of The Depository
Trust Company, a New York corporation ("DTC"), to the Issuer or its agent for
registration of transfer, exchange or payment, and any Note issued is registered
in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
CLASS B-[1][2] __________% NOTE
REGISTERED $___________
NO. R-___ CUSIP NO.________
Green Tree Home Improvement and Home Equity Loan Trust 1998-F a business
trust organized and existing under the laws of the State of Delaware (herein
referred to as the "Issuer"), for value received, hereby promises to pay to Cede
& Co., or registered assigns, the principal sum of _________________________
DOLLARS ($___________) payable on each Payment Date in an amount equal to the
result obtained by multiplying (i) a fraction, the numerator of which is
$__________ and the denominator of which is $__________ by (ii) the aggregate
amount, if any, payable from the Note Distribution Account in respect of
principal on the Class B-[1][2] Notes pursuant to Section 3.01 of the Indenture
(the "Indenture") dated as of December 1, 1998, between the Issuer and U.S. Bank
Trust National Association (the "Indenture Trustee"); provided, however, that
the entire unpaid principal amount of this Note shall be due and payable on the
earlier of the __________ Payment Date (the "Class B-[1][2] Final Scheduled
Payment Date") and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture referred to on the reverse hereof.
The Issuer will pay interest on this Note at the Class B-[1][2] Interest
Rate on each Payment Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Payment Date (after giving effect to all payments of principal made on
the preceding Payment Date). Interest on this Note will accrue for each Payment
Date from the most recent Payment Date on which interest has been paid to but
excluding such Payment Date or, if no interest has yet been paid, from December
30, 1998. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts.
C - 3 - 1
<PAGE>
All payments made by the Issuer with respect to this Note shall be applied first
to interest due and payable on this Note as provided above and then to the
unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture and Related Documents, none of Wilmington Trust
Company in its individual capacity, U.S. Bank Trust National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, the
Seller, the Servicer, or any of their respective partners, beneficiaries,
agents, officers, directors, employees or successors or assigns shall be
personally liable for, nor shall recourse be had to any of them for, the payment
of principal of or interest on this Note or performance of, or omission to
perform, any of the covenants, obligations or indemnifications contained in the
Indenture. Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note, agrees that, except as
expressly provided in the Indenture and Related Documents, in the case of an
Event of Default under the Indenture, it shall have no claim against any of the
foregoing for any deficiency, loss or claim therefrom; provided, however, that
nothing contained herein shall be taken to prevent recourse to, and enforcement
against, the assets of the Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
C - 3 - 2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by its Authorized Officer.
Date: __________
CERTIFICATES FOR HOME IMPROVEMENT
AND HOME EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By
---------------------------------
Name:
Title:
C - 3 - 3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By
---------------------------------
Authorized Signatory
C - 3 - 4
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Class B- [1][2] _____% Notes (herein called the "Class
B-[1][2] Notes"), all issued under the Indenture, to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Holders of the Class B-[1][2] Notes. The Class B-[1][2] Notes
are subject to all terms of the Indenture. All terms used in this Note that are
defined in the Indenture, as supplemented or amended, shall have the meanings
assigned to them in or pursuant to the Indenture, as so supplemented or amended.
The Class A-1 Notes, the Class A-2 Notes, the Class M-1 Notes, the Class
M-2 Notes, the Class B-1 Notes and the Class B-2 Notes (collectively, the
"Notes") are and will be equally and ratably secured by the collateral pledged
as security therefor as provided in the Indenture.
Principal of the Class B-[1][2] Notes will be payable on each Payment Date
in an amount described on the face hereof. "Payment Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing January 15, 1999.
As described above, the entire unpaid principal amount of this Note shall
be due and payable on the earlier of the Class B-[1][2] Final Scheduled Payment
Date and the Redemption Date, if any, pursuant to Section 10.01 of the
Indenture. All principal payments on the Class B-[1][2] Notes shall be made pro
rata to the Class B-[1][2] Noteholders entitled thereto.
Payments of interest on this Note due and payable on each Payment Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register as of the close of business on each Record Date, except
that with respect to Notes registered on the Record Date in the name of the
nominee of the Depository (initially, such nominee to be Cede & Co.), payments
will be made by wire transfer in immediately available funds to the account
designated by such nominee. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears on the Note Register as of
the applicable Record Date without requiring that this Note be submitted for
notation of payment. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) affected by any payments made on any Payment Date
shall be binding upon all future Holders of this Note and of any Note issued
upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Payment Date, then the Indenture Trustee, in
the name of and on behalf of the Issuer, will notify the Person who was the
Registered Holder hereof as of the Record Date with respect to the Payment Date
immediately preceding such Redemption Date by notice mailed within five days of
such Redemption Date and the amount then due and payable shall be payable only
upon presentation and surrender of this Note at the Indenture Trustee's
principal Corporate Trust Office or at the office of the Indenture Trustee's
agent appointed for such purposes located in The City of New York.
C - 3 - 5
<PAGE>
The Issuer shall pay interest on overdue installments of interest at the
Class B-1[1][2] Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01 of the Indenture, in whole, but not in part, at the option of the
Company or the Servicer on any Payment Date on or after the date on which the
Pool Scheduled Principal Balance is less than or equal to 10% of the Cut-off
Date Pool Principal Balance.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by the Holder hereof or his attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in the city in which
the Corporate Trust Office is located, or a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require, and
thereupon one or more new Notes of authorized denominations and in the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be charged for any registration of transfer
or exchange of this Note, but the transferor may be required to pay a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any such registration of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Indenture Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Owner Trustee in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner Trustee or the
Indenture Trustee or of any successor or assign of the Indenture Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed and except that any such partner, owner or beneficiary shall be
fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, will be deemed to represent that
either (1) it is not acquiring the Note (or beneficial interest in a Note) with
the assets of an "employee benefit plan" within the meaning of section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a
"plan" within the meaning of section 4875 of the Code; or (2) the acquisition
and holding of the Note (or beneficial interest in a Note) will not give rise to
a nonexempt prohibited transaction under Section 406(a) of ERISA or Section 4975
of the Code.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case of
a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the
C - 3 - 6
<PAGE>
Company, the Issuer or any General Partner, or join in any institution against
the Company, the Issuer or any General Partner of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Indenture Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note shall
be overdue, and neither the Issuer, the Indenture Trustee nor any such agent
shall be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. The Indenture also
contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of Notes, on behalf of the Holders of all
the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such Holders and upon
all future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Holder of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the laws
of the State of Minnesota, without reference to its conflict of law provisions,
and the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
C - 3 - 7
<PAGE>
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
C - 3 - 8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
- -------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints attorney, to transfer said Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated: __________ ______________________________________
**
Signature Guaranteed:
______________________________________
- ----------
** NOTE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
C - 3 - 9
<PAGE>
EXHIBIT 4.3
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
TRUST AGREEMENT
Dated as of December 1, 1998
among
GREEN TREE FINANCIAL CORPORATION,
as Depositor
and
WILMINGTON TRUST COMPANY,
as Owner Trustee
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - DEFINITIONS....................................................1-1
SECTION 1.1. Definitions............................................1-1
SECTION 1.2. Usage of Terms.........................................1-4
SECTION 1.3. Calculations...........................................1-4
SECTION 1.4. Section References.....................................1-4
SECTION 1.5. Action by or Consent of Certificateholders.............1-4
ARTICLE II - CREATION OF TRUST.............................................2-1
SECTION 2.1. Creation of Trust......................................2-1
SECTION 2.2. Office.................................................2-1
SECTION 2.3. Purposes and Powers....................................2-1
SECTION 2.4. Appointment of Owner Trustee...........................2-2
SECTION 2.5. Initial Capital Contribution of Trust Estate...........2-2
SECTION 2.6. Declaration of Trust...................................2-2
SECTION 2.7. Liability of the Certificateholders....................2-3
SECTION 2.8. Title to Trust Property................................2-3
SECTION 2.9. Situs of Trust.........................................2-3
SECTION 2.10. Representations and Warranties of the Depositor........2-3
SECTION 2.11. [RESERVED].............................................2-4
SECTION 2.12. [RESERVED].............................................2-4
SECTION 2.13. Covenants of the Certificateholders....................2-4
ARTICLE III - THE CERTIFICATES.............................................3-1
SECTION 3.1. Initial Ownership......................................3-1
SECTION 3.2. The Certificates.......................................3-1
SECTION 3.3. Authentication of Certificates.........................3-1
SECTION 3.4. Registration of Transfer and Exchange of Certificates..3-1
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates......3-3
SECTION 3.6. Persons Deemed Certificateholders......................3-3
SECTION 3.7. Access to List of Certificateholders' Names and
Addresses.............................................3-3
SECTION 3.8. Maintenance of Office or Agency........................3-4
SECTION 3.9. Appointment of Paying Agent............................3-4
ARTICLE IV - ACTIONS BY OWNER TRUSTEE......................................4-1
SECTION 4.1. Restriction on Power of Certificateholders.............4-1
SECTION 4.2. Prior Notice to Certificateholders with Respect to
Certain Matters.......................................4-1
SECTION 4.3. Action by Certificateholders with Respect to
Bankruptcy............................................4-1
SECTION 4.4. Restrictions on Certificateholders' Power..............4-1
ARTICLE V - APPLICATION OF TRUST FUNDS; CERTAIN DUTIES.....................5-1
SECTION 5.1. Trust Accounts.........................................5-1
SECTION 5.2. Application of Funds in Certificate Distribution
Account...............................................5-2
i
<PAGE>
SECTION 5.3. Method of Payment......................................5-3
SECTION 5.4. No Segregation of Monies; No Interest..................5-3
SECTION 5.5. Accounting; Reports; Tax Returns.......................5-3
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE.........................6-1
SECTION 6.1. General Authority......................................6-1
SECTION 6.2. General Duties.........................................6-1
SECTION 6.3. Action upon Instruction................................6-1
SECTION 6.4. No Duties Except as Specified in this Agreement or
in Instructions.......................................6-3
SECTION 6.5. No Action Except under Specified Documents or
Instructions..........................................6-3
SECTION 6.6. Restrictions...........................................6-3
SECTION 6.7. Administration Agreement...............................6-4
ARTICLE VII - CONCERNING THE OWNER TRUSTEE.................................7-1
SECTION 7.1. Acceptance of Trust and Duties.........................7-1
SECTION 7.2. Furnishing of Documents................................7-3
SECTION 7.3. Representations and Warranties.........................7-3
SECTION 7.4. Reliance; Advice of Counsel............................7-3
SECTION 7.5. Not Acting in Individual Capacity......................7-4
SECTION 7.6. Owner Trustee Not Liable for Certificates, Notes
or Contracts..........................................7-4
SECTION 7.7. Owner Trustee May Own Certificates and Notes...........7-5
ARTICLE VIII - COMPENSATION OF OWNER TRUSTEE...............................8-1
SECTION 8.1. Owner Trustee's Fees and Expenses......................8-1
SECTION 8.2. Indemnification........................................8-1
SECTION 8.3. Nonrecourse Obligations................................8-1
ARTICLE IX - TERMINATION...................................................9-1
SECTION 9.1. Termination of the Trust...............................9-1
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEES............................................................10-1
SECTION 10.1. Eligibility Requirements for Owner Trustee...........10-1
SECTION 10.2. Resignation or Removal of Owner Trustee..............10-1
SECTION 10.3. Successor Owner Trustee..............................10-2
SECTION 10.4. Merger or Consolidation of Owner Trustee.............10-2
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee........10-2
ARTICLE XI - MISCELLANEOUS PROVISIONS.....................................11-1
SECTION 11.1. Amendment............................................11-1
SECTION 11.2. No Recourse..........................................11-2
SECTION 11.3. Governing Law........................................11-2
SECTION 11.4. Severability of Provisions...........................11-2
SECTION 11.5. Certificates Nonassessable and Fully Paid............11-2
SECTION 11.6. Third-Party Beneficiaries............................11-3
SECTION 11.7. Counterparts.........................................11-3
ii
<PAGE>
SECTION 11.8. Notices..............................................11-3
SECTION 11.9. Limitation of Liability..............................11-3
EXHIBIT A - CERTIFICATE OF TRUST ..........................................A-1
EXHIBIT B - FORM OF CERTIFICATE............................................B-1
EXHIBIT C - FORM OF REPRESENTATION LETTER AND CERTIFICATION................C-1
iii
<PAGE>
THIS TRUST AGREEMENT, dated as of December 1, 1998, is made among Green
Tree Financial Corporation, a Delaware corporation, as depositor (the "Seller")
and Wilmington Trust Company, a Delaware banking corporation, as owner trustee
(in such capacity, the "Owner Trustee").
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.
Unless otherwise expressly defined herein, the terms defined in the Sale
and Servicing Agreement (defined below) shall have the same meanings in this
Agreement. Whenever capitalized and used in this Agreement, the following words
and phrases, unless otherwise specified, shall have the following meanings:
Administration Agreement: The Administration Agreement, dated as of
December 1, 1998, among the Administrator, the Trust, and the Indenture Trustee,
as the same may be amended and supplemented from time to time.
Administrator: Green Tree Financial Servicing Corporation, a Delaware
corporation, or any successor Administrator under the Administration Agreement.
Agreement or this Agreement: This Trust Agreement, all amendments and
supplements thereto and all exhibits and schedules to any of the foregoing.
Authentication Agent: Wilmington Trust Company, or its successor in
interest, and any successor authentication agent appointed as provided in this
Agreement.
Business Trust Statute: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code ss. 3801 et seq., as the same may be amended from time to time.
Certificates: The Green Tree Home Improvement and Home Equity Loan Trust
1998-F Certificates evidencing the beneficial interest of a Certificateholder in
the Trust, substantially in the form of Exhibit B, attached hereto.
Certificate Distribution Account: The account designated as the
Certificate Distribution Account in, and which is established and maintained
pursuant to, Section 5.1.
Certificate Majority: means holders of Certificates representing more than
50% of the interests of the Certificateholders as a whole.
1-1
<PAGE>
Certificate of Trust: The Certificate of Trust substantially in the form
of Exhibit A hereto, filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 3.4.
Certificateholder or Holder: A Person in whose name a Certificate is
registered in the Certificate Register.
Code: The Internal Revenue Code of 1986, as amended.
Corporate Trust Office: The principal office of the Owner Trustee at which
at any particular time its corporate trust business shall be administered, which
office at the Closing Date is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; the telecopy number for the Corporate Trust Office on the date
of the execution of this Agreement is 302-651-8882.
Depositor: The Seller in its capacity as depositor hereunder.
ERISA: The meaning assigned to such term in Section 3.4(e).
Expenses: The meaning assigned to such term in Section 8.2.
GTGP: Green Tree Second GP Inc., a Minnesota corporation.
Green Tree: Green Tree Financial Corporation, a Delaware corporation, and
its successors in interest.
Indemnified Parties: The meaning assigned to such term in Section 8.2.
Insolvency Event: With respect to a specified Person, (a) the commencement
of an involuntary case against such Person under the federal bankruptcy laws, as
now or hereinafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law, and such case is not dismissed within 60
days; or (b) the filing of a decree or entry of an order for relief by a court
having jurisdiction in the premises in respect of such Person or any substantial
part of its property in an involuntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs; or (c) the
commencement by such Person of a voluntary case under any applicable federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its
1-2
<PAGE>
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
Note Depository Agreement: The agreement among the Trust, the Indenture
Trustee, the Administrator and The Depository Trust Company, dated as of the
Closing Date, relating to the Notes, substantially in the form attached as
Exhibit B to the Indenture.
Owner Trustee: Wilmington Trust Company, or its successor in interest,
acting not individually but solely as trustee hereunder, and any successor
trustee appointed as provided in this Agreement.
Paying Agent: Any paying agent or co-paying agent appointed pursuant to
Section 3.9, which initially shall be U.S. Bank Trust National Association.
Record Date: With respect to any Payment Date, the close of business on
the last Business Day immediately preceding such Payment Date.
Related Documents: The Sale and Servicing Agreement, the Indenture, the
Certificates, the Notes, the Administration Agreement, the Note Depository
Agreement and the Underwriting Agreement. The Related Documents executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated as
of December 1, 1998 between the Trust and Green Tree, as Seller and as Servicer,
as the same may be amended and supplemented from time to time.
Secretary of State: The Secretary of State of the State of Delaware.
Seller: Green Tree, or its successor in interest.
Servicer's Certificate: The Monthly Report delivered by the Servicer to
the Trust pursuant to Section 5.14 of the Sale and Servicing Agreement.
Trust: The trust created by this Agreement, the estate of which consists
of the Trust Property, which trust shall be known as "Green Tree Home
Improvement and Home Equity Loan Trust 1998- F."
Trust Accounts: The Collection Account, the Certificate Distribution
Account, the Note Distribution Account and the Undelivered Contract Account.
Trust Property: The property and proceeds of every description conveyed
pursuant to Section 2.5 hereof and Section 2.01 of the Sale and Servicing
Agreement, together with the Trust Accounts (including all Eligible Investments
therein and all proceeds therefrom).
Underwriters: Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Lehman Brothers Inc.
1-3
<PAGE>
Underwriting Agreement: The Underwriting Agreement and related Terms
Agreement, each dated December 16, 1998, by and among Green Tree and the
Underwriters relating to the Class A Notes.
Wilmington Trust: Wilmington Trust Company, a Delaware banking
corporation.
SECTION 1.2. Usage of Terms.
With respect to all terms used in this Agreement, the singular includes
the plural and the plural the singular; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography,
and other means of reproducing words in a visible form; references to agreements
and other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the terms "include" or "including" mean "include
without limitation" or "including without limitation." To the extent that
definitions are contained in this Agreement, or in any such certificate or other
document, such definitions shall control.
SECTION 1.3. Calculations.
All calculations of the amount of interest accrued on the Certificates
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
SECTION 1.4. Section References.
All references to Articles, Sections, paragraphs, subsections, clauses,
exhibits and schedules shall be to such portions of this Agreement unless
otherwise specified.
SECTION 1.5. Action by or Consent of Certificateholders.
(a) Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by a Certificate
Majority. Except as expressly provided herein, any written notice or consent of
the Certificateholders delivered pursuant to this Agreement shall be effective
if signed by Holders of the Certificates evidencing not less than a Certificate
Majority at the time of the delivery of such notice.
(b) Whenever any provision of this Agreement refers to action to be taken,
or consented to, by Certificateholders, such provision shall be deemed to refer
to Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders.
1-4
<PAGE>
ARTICLE II
CREATION OF TRUST
SECTION 2.1. Creation of Trust.
There is hereby formed a trust to be known as "Green Tree Home Improvement
and Home Equity Loan Trust 1998-F," in which name the Trust may conduct
business, make and execute contracts and other instruments and sue and be sued.
SECTION 2.2. Office.
The office of the Trust shall be in care of the Owner Trustee at the
Corporate Trust Office or at such other address in Delaware as the Owner Trustee
may designate by written notice to the Certificateholders and the Depositor.
SECTION 2.3. Purposes and Powers.
The sole purpose of the Trust is to conserve the Trust Property and
collect and disburse the periodic income therefrom for the use and benefit of
the Certificateholders and the Noteholders and in furtherance of such purpose
the Trust shall have the power and authority to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and the Certificates
pursuant to this Agreement and to sell the Notes and the Certificates;
(ii) with the proceeds of the sale of the Notes and the Certificates, to
pay the organizational, start-up and transactional expenses of the Trust and to
pay the balance to the Seller pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate to the Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders and to hold, manage and distribute to the Certificateholders
pursuant to the terms of the Sale and Servicing Agreement any portion of the
Trust Property released from the lien of, and remitted to the Trust pursuant to,
the Indenture;
(iv) to enter into and perform its obligations under the Related Documents
to which it is or is to be a party;
(v) to engage in those activities, including entering into agreements,
that are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Related Documents, to engage in such
other activities as may be required in connection with conservation of the Trust
Property and the making of distributions to the Certificateholders and the
Noteholders.
2-1
<PAGE>
The Trust is hereby authorized to engage in the foregoing activities and any
activities that are necessary or incidental thereto. The Trust shall not engage
in any activity other than in connection with the foregoing or other than as
required or expressly authorized by the terms of this Agreement or the Related
Documents. Similarly, the Owner Trustee shall have no discretionary duties other
than performing those ministerial acts set forth above necessary to accomplish
the purpose of this Trust as set forth in the introductory sentence of this
Section.
SECTION 2.4. Appointment of Owner Trustee.
The Depositor hereby appoints the Owner Trustee as trustee of the Trust
effective as of the date hereof, to have all the rights, powers and duties set
forth herein and in the Business Trust Statute, and the Owner Trustee hereby
accepts such appointment.
SECTION 2.5. Initial Capital Contribution of Trust Estate.
The Depositor hereby sells, assigns, transfers, conveys and sets over to
the Owner Trustee, as of the date hereof, the sum of $10.00. The Owner Trustee
hereby acknowledges receipt in trust from the Depositor, as of the date hereof,
of the foregoing contribution, which shall constitute the initial Trust Property
and shall be deposited in the Certificate Distribution Account. The Depositor
shall pay organizational expenses of the Trust as they may arise or shall, upon
the request of the Owner Trustee, promptly reimburse the Owner Trustee for any
such expenses paid by the Owner Trustee.
SECTION 2.6. Declaration of Trust.
The Owner Trustee hereby declares that it will hold the Trust Property in
trust upon and subject to the conditions set forth herein for the use and
benefit of the Certificateholders, subject to the interests and rights in the
Trust Property granted to other Persons by the Related Documents. It is the
intention and agreement of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. None of the parties
hereto shall make the election provided in Treasury Regulation ss. 301.7701-3(c)
to have the Trust classified as an association taxable as a corporation. The
parties agree that, unless otherwise required by appropriate tax authorities,
for so long as GTGP is the sole Certificateholder the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as an unincorporated division
of GTGP for tax purposes. On or before the date hereof, the Owner Trustee shall
file in the Office of the Secretary of State the Certificate of Trust required
by Section 3810(a) of the Business Trust Statute, to be effective on the Closing
Date. Effective as of the date hereof, the Owner Trustee shall have all rights,
powers and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust.
2-2
<PAGE>
SECTION 2.7. Liability of the Certificateholders.
(a) No Certificateholder shall have any personal liability for any
liability or obligation of the Trust or by reason of any action taken by the
parties to this Agreement pursuant to any provisions of this Agreement or any
Related Document.
SECTION 2.8. Title to Trust Property.
(a) Legal title to all the Trust Property shall be vested at all times in
the Trust as a separate legal entity except where applicable law in any
jurisdiction requires title to any part of the Trust Property to be vested in a
trustee or trustees, in which case title shall be deemed to be vested in the
Owner Trustee, a co-trustee and/or a separate trustee, as the case may be.
(b) The Certificateholders shall not have legal title to any part of the
Trust Property. The Certificateholders shall be entitled to receive
distributions with respect to their undivided beneficial ownership interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title or interest by any Certificateholder of
its ownership interest in the Trust Property shall operate to terminate this
Agreement or the trusts hereunder or entitle any transferee to an accounting or
to the transfer to it of legal title to any part of the Trust Property.
SECTION 2.9. Situs of Trust.
The Trust will be located and administered in the State of Delaware. All
bank accounts maintained by the Owner Trustee on behalf of the Trust shall be
located in the State of Delaware or the State of Minnesota. The Trust shall not
have any employees in any state other than Delaware; provided, however, that
nothing herein shall restrict or prohibit the Owner Trustee, the Servicer or any
agent of the Trust from having employees within or without the State of
Delaware. Payments will be received by the Trust only in Delaware or the State
of Minnesota, and payments will be made by the Trust only from Delaware or the
State of Minnesota. The only office of the Trust will be at the Corporate Trust
Office in Delaware.
SECTION 2.10. Representations and Warranties of the Depositor.
By execution of this Agreement, the Depositor makes the following
representations and warranties with respect to itself on which the Owner Trustee
relies in accepting the Trust Property in trust and issuing the Certificate.
(a) Organization and Good Standing. It has been duly organized and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority to own its properties and to conduct its
business as such properties are currently owned and as such business is
currently conducted and is proposed to be conducted pursuant to this Agreement
and the Related Documents.
(b) Due Qualification. It is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the
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ownership or lease of its property, the conduct of its business and the
performance of its obligations under this Agreement and the Related Documents
requires such qualification.
(c) Power and Authority; Binding Obligations. It has the power and
authority to execute and deliver this Agreement and its Related Documents and to
perform its obligations pursuant thereto; and the execution, delivery and
performance of this Agreement and its Related Documents have been duly
authorized by all necessary corporate action. When executed and delivered, this
Agreement and the Related Documents will constitute the legal, valid and binding
obligations of the Depositor enforceable in accordance with their terms, except
as enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies.
(d) No Consent Required. No consent, license, approval or authorization or
registration or declaration with any Person or with any governmental authority,
bureau or agency is required in connection with the execution, delivery or
performance of this Agreement and the Related Documents, except for such as have
been obtained, effected or made.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the Depositor's Related Documents and the fulfillment of its
obligations under this Agreement and its Related Documents shall not conflict
with, result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under, its certificate
of incorporation or bylaws, or any indenture, agreement, mortgage, deed of trust
or other instrument to which it is a party or by which it is bound, or result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or other
instrument, or violate any law, order, rule or regulation applicable to it of
any court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over it or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations pending or,
to its knowledge, threatened against it before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over it or its properties (A) asserting the invalidity of this
Agreement or any of the Related Documents, (B) seeking to prevent the issuance
of the Certificates or the Notes or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of, this
Agreement or any of the Related Documents, or (D) seeking to adversely affect
the federal income tax or other federal, state or local tax attributes of the
Certificates.
SECTION 2.11. [RESERVED]
SECTION 2.12. [RESERVED]
SECTION 2.13. Covenants of the Certificateholders.
Each Certificateholder by becoming a Certificateholder agrees:
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(a) to be bound by the terms and conditions of the Certificates and of
this Agreement, including any supplements or amendments hereto and to perform
the obligations of a Certificateholder as set forth therein or herein, in all
respects as if it were a signatory hereto. This undertaking is made for the
benefit of the Trust, the Owner Trustee and all other Certificateholders present
and future.
(b) if requested by the Trust, it will sign a federal income tax return in
its capacity as holder of an interest in the Trust. Each Certificateholder also
hereby agrees that in its tax returns it will not take any position inconsistent
with those taken in any tax returns filed by the Trust.
(c) if such Certificateholder is other than an individual or other entity
holding its Certificate through a broker who reports securities sales on Form
1099-B, to notify the Owner Trustee of any transfer by it of a Certificate in a
taxable sale or exchange, within 30 days of the date of the transfer.
(d) until the completion of the events specified in Section 9.1(e), not,
for any reason, to institute proceedings for the Trust or the Seller to be
adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy
or insolvency proceedings against the Trust or the Seller, or file a petition
seeking or consenting to reorganization or relief under any applicable federal
or state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of the Trust or the Seller or a substantial part of its property, or
cause or permit the Trust or the Seller to make any assignment for the benefit
of its creditors, or admit in writing its inability to pay its debts generally
as they become due, or declare or effect a moratorium on its debt or take any
action in furtherance of any such action.
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ARTICLE III
THE CERTIFICATES
SECTION 3.1. Initial Ownership.
Upon the formation of the Trust by the contribution by the Depositor
pursuant to Section 2.5 and until the issuance of the Certificates, the
Depositor shall be the sole beneficiary of the Trust.
SECTION 3.2. The Certificates.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of any authorized signatory of the Owner Trustee having such
authority under the Owner Trustee's seal imprinted or otherwise affixed thereon
and attested on behalf of the Owner Trustee by the manual or facsimile signature
of any authorized signatory of the Owner Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures were affixed, authorized to sign on behalf of the Owner Trustee shall
be validly issued and entitled to the benefits of this Agreement,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Certificates.
SECTION 3.3. Authentication of Certificates.
Simultaneously with the sale, assignment and transfer to the Trust of the
Contracts and the delivery to the Trust of the Contract Files and the other
Trust Property pursuant to the Sale and Servicing Agreement, the Owner Trustee
shall cause the Certificates to be executed on behalf of the Trust,
authenticated and delivered to or upon the order of the Depositor. No
Certificate shall entitle its Holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit B,
executed by the Owner Trustee or the Authentication Agent, by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Certificate shall have been duly authenticated and delivered
hereunder. Wilmington Trust Company is hereby initially appointed Authentication
Agent. All Certificates shall be dated the date of their authentication.
SECTION 3.4. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall maintain, or cause to be maintained,
at the office or agency maintained pursuant to Section 3.8, a register (the
"Certificate Register") in which, subject to such reasonable regulations as it
may prescribe, the Owner Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as provided in this
Agreement. The Owner Trustee is hereby initially appointed Certificate Registrar
for the purpose of registering Certificates and transfers and exchanges of
Certificates as provided in this Agreement.
(b) Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Owner Trustee shall
execute, authenticate and deliver (or shall cause the Authentication Agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates dated the date of authentication by
the Owner
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Trustee or any Authentication Agent. At the option of a Holder, Certificates may
be exchanged for other Certificates of the same class in authorized
denominations of a like aggregate amount upon surrender of the Certificates to
be exchanged at the office or agency maintained pursuant to Section 3.8.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by (i) a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate
Registrar, duly executed by the Holder or his attorney duly authorized in
writing, and (ii) a representation letter and certification in the form of
Exhibit C hereto, duly executed by the transferee Holder. Each Certificate
surrendered for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Owner Trustee in accordance with its customary
practice.
(d) No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Owner Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
(e) The Certificates may not be acquired by or for the account of (i) an
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) that is subject to the
provisions of Title 1 of ERISA, (ii) a plan described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended, or (iii) any entity whose
underlying assets include "plan assets" (within the meaning of Department of
Labor ("DOL") Regulation Section 2510.3-101, 29 C.F.R. ss. 2510.3-101 or
otherwise under ERISA) by reason of a plan's investment in the entity,
including, without limitation, an insurance company acting on behalf of its
general account; provided, however, that a Certificate or an interest therein
may be transferred to an insurance company acting on behalf of its general
account if such insurance company represents and covenants in writing to the
Company, the Owner Trustee, the Underwriters and the Servicer that (i) on the
date of such transfer, less than 25% of the assets of such general account (as
reasonably determined by such insurance company) constitute "plan assets" for
purposes of Title I of ERISA and Section 4975 of the Code, (ii) the purchase and
holding of such Certificate are eligible for exemptive relief under Sections (1)
and (3) of Prohibited Transaction Class Exemption 95-60 and (iii) if, after the
initial acquisition of such Certificate, at any time during any calendar quarter
(A) 25% or more of the assets of such general account (as reasonably determined
by such insurance company no less frequently than each calendar quarter)
constitute "plan assets" for purposes of Title I of ERISA or Section 4975 of the
Code and no exemption or exception from the prohibited transaction rules applies
to the continued holding of such Certificate under Section 401(c) of ERISA and
the final regulations thereunder or under an exemption or regulation issued by
the DOL under ERISA or (B) the Company, the Owner Trustee, the Underwriters or
the Servicer furnishes to the insurance company an opinion of counsel to the
effect that the holding of such Certificate in the insurance company's general
account causes the assets of the Trust to be considered "plan assets" (within
the meaning of DOL Regulation Section 2510.3-101, 29 C.F.R. ss. 2510.3-101 or
otherwise under ERISA), then such insurance company will dispose of all of the
Certificates then held in its general account by the end of the next following
calendar quarter.
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(f) Notwithstanding anything contained herein to the contrary, the Owner
Trustee and the Certificate Registrar shall not be responsible for ascertaining
whether any transfer complies with the registration provisions or exemptions
from the Securities Act of 1933, as amended, the Securities and Exchange Act of
1934, as amended, applicable state securities law or the Investment Company Act
of 1940, as amended, or the exemption provisions of ERISA; provided, however,
that if a certificate is specifically required to be delivered to the Owner
Trustee by a purchaser or transferee of a Certificate, the Owner Trustee shall
be under a duty to examine the same to determine whether it conforms to the
requirements of this Agreement and shall promptly notify the party delivering
the same if such certificate does not so conform.
(g) Notwithstanding the preceding provisions of this Section, the Owner
Trustee shall not be required to make, and the Certificate Registrar shall not
be required to register, transfers or exchanges of Certificates for a period of
15 days preceding the due date for any payment with respect to the Certificate.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (b) there is delivered to
the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Certificate Registrar or the Owner Trustee that such Certificate
has been acquired by a bona fide purchaser, the Owner Trustee on behalf of the
Trust shall execute, authenticate and deliver (or the Authentication Agent shall
authenticate and deliver), in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor. In
connection with the issuance of any new Certificate under this Section 3.5, the
Owner Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Owner Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 3.5 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Owner Trustee, the Certificate Registrar and any agent of the Owner Trustee
or the Certificate Registrar may treat the person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 5.2 and for all other purposes whatsoever, and
neither the Owner Trustee, the Certificate Registrar nor any agent of the Owner
Trustee or the Certificate Registrar shall be affected by any notice to the
contrary.
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SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Servicer,
within 15 days after receipt by the Owner Trustee of a written request therefor,
a list, in such form as the Servicer may reasonably require, of the names and
addresses of the Certificateholders as of the most recent Record Date for
payment of distributions to Certificateholders. If three or more
Certificateholders of a Class, or one or more Certificateholders holding not
less than 25% of the interests of the Certificateholders as a whole (hereinafter
referred to as "Applicants"), apply in writing to the Owner Trustee, and such
application states that the Applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication that such
Applicants propose to transmit, then the Owner Trustee shall, within five
Business Days after the receipt of such application, afford such Applicants
access, during normal business hours, to the current list of Certificateholders.
Every Certificateholder, by receiving and holding a Certificate, agrees that
none of the Servicer or the Owner Trustee, nor any agent thereof, shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders under this Agreement, regardless of the
source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency.
The Owner Trustee shall maintain in Wilmington, Delaware, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Owner Trustee in respect of the Certificates and the Related Documents may
be served. The Owner Trustee initially designates its Corporate Trust Office for
such purposes. The Owner Trustee shall give prompt written notice to the
Depositor and to the Certificateholders of any change in the location of the
Certificate Register or any such office of agency.
SECTION 3.9. Appointment of Paying Agent.
The Paying Agent shall make distributions to Certificateholders from the
Certificate Distribution Account pursuant to Section 5.2 and shall report the
amounts of such distributions to the Owner Trustee. Any Paying Agent shall have
the revocable power to withdraw funds from the Certificate Distribution Account
for the purpose of making the distributions referred to above. The Owner Trustee
may revoke such power and remove the Paying Agent if the Owner Trustee
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The Paying
Agent shall initially be U.S. Bank Trust National Association. U.S. Bank Trust
National Association shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Owner Trustee. In the event that U.S. Bank Trust National
Association shall no longer be the Paying Agent, the Owner Trustee shall appoint
a successor to act as Paying Agent (which shall be a bank or trust company). The
Owner Trustee shall cause such successor Paying Agent or any additional Paying
Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Owner Trustee that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
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Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee, and upon removal of a Paying Agent, such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other Paying Agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
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ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Restriction on Power of Certificateholders.
No Certificateholder shall have any right to vote or in any manner
otherwise control the operation and management of the Trust except as expressly
provided in this Agreement.
SECTION 4.2. Prior Notice to Certificateholders with Respect to Certain
Matters.
The Owner Trustee shall not take any of the following actions, unless at
least 30 days (or such shorter period as shall be required under the
circumstances) before the taking of such action, the Owner Trustee shall have
notified the Certificateholders in writing of the proposed action and the
Certificateholders shall not have notified the Owner Trustee in writing prior to
the 30th day after such notice is given that such Certificateholders have
withheld consent or provided alternative direction:
(a) the election by the Trust to file an amendment to the Certificate of
Trust unless such amendment is required to be filed under the Business Trust
Statute or unless such amendment would not materially and adversely affect the
interests of the Certificateholders;
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required unless such
amendment would not materially and adversely affect the interests of the
Certificateholders; or
(c) the amendment, change or modification of the Administration Agreement,
unless such amendment would not materially and adversely affect the interests of
the Certificateholders.
SECTION 4.3. Action by Certificateholders with Respect to Bankruptcy.
The Owner Trustee shall not have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the unanimous prior
approval of all Certificateholders and the delivery to the Owner Trustee by each
such Certificateholder of a certificate certifying that such Certificateholder
reasonably believes that the Trust is insolvent.
SECTION 4.4. Restrictions on Certificateholders' Power.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to this Agreement or any
Related Document, unless the Certificateholders are the instructing party
pursuant to Section 6.3 and unless a Certificateholder previously shall have
given to the Owner Trustee a written notice of default and of the continuance
thereof, as provided in this Agreement and unless Holders of Certificates
evidencing in the aggregate not less than a 25 % interest of the Certificates as
a whole shall have made written request upon the Owner Trustee to institute such
action, suit or proceeding in its own name as Owner Trustee under this Agreement
and shall have
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offered to the Owner Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Owner Trustee, for 30 days after its receipt of such notice, request, and offer
of indemnity, shall have neglected or refused to institute any such action,
suit, or proceeding, and during such 30-day period no request or waiver
inconsistent with such written request has been given to the Owner Trustee
pursuant to and in compliance with this Section or Section 6.3; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Owner Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 4.4, each and every
Certificateholder and the Owner Trustee shall be entitled to such relief as can
be given either at law or in equity.
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ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Trust Accounts.
(a) On or prior to the Closing Date, the Depositor shall cause the
Servicer to establish the Certificate Distribution Account in the name of the
Owner Trustee for the benefit of the Certificateholders as provided in Section
6.01(c) of the Sale and Servicing Agreement. The Certificate Distribution
Account shall be an Eligible Account and initially shall be a segregated trust
account established with the Indenture Trustee and maintained with the Indenture
Trustee, so long as the Indenture Trustee is acting as Paying Agent under
Section 3.9.
(b) The Owner Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Certificate Distribution Account and
in all proceeds thereof. If, at any time, the Certificate Distribution Account
ceases to be an Eligible Account, the Owner Trustee shall within 5 Business Days
(or such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish or cause the Servicer to establish a new
Certificate Distribution Account as an Eligible Account and shall transfer any
cash and/or any investments to such new Certificate Distribution Account.
(c) All amounts held in the Certificate Distribution Account shall, to the
extent permitted by applicable laws, rules and regulations, be invested by the
Paying Agent in Eligible Investments as provided in Section 6.01 of the Sale and
Servicing Agreement and pursuant to the written instructions of the
Administrator that mature not later than one Business Day prior to the Payment
Date for the Due Period to which such amounts relate. Investments in Eligible
Investments shall be made in the name of the Trust, and such investments shall
not be sold or disposed of prior to their maturity. Any investment of funds in
the Certificate Distribution Account shall be made in Eligible Investments held
by a financial institution with respect to which (a) such institution has noted
the Owner Trustee's interest therein by book entry or otherwise and (b) a
confirmation of the Owner Trustee's interest has been sent to the Owner Trustee
by such institution, provided that such Eligible Investments are (i) specific
certificated securities, and (ii) either (A) in the possession of such
institution or (B) in the possession of a clearing corporation in New York or
Delaware, registered in the name of such clearing corporation, not endorsed for
collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the Owner
Trustee's security interest therein, and held by such clearing corporation in an
account of such institution. Subject to the other provisions hereof, the Paying
Agent on behalf of the Owner Trustee shall have sole control over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the Owner
Trustee or its agent, together with each document of transfer, if any, necessary
to transfer title to such investment to the Owner Trustee in a manner which
complies with this Section 5.1. All interest, dividends, gains upon sale and
other income from, or earnings on investment of funds in the Certificate
Distribution Account shall be distributed on the next Payment Date pursuant to
Section 5.2(a). The Seller shall deposit in the Certificate Distribution Account
an amount equal to any net loss on such investments immediately as realized.
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SECTION 5.2. Application of Funds in Certificate Distribution Account.
(a) On each Payment Date the Paying Agent will, based on the information
contained in the Monthly Report delivered on the related Determination Date
pursuant to Section 5.14 of the Sale and Servicing Agreement, distribute to
Certificateholders, on a pro rata basis to the extent of the funds available,
amounts deposited in the Certificate Distribution Account.
(b) On the Payment Date following the date on which amounts received in
respect of the Seller's or the Servicer's exercise of its option to purchase the
corpus of the Trust pursuant to Section 8.01 of the Sale and Servicing
Agreement, or pursuant to the auction of the Contracts as described in Section
10.04 of the Indenture or Section 9.3 of this Agreement, are deposited in the
Certificate Distribution Account, the Paying Agent will distribute such amounts
to Certificateholders in the manner described in Section 5.2(a).
(c) On the Payment Date on which proceeds are deposited in the Certificate
Distribution Account pursuant to Section 8.02 of the Sale and Servicing
Agreement (or on the Payment Date immediately following such deposit if such
proceeds are not deposited in the Certificate Distribution Account on a Payment
Date), the Paying Agent will distribute the proceeds so deposited in the
Certificate Distribution Account to Certificateholders in the manner described
in Section 5.2(a).
(d) On the Payment Date following the date on which the Indenture Trustee
makes payments of money or property in respect of liquidation of the Trust
Property pursuant to Section 5.06 of the Indenture and deposits funds received
in connection with such liquidation in the Certificate Distribution Account, the
Paying Agent will distribute such funds to Certificateholders in the manner
described in Section 5.2(a).
(e) On each Payment Date, the Owner Trustee shall send or cause to be sent
to each Certificateholder the statement required pursuant to Section 6.07 of the
Sale and Servicing Agreement.
(f) The Paying Agent agrees, to the extent required by the Internal
Revenue Code, and applicable federal regulations promulgated thereunder, as the
same may be amended from time to time (collectively, the "Code"), to withhold
from each payment due hereunder or under any Certificate, United States
withholding taxes at the appropriate rate, and, on a timely basis, to deposit
such amounts with an authorized depository and make such returns, filings and
other reports in connection therewith as are required of it under the Code. Any
Certificateholder which is eligible for an exemption from or reduction of
withholding of United States federal income taxes shall, from time to time,
provide to the Owner Trustee and the Paying Agent in a timely manner all
appropriate and properly completed forms indicating such eligibility, as may be
necessary to permit the Paying Agent not to withhold taxes from payments due to
such Certificateholder. In connection with the foregoing, the Owner Trustee
shall promptly furnish or cause to be furnished to each Certificateholder in a
timely fashion such U.S. Treasury forms as are required by the Code to be
furnished to such Certificateholder indicating payment of any taxes withheld
from any payments by the Paying Agent to such Certificateholder. The Owner
Trustee and the Paying Agent shall be fully protected in relying upon, and each
Certificateholder by its acceptance of a Certificate hereunder agrees to
indemnify and hold the Owner Trustee and the Paying Agent harmless against all
claims
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or liability of any kind arising in connection with or related to the Owner
Trustee's or the Paying Agent's reliance upon any documents, forms or
information provided by any Certificateholder to the Owner Trustee. In addition,
if the Paying Agent has not withheld taxes on any payment made to any
Certificateholder, and the Paying Agent is subsequently required to remit to any
taxing authority any such amount not withheld, such Certificateholder shall
return such amount to the Paying Agent upon written demand by the Paying Agent.
In no event shall the Owner Trustee or the Paying Agent be liable for
consequential damages to any Certificateholder.
(g) Any funds remaining in the Certificate Distribution Account after
distribution of all amounts specified in this Section 5.2 shall be distributed
to the Certificateholders in the manner described in Section 5.2(a).
SECTION 5.3. Method of Payment.
Subject to Section 9.1(c), distributions required to be made to
Certificateholders on any Payment Date shall be made to each Certificateholder
of record on the preceding Record Date either by wire transfer, in immediately
available funds, to the account of such Holder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
to the Certificate Registrar appropriate written instructions at least five
Business Days prior to such Payment Date and such Holder's Certificates in the
aggregate evidence a denomination of not less than $1,000,000, or, if not, by
check mailed to such Certificateholder at the address of such Holder appearing
in the Certificate Register.
SECTION 5.4. No Segregation of Monies; No Interest.
Subject to Sections 5.1 and 5.2, monies received by or on behalf of the
Owner Trustee hereunder need not be segregated in any manner except to the
extent required by law or by the Sale and Servicing Agreement and may be
deposited under such general conditions as may be prescribed by law, and neither
the Owner Trustee or the Paying Agent shall be liable for any interest thereon.
SECTION 5.5. Accounting; Reports; Tax Returns.
(a) It is the intention of the parties that for so long as there is only
one Certificateholder the Trust will be disregarded as a separate entity for tax
purposes, and that if there is more than one Certificateholder the Trust will be
treated as a partnership for tax purposes. Accordingly, the Administrator has
agreed pursuant to the Administration Agreement that the Administrator shall, as
appropriate: (i) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, (ii) deliver to each
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, such information as may be required to enable each
Certificateholder to prepare its federal and state income tax returns, (iii)
obtain a federal tax identification number for the Trust, and file or cause to
be filed such tax returns relating to the Trust and direct the Owner Trustee to
make such elections as may from time to time be required or appropriate under
any applicable state or federal statute or rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (iv) collect or cause to be collected any withholding tax as described
in and in accordance with Section 5.2(f) with respect to income or distributions
to Certificateholders and (v) file or cause to be filed all
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documents required to be filed by the Trust with the Commission and otherwise
take or cause to be taken all such actions as are notified by the Servicer to
the Administrator as being required for the Trust's compliance with all
applicable provisions of state and federal securities laws.
(b)The Owner Trustee shall sign on behalf of the Trust the tax returns of
the Trust, unless applicable law requires the Certificateholder to sign such
documents, in which case such documents shall be signed by the
Certificateholder.
(c) None of the parties hereto shall make the election provided in
Treasury Regulation ss. 301.7701-3(c) to have the Trust classified as an
association taxable as a corporation.
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority.
The Owner Trustee is authorized and directed to execute and deliver the
Related Documents to which the Trust is to be a party and each certificate or
other document attached as an exhibit to or contemplated by the Related
Documents to which the Trust is to be a party and any amendment thereto, and on
behalf of the Trust, to direct the Indenture Trustee to authenticate and deliver
the Class A-1 Notes in the aggregate principal amount of $245,280,000, the Class
A-2 Notes in the aggregate principal amount of $99,645,000, the Class M-1 Notes
in the aggregate principal amount of $24,075,000, the Class M-2 Notes in the
aggregate principal amount of $31,500,000, the Class B-1 Notes in the aggregate
principal amount of $24,750,000 and the Class B-2 Notes in the aggregate
principal amount of $24,750,000. In addition to the foregoing, the Owner Trustee
is authorized, but shall not be obligated, to take all actions required of the
Trust pursuant to the Related Documents. The Owner Trustee is further
authorized, on behalf of the Trust, to enter into the Administration Agreement
and to appoint a successor Administrator.
SECTION 6.2. General Duties.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged through the Administrator or such agents as shall be appointed) all
of its responsibilities pursuant to the terms of this Agreement and the Related
Documents and to administer the Trust in the interest of the Certificateholders,
subject to the Related Documents and in accordance with the provisions of this
Agreement. The Owner Trustee undertakes to perform such duties, and only such
duties, as are specifically set forth in this Agreement or as it shall be
directed in writing by the instructing party. No implied covenants or agreements
shall be read into this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Related Documents to the extent the Administrator has
agreed in the Administration Agreement to perform any act or to discharge any
duty of the Trust or the Owner Trustee hereunder or under any Related Document,
and the Owner Trustee shall not be liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
SECTION 6.3. Action upon Instruction.
(a) Subject to Article IV, the Certificateholders shall have the exclusive
right to direct the actions of the Owner Trustee in the management of the Trust,
so long as such instructions are not inconsistent with the express terms set
forth herein or in any Related Document. The Certificateholders shall not
instruct the Owner Trustee in a manner inconsistent with this Agreement or the
Related Documents.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any Related Document if the Owner Trustee shall have reasonably
determined, or shall have been
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advised by counsel, that such action is contrary to the terms hereof or of any
Related Document or is otherwise contrary to law.
(c) No provision of this Agreement shall require the Owner Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of its duties hereunder or in the exercise of any of its rights or
powers if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) In accepting the trusts hereby created, the Owner Trustee acts solely
as trustee hereunder and not in its individual capacity. The Owner Trustee
agrees to disburse all moneys actually received by it constituting part of the
Trust Property upon the terms of this Agreement. Notwithstanding anything in
this Agreement to the contrary, the Owner Trustee, when acting in such capacity,
shall not be personally liable or accountable to any Person, under any
circumstances, except by reason of its gross negligence, willful misconduct or
breach of its representations, warranties or covenants.
(e) The Owner Trustee shall be under no liability (except as provided in
(d) above) for any action taken by the Owner Trustee in good faith in reliance
upon any paper, order, list, demand, request, consent, affidavit, notice,
opinion, direction, endorsement, assignment, resolution, draft or other
document, believed by it to be genuine and to have been signed by the proper
party or parties or for the disposition of moneys or Trust Property pursuant to
this Agreement. As to any fact or matter, the manner of ascertainment of which
is not specifically prescribed herein, the Owner Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice president or
by the treasurer or other authorized officer of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Owner Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(f) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or any
Related Document, the Owner Trustee shall promptly give notice (in such form as
shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Owner Trustee acts in good faith in accordance with any written
instruction received from the Certificateholders, the Owner Trustee shall not be
liable on account of such action to any Person. If the Owner Trustee shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action, not inconsistent with this Agreement or
the Related Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
(g) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any Related Document or any such provision is
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement permits any
determination by the Owner Trustee or is silent or is incomplete as to the
course of action that the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances)
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to the Certificateholders requesting instruction and, to the extent that the
Owner Trustee acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be liable, on account of
such action or inaction, to any Person. If the Owner Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
Related Documents, as it shall deem to be in the best interests of the
Certificateholders, and shall have no liability to any Person for such action or
inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement or in
Instructions.
The Owner Trustee shall not have any duty or obligation to manage, make
any payment with respect to, register, record, sell, dispose of, or otherwise
deal with the Trust Property, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to which
the Trust is a party, except as expressly provided by the terms of this
Agreement (including as provided in Section 6.2) or in any written instruction
received by the Owner Trustee pursuant to Section 6.3; and no implied duties or
obligations shall be read into this Agreement or any Related Document against
the Owner Trustee. The Owner Trustee shall have no responsibility for preparing,
monitoring or filing any financing or continuation statements in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement or
any Related Document; however, the Owner Trustee will from time to time execute
and deliver such financing or continuation statements as are prepared by the
Servicer and delivered to the Owner Trustee in final execution form for its
execution on behalf of the Trust for the purpose of perfecting or maintaining
the perfection of such a security interest or lien or effecting such a
recording. The Owner Trustee nevertheless agrees that it will, at its own cost
and expense (and not at the expense of the Trust), promptly take all action as
may be necessary to discharge any liens on any part of the Trust Property that
are attributable to claims against the Owner Trustee in its individual capacity
that are not related to the ownership or the administration of the Trust
Property.
SECTION 6.5. No Action Except under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or
otherwise deal with any part of, the Trust Property except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, (ii) in accordance with the Related Documents and
(iii) in accordance with any document or instruction delivered to the Owner
Trustee pursuant to Section 6.3.
SECTION 6.6. Restrictions.
The Owner Trustee shall not take any action (a) that is inconsistent with
the purposes of the Trust set forth in Section 2.3 or (b) that, to the actual
knowledge of the Owner Trustee, would result in the Trust's becoming taxable as
a corporation for federal income tax purposes. The Certificateholders shall not
direct the Owner Trustee to take any action that would violate the provisions of
this Section.
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SECTION 6.7. Administration Agreement.
(a) The Administrator is authorized to execute on behalf of the Trust all
documents, reports, filings, instruments, certificates and opinions as it shall
be the duty of the Trust to prepare, file or deliver pursuant to the Related
Documents. Upon written request, the Owner Trustee shall execute and deliver to
the Administrator a power of attorney appointing the Administrator its agent and
attorney-in-fact to execute all such documents, reports, filings, instruments,
certificates and opinions.
(b) If the Administrator shall resign or be removed pursuant to the terms
of the Administration Agreement, the Owner Trustee may, and is hereby authorized
and empowered to, appoint or consent to the appointment of a successor
Administrator pursuant to the Administration Agreement.
(c) If the Administration Agreement is terminated, the Owner Trustee may,
and is hereby authorized and empowered to, appoint or consent to the appointment
of a Person to perform substantially the same duties as are assigned to the
Administrator in the Administration Agreement pursuant to an agreement
containing substantially the same provisions as are contained in the
Administration Agreement.
(d) The Owner Trustee shall promptly notify each Certificateholder of any
default by or misconduct of the Administrator under the Administration Agreement
of which the Owner Trustee has received written notice or of which a Responsible
Officer of the Owner Trustee has actual knowledge.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trust and Duties.
The Owner Trustee accepts the trusts hereby created and agrees to perform
its duties hereunder with respect to such trusts but only upon the terms of this
Agreement. The Owner Trustee also agrees to disburse all monies actually
received by it constituting part of the Trust Property upon the terms of the
Related Documents and this Agreement. The Owner Trustee shall not be answerable
or accountable hereunder or under any Related Document under any circumstances,
except (i) for its own willful misconduct or gross negligence, (ii) in the case
of the inaccuracy of any representation or warranty contained in Section 7.3,
(iii) for liabilities arising from the failure of the Owner Trustee to perform
obligations expressly undertaken by it in the last sentence of Section 6.4
hereof, (iv) for any investments issued by the Owner Trustee or any branch or
affiliate thereof in its commercial capacity or (v) for taxes, fees or other
charges on, based on or measured by, any fees, commissions or compensation
received by the Owner Trustee in connection with any of the transactions
contemplated by this Agreement or any Related Document. In particular, but not
by way of limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the instructions
of the Certificateholders;
(c) no provision of this Agreement or any Related Document shall require
the Owner Trustee to expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or powers hereunder or under
any Related Document if the Owner Trustee shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under this Agreement or any of the Related
Documents, including the principal of and interest on the Certificates or the
Notes;
(e) the Owner Trustee shall not be responsible for or in respect of the
recitals herein, the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Property or for or in respect
of the validity or sufficiency of the Related Documents, other than the
certificate of authentication on the Certificates, and the Owner Trustee shall
in no event assume or incur any liability, duty, or obligation to the Indenture
Trustee, any Noteholder or to any Certificateholder, other than as expressly
provided for herein and in the Related Documents;
(f) the Owner Trustee shall not be liable for the default or misconduct of
the Administrator, the Indenture Trustee or the Servicer under any of the
Related Documents or
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otherwise and the Owner Trustee shall have no obligation or liability to monitor
the performance of or to perform the obligations of the Trust under this
Agreement or the Related Documents that are required to be performed by the
Administrator under the Administration Agreement, the Indenture Trustee under
the Indenture or the Servicer under the Sale and Servicing Agreement;
(g) the Owner Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or otherwise or in relation to this
Agreement or any Related Document, at the request, order or direction of the
Certificateholders, unless such Certificateholders have offered to the Owner
Trustee security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee therein or thereby. The
right of the Owner Trustee to perform any discretionary act enumerated in this
Agreement or in any Related Document shall not be construed as a duty, and the
Owner Trustee shall not be answerable for other than its gross negligence or
willful misconduct in the performance of any such act;
(h) the Owner Trustee shall not be under any obligation to appear in,
prosecute or defend any action, which in its opinion may require it to incur any
out-of-pocket expense or any liability unless it shall be furnished with such
reasonable security and indemnity against such expense or liability as it may
require in accordance with the terms hereof. The Owner Trustee may, but shall be
under no duty to, undertake such action as it may deem necessary at any and all
times to protect the Trust Property and the respective rights and interests of
the Noteholders and the Certificateholders pursuant to the terms of the
Indenture and this Agreement;
(i) the Owner Trustee may (at the expense of the Seller) consult with
counsel, and the written advice of counsel or any opinion of counsel shall be
full and complete authorization and protection in respect of any action taken or
omitted by the Owner Trustee in good faith reliance thereon; and
(j) notwithstanding anything contained herein to the contrary, neither
Wilmington Trust nor the Owner Trustee shall be required to take any action in
any jurisdiction other than in the State of Delaware if the taking of such
action will (i) require the consent or approval or authorization or order of or
giving of notice to, or the registration with or the taking of any other action
in respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of any jurisdiction or any political
subdivisions thereof in existence on the date hereof other than the State of
Delaware becoming payable by Wilmington Trust; or (iii) subject Wilmington Trust
to personal jurisdiction in any jurisdiction other than the State of Delaware
for causes of action arising from acts unrelated to the consummation of the
transactions by Wilmington Trust or the Owner Trustee as the case may be,
contemplated hereby. The Owner Trustee shall be entitled to obtain (at the
expense of the Seller) an opinion of counsel to determine whether any action
required to be taken pursuant to this Agreement results in the consequences
described in clauses (i), (ii) and (iii) of the preceding sentence. In the event
that said counsel advises the Owner Trustee that such action will result in such
consequences, the Owner Trustee will appoint an additional or separate trustee
to proceed with such action.
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SECTION 7.2. Furnishing of Documents.
The Owner Trustee shall furnish to the Certificateholders, promptly upon
receipt of a written request therefor, duplicates or copies of all reports,
notices, requests, demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the Related Documents unless
the Certificateholders have previously received such items.
SECTION 7.3. Representations and Warranties.
The Owner Trustee hereby represents and warrants to the Depositor and the
Certificateholders that:
(a) It is a banking corporation duly organized and validly existing in
good standing under the laws of the State of Delaware. It has all requisite
corporate power and authority and all franchises, grants, authorizations,
consents, orders and approvals from all governmental authorities of the State of
Delaware and the United States governing its banking and trust powers necessary
to execute, deliver and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the execution
and delivery by it of this Agreement and each Related Document to which the
Trust is a party, and this Agreement and each Related Document will be executed
and delivered by one of its officers who is duly authorized to execute and
deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any Federal or
Delaware law, governmental rule or regulation governing the banking or trust
powers of the Owner Trustee or any judgment or order binding on it, or
constitute any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by which
any of its properties may be bound or result in the creation or imposition of
any lien, charge or encumbrance on the Trust Property resulting from actions by
or claims against the Owner Trustee individually which are unrelated to this
Agreement or the Related Documents.
SECTION 7.4. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
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(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the Related
Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Related Document.
SECTION 7.5. Not Acting in Individual Capacity.
Except as provided in this Article VII, in accepting the trusts hereby
created Wilmington Trust Company acts solely as Owner Trustee hereunder and not
in its individual capacity and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Related Document shall look only to the Trust Property for payment or
satisfaction thereof.
SECTION 7.6. Owner Trustee Not Liable for Certificates, Notes or
Contracts.
The recitals contained herein and in the Certificates and the Notes (other
than the signature and counter-signature of the Owner Trustee on the
Certificates and the Notes) shall be taken as the statements of the Depositor,
and the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, of any Related Document or of the Certificates (other than the
signature and counter-signature of the Owner Trustee on the Certificates) or the
Notes (other than the signature or counter-signature of the Owner Trustee on the
Notes), or of any Contract or related documents. The Owner Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Contract, or the perfection and priority of
any security interest created by any Contract in any real property or the
maintenance of any such perfection and priority of any security interest created
by any Contract in any real property or for or with respect to the sufficiency
of the Trust Property or its ability to generate the payments to be distributed
to Certificateholders under this Agreement or the Noteholders under the
Indenture, including, without limitation: the existence, condition and ownership
of any real property; the existence and enforceability of any insurance thereon;
the existence and contents of any Contract or any computer or other record
thereof; the validity of the assignment of any Contract to the Trust or of any
intervening assignment; the completeness of any Contract; the performance or
enforcement of any Contract; the compliance by the Seller or the Servicer with
any warranty or representation made under any Related Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Servicer taken in the name of the Owner Trustee.
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SECTION 7.7. Owner Trustee May Own Certificates and Notes.
The Owner Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates or Notes and may deal with the Depositor, the
Seller, the Indenture Trustee and the Servicer in banking or other transactions
with the same rights as it would have if it were not Owner Trustee.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses.
The Owner Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between
Green Tree and the Owner Trustee (or, with respect to any successor Owner
Trustee, reasonable compensation for all services rendered by it hereunder), and
the Owner Trustee shall be entitled to be reimbursed by Green Tree for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Owner Trustee may employ in connection with the exercise and performance of its
rights and its duties hereunder; provided, however, that the Owner Trustee shall
only be entitled to reimbursement for such expenses hereunder to the extent such
expenses (i) are fees of outside counsel engaged by the Owner Trustee in respect
of the performance of its obligations hereunder or (ii) relate to the
performance of its obligations pursuant to Section 5.5 hereof.
SECTION 8.2. Indemnification.
Green Tree shall be liable as primary obligor for, and shall indemnify the
Owner Trustee in its individual capacity and its successors, assigns, agents and
servants, and any co-trustee (collectively, the "Indemnified Parties") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the Related Documents, the Trust Property,
the administration of the Trust Property or the action or inaction of the Owner
Trustee hereunder, except only that Green Tree shall not be liable for or
required to indemnify the Owner Trustee from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.1. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement.
SECTION 8.3. Nonrecourse Obligations.
Notwithstanding anything in this Agreement or any Related Document, the
Owner Trustee agrees in its individual capacity and in its capacity as Owner
Trustee for the Trust that all obligations of the Trust to the Owner Trustee
individually or as Owner Trustee for the Trust shall be recourse to the Trust
Property only and specifically shall not be recourse to the assets of any
Certificateholder.
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ARTICLE IX
TERMINATION
SECTION 9.1. Termination of the Trust.
(a) The respective obligations and responsibilities of the Depositor and
the Owner Trustee created by this Agreement and the Trust created by this
Agreement shall terminate upon the later of (i) the maturity or other
liquidation of the last Contract (including the purchase as of any Payment Date
by the Seller or the Servicer at its option of the corpus of the Trust as
described in Section 8.01 of the Sale and Servicing Agreement) and the
subsequent distribution of amounts in respect of such Contracts as provided in
the Related Documents, or (ii) the payment to Certificateholders of all amounts
required to be paid to them pursuant to this Agreement. In any case, there shall
be delivered to the Owner Trustee, the Indenture Trustee, the Rating Agencies
and the Note Insurer an Opinion of Counsel that all applicable preference
periods under federal, state and local bankruptcy, insolvency and similar laws
have expired with respect to the payments pursuant to clause (ii); provided,
however, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants living on the date of this Agreement of Rose Kennedy of the
Commonwealth of Massachusetts; and provided, further, that the rights to
indemnification under Section 8.2 shall survive the termination of the Trust.
The Servicer shall promptly notify the Owner Trustee of any prospective
termination pursuant to this Section 9.1. The bankruptcy, liquidation,
dissolution, termination, resignation, expulsion, withdrawal, death or
incapacity of any Certificateholder, shall not (x) operate to terminate this
Agreement or the Trust, nor (y) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Trust Property nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Within five Business Days of receipt of notice of final distribution
on the Certificates from the Seller or the Servicer given pursuant to Section
8.01(b) of the Sale and Servicing Agreement , the Owner Trustee shall mail
written notice to the Certificateholder specifying (i) the Payment Date upon
which final payment of the Certificates shall be made upon presentation and
surrender of Certificates at the office of the Paying Agent therein specified,
(ii) the amount of any such final payment, and (iii) that the Record Date
otherwise applicable to such Payment Date is not applicable, payments being made
only upon presentation and surrender of the Certificates at the office of the
Paying Agent therein specified. The Owner Trustee shall give such notice to the
Certificate Registrar at the time such notice is given to Certificateholders. In
the event such notice is given, (i) the Indenture Trustee shall make deposits
into the Certificate Distribution Account in accordance with Section 6.06 of the
Sale and Servicing Agreement, or, (ii) in the case of an optional purchase of
Contracts pursuant to Section 8.01 of the Sale and Servicing Agreement, the
Indenture Trustee shall deposit the amount specified in Section 8.01 of the Sale
and Servicing Agreement. Upon presentation and surrender of the Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Payment Date pursuant to Section 5.2.
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(d) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that remain
subject to this Agreement. Any funds which are payable to Certificateholders
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Owner Trustee to The United Way (but only upon termination of this
Agreement), and the Certificateholders, by acceptance of their Certificates,
hereby waive any rights with respect to such funds.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation (i) satisfying the
provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized to
exercise corporate trust powers; (iii) having a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by Federal or
State authorities; (iv) having (or having a parent which has) a long-term debt
rating of at least P-1 by Moody's or AA- by Standard & Poor's and a short-term
debt rating of A-1+ from S&P or otherwise acceptable to the Rating Agencies; and
(v) shall not be an Affiliate of the Seller. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Owner Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Owner Trustee shall resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner Trustee.
The Owner Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor at least 30
days before the date specified in such instrument. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor Owner Trustee
meeting the qualifications set forth in Section 10.1 by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Owner Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.1 and shall fail to resign after written
request therefor by the Depositor or if at any time the Owner Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver
of the Owner Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Owner Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Owner Trustee. If the Depositor shall remove the Owner
Trustee under the authority of the immediately preceding sentence, the Depositor
shall promptly appoint a successor Owner Trustee meeting the qualification
requirements of Section 10.1 by written instrument, in duplicate, one copy of
which instrument shall be delivered to the outgoing Owner Trustee so removed and
one copy to the successor Owner Trustee and payment of all fees owed to the
outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until all fees and expenses, including any indemnity
payments, due to the outgoing Owner Trustee have been paid and
10-1
<PAGE>
until acceptance of appointment by the successor Owner Trustee pursuant to
Section 10.3. The Depositor shall provide notice of such resignation or removal
of the Owner Trustee to each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee.
Any successor Owner Trustee appointed pursuant to Section 10.2 shall
execute, acknowledge and deliver to the Depositor and to its predecessor Owner
Trustee an instrument accepting such appointment under this Agreement, and
thereupon the resignation or removal of the predecessor Owner Trustee shall
become effective and such successor Owner Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as if
originally named as Owner Trustee. The predecessor Owner Trustee shall deliver
to the successor Owner Trustee all documents and statements and monies held by
it under this Agreement; and the predecessor Owner Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Owner Trustee
all such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice of the successor Owner Trustee
to the Certificateholder, the Indenture Trustee, the Noteholders, the Note
Insurer and the Rating Agencies. If the Administrator shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Owner
Trustee, the successor Owner Trustee shall cause such notice to be mailed at the
expense of the Administrator.
SECTION 10.4. Merger or Consolidation of Owner Trustee.
Any corporation into which the Owner Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section 10.1,
without the execution or filing of any instrument or any further act on the part
of any of the parties hereto, anything herein to the contrary notwithstanding,
and provided further that the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Property or any Contract Security may at the time be located,
the Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Owner Trustee to act as co-trustee, jointly with the Owner
Trustee, or separate
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<PAGE>
trustee or separate trustees, of all or any part of the Trust Property, and to
vest in such Person, in such capacity, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Administrator and the Owner
Trustee may consider necessary or desirable. If the Administrator shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Owner Trustee shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to Section 10.1 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.1.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or imposed upon
the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed the Owner Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties, and obligations
(including the holding of title to the Trust Property or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Owner Trustee. Each such instrument shall be filed with the Owner Trustee and a
copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
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<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Amendment.
(a) This Agreement may be amended by the Depositor and the Owner Trustee
with the consent of the Note Insurer, but without the consent of any of the
Certificateholder or Noteholders, (i) to cure any ambiguity, or (ii) to correct,
supplement or modify any provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Certificateholder or Noteholder or
the Note Insurer.
(b) This Agreement may also be amended from time to time, by the Depositor
and the Owner Trustee with the consent of a Certificate Majority of the
Certificates and, if such amendment materially and adversely affects the
interests of Noteholders, the consent of a Note Majority (which consent of any
Holder of a Certificate or Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate or Note and of any
Certificate or Note issued upon the transfer thereof or in exchange thereof or
in lieu thereof whether or not notation of such consent is made upon the
Certificate or Note) for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates or Notes;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Contracts or distributions that shall be required to be made on any
Certificate or Note or the Class A-1 Interest Rate, the Class A-2 Interest Rate,
the Class M-1 Interest Rate, the Class M-2 Interest Rate, the Class B-1 Interest
Rate or the Class B-2 Interest Rate, or (b) reduce the aforesaid percentage
required to consent to any such amendment or any waiver hereunder, without the
consent of the Holders of all Certificates and Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Rating Agency and to the Note Insurer.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and to the
Note Insurer unless such parties have previously received such notification.
(e) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to Section 11.1(b) to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Certificateholders, Noteholders and the Note Insurer provided
for in this Agreement) and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable requirements
as the Owner Trustee may prescribe, including the establishment of record dates.
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(f) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent to the execution and delivery of
such amendment have been satisfied. The Owner Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's
own rights, duties or immunities under this Agreement or otherwise.
(g) The Depositor and the Owner Trustee may amend this Agreement in order
to effect a "financial asset securitization investment trust" ("FASIT") election
for all or a portion of the Trust; provided, that (i) the Depositor delivers an
Opinion of Counsel to the Owner Trustee to the effect that such election will
not adversely affect the Federal or applicable state income tax characterization
of any outstanding Notes or Certificates or the taxability of the Trust under
Federal or applicable state income tax laws or otherwise have a material adverse
effect on the Certificates or Notes, and (ii) the requirements of clauses (c),
(d) and (f) above are met.
SECTION 11.2. No Recourse.
Each Certificateholder by accepting a Certificate acknowledges that such
Certificateholder's Certificates represent beneficial interests in the Trust
only and do not represent interests in or obligations of the Seller, the
Servicer, the Owner Trustee, the Indenture Trustee or any Affiliate of any of
the foregoing and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated in this Agreement, the
Certificates or the Related Documents.
SECTION 11.3. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard to the principles of conflicts of
laws thereof and the obligations, rights and remedies of the parties under this
Agreement shall be determined in accordance with such laws.
SECTION 11.4. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.5. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the
Trust. The fractional undivided interests in the Trust represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and Certificates upon execution thereof by the Owner
Trustee pursuant to Section 3.3 are and shall be deemed fully paid.
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<PAGE>
SECTION 11.6. Third-Party Beneficiaries.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. The
parties further agree that the Indenture Trustee, the Noteholders, the
Certificateholders and the Note Insurer shall be deemed to be third party
beneficiaries of this Agreement. Except as otherwise provided in this Agreement,
no other Person shall have any right or obligation hereunder.
SECTION 11.7. Counterparts.
For the purpose of facilitating its execution and for other purposes, this
Agreement may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
SECTION 11.8. Notices.
All demands, notices and communications under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Depositor, at the following address: c/o Green Tree Financial
Corporation, 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639, Attention: Chief Financial Officer, (b) in the case of the Owner
Trustee, at the Corporate Trust Office, (c) in the case of each Rating Agency,
at 99 Church Street, New York, New York 10007, Attention: ABS Monitoring
Department (for Moody's) and 25 Broadway, New York, New York 10004 (for Standard
& Poor's) Attention: Asset-Backed Surveillance, and (d) in the case of the Note
Insurer, at the following address: Financial Security Assurance Inc., 350 Park
Avenue, New York, New York 10022, Attn: Surveillance Department Re: Green Tree
Home Improvement and Home Equity Loan Trust 1998-F or at such other address as
shall be designated by any such party in a written notice to the other parties.
Notwithstanding the foregoing, any notice required or permitted to be mailed to
a Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register, and any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.9 Limitation of Liability
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually, or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Issuer under this Agreement or any other related documents.
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<PAGE>
IN WITNESS WHEREOF, the Depositor and the Owner Trustee have caused this
Trust Agreement to be duly executed by their respective officers as of the day
and year first above written.
GREEN TREE FINANCIAL CORPORATION,
as Depositor
By______________________________________
Name: Scott T. Young
Title: Vice President and Controller
WILMINGTON TRUST COMPANY,
as Owner Trustee
By______________________________________
Name:
Title:
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1998-F
THIS Certificate of Trust of GREEN TREE HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1998-F (the "Trust") is being duly executed and filed by the
undersigned trustee, to form a business trust under the Delaware Business Trust
Act (12 Del. Code, ss. 3801 et seq.) (the "Act").
1. Name. The name of the business trust formed hereby is GREEN TREE HOME
IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate
Trust Administration.
3. This Certificate of Trust will be effective December 30, 1998.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate of
Trust in accordance with Section 3811(a) of the Act.
WILMINGTON TRUST COMPANY,
as trustee
By
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
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EXHIBIT B
FORM OF CERTIFICATE
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT
TO THE NOTES TO THE EXTENT DESCRIBED IN THE INDENTURE
REFERRED TO HEREIN.
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY
LOAN TRUST 1998-F
evidencing the beneficial interest in the Trust, as defined below, the property
of which includes a pool of home improvement contracts and promissory notes and
home equity loans secured by mortgages, deeds of trust or security deeds on
certain real property which is subject to the home improvement or home equity
loan to which it relates, all sold to the Trust by Green Tree Financial
Corporation.
This Certificate does not represent an obligation of, or an interest in, Green
Tree Financial Corporation or any affiliate thereof.
Certificate No. Percentage Interest: ____%
First Payment Date:
January 15, 1999
Servicer:
Green Tree Financial Corporation
This Certificate may not be acquired by (a) an employee benefit plan (as defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(b) a plan described in Section 4975(e)(1) of the Code or (c) any entity whose
underlying assets include plan assets by reason of such plan's investment in the
entity (including an insurance company acting on behalf of its general account)
(each, a "Benefit Plan Investor"). Prior to its purchase of this Certificate,
the proposed transferee of such Certificate must certify and covenant in writing
(in the form of letter attached as Exhibit C to the Trust Agreement) to the
Seller, the Servicer, the Owner Trustee and the Underwriters that it is not a
Benefit Plan Investor or that it is an insurance company general account and
that its purchase of this Certificate will satisfy certain conditions specified
in the exemptive relief granted by, and the regulations proposed by, the
Department of Labor) and that it will dispose of the Certificate within a
prescribed period of time if such conditions cease to be
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<PAGE>
satisfied or if the Company, the Owner Trustee, the Underwriters or the Servicer
furnishes to the insurance company an opinion of counsel to the effect that the
insurance company's holding of the Certificate in its general account causes the
assets of the Trust to be considered "plan assets" under ERISA.. Any transfer of
this Certificate in violation of the foregoing shall be void and of no effect.
THIS CERTIFIES THAT _____________________________ is the registered owner
of a nonassessable, fully paid, fractional undivided interest in the Green Tree
Home Improvement And Home Equity Loan Trust 1998-F (the "Trust"). The Trust was
created pursuant to a Trust Agreement, dated as of December 1, 1998 (the "Trust
Agreement"), between Green Tree Financial Corporation, as depositor (the
"Depositor"), and Wilmington Trust Company, not in its individual capacity but
solely as Owner Trustee (the "Owner Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Trust Agreement or the Sale and Servicing Agreement, dated as of
December 1, 1998 (the "Sale and Servicing Agreement"), between the Trust and
Green Tree Financial Corporation (the "Seller"), in its individual capacity and
as servicer (the "Servicer").
This Certificate is one of the duly authorized Certificates issued under
the Trust Agreement (herein called the "Certificates"). The Trust has also
issued under the Indenture, dated as of December 1, 1998, between the Trust and
U.S. Bank Trust National Association, as trustee, the Notes (the "Notes")
designated as the Class A-1, Class A-2, Class M-1, Class M-2, Class B-1 and
Class B-2 Notes. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. The property of the Trust includes (as more fully
described in the Trust Agreement) a pool of home improvement contracts and
promissory notes and home equity loans (the "Contracts") which are secured by
mortgages, deeds of trust or security deeds on certain real property which is
the subject of the home improvement or home equity loans to which it relates,
certain monies due thereunder on or after the Cutoff Date, an assignment of the
Seller's security interests in the related real property, certain bank accounts
and property (including the right to receive Liquidation Proceeds) securing the
Contracts, and proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Payment Date"), commencing on January 15, 1999, to the person
in whose name this Certificate is registered at the close of business on the
Business Day immediately preceding such Payment Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the amounts then
distributable on the Certificates to the extent of the funds available therefor.
The Certificateholder, by its acceptance of a Certificate, covenants and
agrees that it will not at any time institute against or join in any institution
against the Depositor or the Trust of any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Certificates, the Notes, the Trust Agreement or
any of the Related Documents.
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<PAGE>
Except as provided in the Trust Agreement, distributions on this
Certificate will be made by the Paying Agent by check or money order mailed to
the Certificateholder of record in the Certificate Register without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Paying Agent of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Owner Trustee. The Record Date otherwise
applicable to distributions shall not be applicable to such final distribution.
The Certificates do not represent an obligation of, or an interest in, the
Depositor, the Servicer, the Owner Trustee or any Affiliate of any of them. The
Certificates are limited in right of payment to certain collections and
recoveries respecting the Contracts, all as more specifically set forth in the
Trust Agreement. A copy of the Trust Agreement may, upon request, be examined by
any Certificateholder during normal business hours at the principal office of
the Depositor and at such other places, if any, designated by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the Depositor and the Owner Trustee. In certain limited
circumstances, the Trust Agreement may only be amended with the consent of the
Holders of Certificates evidencing not less than a Certificate Majority. Any
such consent by the Holder of this Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
As provided in the Trust Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the
Certificate Registrar upon surrender of this Certificate for registration of
transfer at the offices or agencies of the Certificate Registrar maintained by
the Owner Trustee in Wilmington, Delaware accompanied by a written instrument of
transfer in form satisfactory to the Owner Trustee and the Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Certificates of authorized denominations
evidencing the same aggregate fractional undivided interest in the Trust issued
to the designated transferee. The initial Certificate Registrar appointed under
the Trust Agreement is Wilmington Trust Company.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, Certificates are exchangeable for new Certificates of a like
interest, as requested by the Holder surrendering the same. No service charge
will be made for any such registration of transfer or exchange, but the Owner
Trustee may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Owner Trustee, the Certificate Registrar and any agent of the Owner
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for the purpose of receiving
distributions and for all other purposes, and neither the
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<PAGE>
Owner Trustee, the Certificate Registrar nor any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the disposition of all property held as part of the Trust. The Servicer or the
Seller may at its option purchase the corpus of the Trust at a price specified
in the Sale and Servicing Agreement, and such purchase of the Contracts and
other property of the Trust will effect early retirement of the Certificates;
provided, however, such right of purchase is exercisable only as of a Record
Date as of which the Pool Scheduled Principal Balance is less than or equal to
10% of the Cutoff Date Pool Principal Balance.
The recitals contained herein shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this Certificate or of any
Contract or related document.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual or facsimile signature,
this Certificate shall not entitle the Holder hereof to any benefit under the
Trust Agreement or the Sale and Servicing Agreement or be valid for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in
its individual capacity has caused this Certificate to be duly executed.
Dated: ____________, ____
GREEN TREE HOME IMPROVEMENT
AND HOME EQUITY LOAN TRUST
1998-F
By WILMINGTON TRUST COMPANY, not in its
individual capacity but solely on
behalf of the Issuer as Owner Trustee
under the Trust Agreement
By
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
Owner Trustee
By
------------------------------------------
as Authenticating Agent
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________________ (PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE)
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *
------------------------
Signature Guaranteed:
*
------------------------
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-7
<PAGE>
EXHIBIT C
FORM OF REPRESENTATION LETTER AND CERTIFICATION
_____, 199_
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, MN 55102
Attention: Chief Financial Officer
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as Representative of the several Underwriters
250 Vesey Street
World Financial Center
North Tower - 10th Floor
New York, New York 10281
Re: Green Tree Home Improvement and Home Equity Loan Trust 1998-F
Ladies and Gentlemen:
This is to notify you as to the transfer of Green Tree Home Improvement
and Home Equity Loan Trust 1998-F Certificate, No ____.
The undersigned is the holder of the Certificate and with this notice
hereby deposits with the Trustee a certificate representing the Certificate and
requests that Certificates in the same percentage interest be issued and
executed on behalf of the Trust and authenticated by the Trustee, as specified
in the Trust Agreement, and registered to the purchaser on ________,____, as
follows:
Name:
Denominations:
Address:
Taxpayer I.D. No.:
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In connection with the proposed purchase, the undersigned hereby confirms
that:
1. The undersigned either:
(a) is not (i) an "employee benefit plan" (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), including governmental plans and church plans, (ii) a plan
described in Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended (the "Code"), including individual retirement accounts and Keogh
plans, or (iii) any other entity whose underlying assets include "plan
assets" (as defined in United States Department of Labor ("DOL")
Regulation Section 2510.3-101, 29 C.F.R. ss. 2510.3-101 or otherwise under
ERISA) by reason of a plan's investment in the entity, including, without
limitation, an insurance company general account, or
(b) is an insurance company acting on behalf of a general account and (i)
on the date hereof less than 25% of the assets of such general account (as
reasonably determined by us) constitute "plan assets" for purposes of
Title I of ERISA and Section 4975 of the Code, (ii) the purchase and
holding of such Certificate are eligible for exemptive relief under
Sections (1) and (3) of Prohibited Transaction Class Exemption 95-60, and
(iii) the undersigned agrees that if, after the undersigned's initial
acquisition of the Certificates, at any time during any calendar quarter
(A) 25% or more of the assets of such general account (as reasonably
determined by us no less frequently than each calendar quarter) constitute
"plan assets" for purposes of Title I of ERISA or Section 4975 of the Code
and no exemption or exception from the prohibited transaction rules
applies to the continued holding of the Certificates under Section 401(c)
of ERISA and the final regulations thereunder or under an exemption or
regulation issued by the DOL under ERISA or (B) the Company, the Owner
Trustee, the Underwriters or the Servicer furnishes to the insurance
company an opinion of counsel to the effect that the holding of such
Certificate in the insurance company's general account causes the assets
of the Trust to be considered "plan assets" (within the meaning of DOL
Regulation Section 2510.3-101, 29 C.F.R. ss. 2510.3-101 or otherwise under
ERISA), we will dispose of all Certificates issued by the Trust then held
in our general account by the end of the next following calendar quarter.
2. The undersigned understands that any purported transfer of any
Certificate in contravention of the restrictions and conditions set forth in
paragraph 1 above (including any violation of the representation in paragraph 1
by an investor who continues to hold a Certificate occurring any time after the
transfer in which it acquired such Certificate) shall be null and void, and the
purported transferee shall not be recognized by the Trust or any other person as
a Certificateholder for any purpose.
3. The person signing this letter on behalf of the ultimate beneficial
purchaser of the Certificates has been duly authorized by such beneficial
purchaser of the Certificates to do so.
4. The Certificates purchased by the undersigned should be registered in
the name and issued in the denominations set forth on Schedule 1 hereto. All
payments on the Certificates
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held by the undersigned should be wired in accordance with the instructions set
forth on Schedule 1 hereto unless the undersigned otherwise notifies the Trustee
in writing.
You are entitled to rely upon this letter, and the undersigned understands
that, in granting their respective consents to the purchase of Certificates, the
Company, the Servicer, the Trustee and the Underwriters will rely on the
undersigned's representations and warranties in this letter and on the
undersigned's certifications in the documents delivered by the undersigned to
the Company, the Servicer, the Trustee or the Underwriters in conjunction with
the purchase of Certificates by the undersigned. You are irrevocably authorized
to produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
[NAME OF HOLDER OF CERTIFICATE]
By: __________________________
Name, Chief Financial
or other Executive Officer
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Schedule 1
Registration and Payment Instructions
Registration Instructions:
Full Legal Name of Purchaser: _______________________________________________
Name in Which Certificates Should be Registered: ____________________________
Number and Denomination of Certificates: ____________________________________
_____________________________________________________________________________
Payment Instructions:
Name of Bank: __________________________________
Address of Bank: __________________________________
Account Name: __________________________________
Account Number: __________________________________
ABA Number: __________________________________
Reference: __________________________________
Notice Information:
Address: __________________________________
__________________________________
Attention: __________________________________
Telephone: __________________________________
Telefax: __________________________________
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Exhibit 4.4
================================================================================
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
ADMINISTRATION AGREEMENT
among
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
as Issuer
and
GREEN TREE FINANCIAL SERVICING CORPORATION
as Administrator
and
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Indenture Trustee
Dated as of December 1, 1998
================================================================================
<PAGE>
This ADMINISTRATION AGREEMENT dated as of December 1, 1998 (this
"Agreement"), among Green Tree Home Improvement and Home Equity Loan Trust
1998-F, a Delaware business trust (the "Issuer"), Green Tree Financial Servicing
Corporation, a Delaware corporation, as administrator (the "Administrator"), and
U.S. Bank Trust National Association, a national banking association, not in its
individual capacity but solely as Indenture Trustee (the "Indenture Trustee").
WITNESSETH:
WHEREAS, the Issuer is issuing six classes of Notes (collectively, the
"Notes"), pursuant to the Indenture dated as of December 1, 1998 (as amended and
supplemented from time to time, the "Indenture"), between the Issuer and the
Indenture Trustee, and the Issuer is issuing one class of Certificates (the
"Certificates") pursuant to the Trust Agreement, dated as of December 1, 1998
(as amended and supplemented from time to time, the "Trust Agreement"), between
Wilmington Trust Company, as owner trustee (the "Owner Trustee") and Green Tree
Financial Corporation, as depositor (capitalized terms used and not otherwise
defined herein shall have the meanings assigned to such terms in the Trust
Agreement or the Indenture);
WHEREAS, the Issuer has entered into certain agreements in connection with
the issuance of the Notes and the Certificates including: (i) the Trust
Agreement, (ii) a Sale and Servicing Agreement dated as of December 1, 1998 (as
amended and supplemented from time to time, the "Sale and Servicing Agreement"),
between the Issuer and Green Tree Financial Corporation, a Delaware corporation,
as seller (in such capacity, the "Seller") and servicer (in such capacity, the
"Servicer"), (iii) a Letter of Representations dated December 30, 1998 (as
amended and supplemented from time to time, the "Note Depository Agreement"),
among the Issuer, the Indenture Trustee, the Administrator and The Depository
Trust Company ("DTC") relating to the Notes; and (iv) the Indenture (the Trust
Agreement, the Sale and Servicing Agreement, the Note Depository Agreement and
the Indenture being referred to hereinafter collectively as the "Related
Agreements");
WHEREAS, pursuant to the Related Agreements, the Issuer and the Owner
Trustee are required to perform certain duties in connection with (a) the Notes
and the collateral therefor pledged pursuant to the Indenture (the "Collateral")
and (b) the Certificates (the registered holders of such interests being
referred to herein as the "Owners");
WHEREAS, the Issuer and the Owner Trustee desire to have the Administrator
perform certain of the duties of the Issuer and the Owner Trustee referred to in
the preceding clause and to provide such additional services consistent with the
terms of this Agreement and the Related Agreements as the Issuer and the Owner
Trustee may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Owner Trustee on the terms set forth herein;
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NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Duties of the Administrator.
(a) Duties with Respect to the Note Depository Agreement and the
Indenture. (i) The Administrator agrees to perform all its duties as
Administrator and the duties of the Issuer and the Owner Trustee under the
Note Depository Agreement. In addition, the Administrator shall consult
with the Owner Trustee regarding the duties of the Issuer or the Owner
Trustee under the Indenture and the Note Depository Agreement. The
Administrator shall monitor the performance of the Issuer and shall advise
the Owner Trustee when action is necessary to comply with the Issuer's or
the Owner Trustee's duties under the Indenture and the Note Depository
Agreement. The Administrator shall prepare for execution by the Issuer, or
shall cause the preparation by other appropriate persons of, all such
documents, reports, filings, instruments, certificates and opinions that
shall be the duty of the Issuer or the Owner Trustee to prepare, file or
deliver pursuant to the Indenture and the Note Depository Agreement. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that is the duty of the Issuer or the Owner Trustee to take pursuant
to the Indenture including, without limitation, such of the foregoing as
are required with respect to the following matters under the Indenture
(references are to sections of the Indenture):
(A) the duty to cause the Note Register to be kept and to give
the Indenture Trustee notice of any appointment of a new Note
Registrar and the location, or change in location, of the Note
Register (Section 2.04);
(B) the notification of Noteholders of the final principal
payment on their Notes (Section 2.07(b));
(C) the preparation of or obtaining of the documents and
instruments required for authentication of the Notes and delivery of
the same to the Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release
of collateral (Section 4.04);
(E) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the
Indenture regarding funds held in trust (Section 3.03);
(F) the direction to the Indenture Trustee to deposit moneys with
Paying Agents, if any, other than the Indenture Trustee (Section
3.03);
(G) the obtaining and preservation of the Issuer's qualification
to do business in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and
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enforceability of the Indenture, the Notes, the Indenture Collateral
and each other instrument and agreement included in the Trust Estate
(Section 3.04);
(H) the preparation of all supplements and amendments to the
Indenture and all financing statements, continuation statements,
instruments of further assurance and other instruments and the taking
of such other action as is necessary or advisable to protect the Trust
Estate (Section 3.05);
(I) the delivery of the Opinion of Counsel on the Closing Date
and the annual delivery of Opinions of Counsel as to the Trust Estate,
and the annual delivery of the Officer's Certificate and certain other
statements as to compliance with the Indenture (Sections 3.06 and
3.09);
(J) the identification to the Indenture Trustee in an Officer's
Certificate of a Person with whom the Issuer has contracted to perform
its duties under the Indenture (Section 3.07(b));
(K) the notification of the Indenture Trustee and the Rating
Agencies of an Event of Termination under the Sale and Servicing
Agreement and, if such an Event of Termination arises from the failure
of the Servicer to perform any of its duties under the Sale and
Servicing Agreement with respect to the Contracts, the taking of all
reasonable steps available to remedy such failure (Sections 3.07(d));
(L) the duty to cause the Servicer to fulfill its obligations
under the Sale and Servicing Agreement (Section 3.14);
(M) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.11(b));
(N) the delivery of written notice to the Indenture Trustee and
the Rating Agencies of each Event of Default under the Indenture and
each default by the Servicer or the Seller under the Sale and
Servicing Agreement (Section 3.18);
(O) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officer's Certificate and the obtaining of the Opinion of Counsel and
(if required) the Independent Certificate relating thereto (Section
4.01);
(P) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Trust Estate in a commercially
reasonable manner if an Event of Default shall have occurred and be
continuing (Section 5.04);
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<PAGE>
(Q) the preparation and delivery of notice to Noteholders of the
removal of the Indenture Trustee and the appointment of a successor
Indenture Trustee (Section 6.08);
(R) the preparation of any written instruments required to
confirm more fully the authority of any co-trustee or separate trustee
and any written instruments necessary in connection with the
resignation or removal of any co-trustee or separate trustee (Section
6.08 and 6.10);
(S) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee
is not the Note Registrar (Section 7.01);
(T) the preparation and, after execution by the Issuer, the
filing with the Commission, any applicable state agencies and the
Indenture Trustee of documents required to be filed on a periodic
basis with, and summaries thereof as may be required by rules and
regulations prescribed by, the Commission and any applicable state
agencies and the transmission of such summaries, as necessary, to the
Noteholders (Section 7.03);
(U) the opening of one or more accounts in the Issuer's name, the
preparation and delivery of Issuer Orders, Officer's Certificates and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Section
8.02 and 8.03);
(V) the preparation of Issuer Orders and the obtaining of
Opinions of Counsel with respect to the execution of supplemental
indentures and the mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.01, 9.02 and 9.03);
(W) the execution and delivery of new Notes conforming to any
supplemental Indenture (Section 9.06);
(X) the duty to notify Noteholders of redemption of the Notes or
to cause the Indenture Trustee to provide such notification (Section
10.02);
(Y) the preparation and delivery of all Officer's Certificates,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action
under the Indenture (Section 11.01(a));
(Z) the preparation and delivery of Officer's Certificates and
the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.01(b));
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(AA) the notification of the Rating Agencies, upon the failure of
the Indenture Trustee to give such notification, of the information
required pursuant to Section 11.04 of the Indenture (Section 11.04);
(AB) the preparation and delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment
and notice provisions (Section 11.06);
(AC) the recording of the Indenture, if applicable (Section
11.15); and
(AD) the preparation of Definitive Notes in accordance with the
Instructions of the Depository (Section 2.11).
(ii) The Administrator will:
(A) pay the Indenture Trustee (and any separate trustee or
co-trustee appointed pursuant to Section 6.10 of the Indenture (a
"Separate Trustee")) from time to time reasonable compensation for all
services rendered by the Indenture Trustee or Separate Trustee, as the
case may be, under the Indenture (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 in the Indenture,
reimburse the Indenture Trustee or any Separate Trustee upon its
request for all reasonable expenses, disbursements and advances
incurred or made by the Indenture Trustee or Separate Trustee, as the
case may be, in accordance with any provision of the Indenture
(including the reasonable compensation, 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;
(C) indemnify the Indenture Trustee and any Separate Trustee and
their respective agents for, and hold them harmless against any
losses, liability or expense incurred without negligence or bad faith
on their part, arising out of or in connection with the acceptance or
administration of the transactions contemplated by the Indenture,
including the reasonable costs and expenses of defending themselves
against any claim or liability in connection with the exercise or
performance of any of their powers or duties under the Indenture; and
(D) indemnify the Owner Trustee and its agents for, and hold them
harmless against, any losses, liability or expense incurred without
gross negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the transactions
contemplated by the Trust Agreement, including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or
duties under the Trust Agreement.
(b) Additional Duties. (i) In addition to the duties of the Administrator
set forth above, the Administrator shall perform such calculations and shall
prepare or shall cause the preparation by
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other appropriate persons of, and shall execute on behalf of the Issuer or the
Owner Trustee, all such documents, reports, filings, instruments, certificates,
notices and opinions that it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to the Related Agreements or
Section 5.5(a)(i), (ii), (iii) or (v) of the Trust Agreement or Section 7.04(b)
or (c) of the Sale and Servicing Agreement, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the Issuer or
the Owner Trustee to take pursuant to the Related Agreements. In furtherance
thereof, the Owner Trustee shall, on behalf of itself and of the Issuer, execute
and deliver to the Administrator and to each successor Administrator appointed
pursuant to the terms hereof, one or more powers of attorney substantially in
the form of Exhibit A hereto, appointing the Administrator the attorney-in-fact
of the Owner Trustee and the Issuer for the purpose of executing on behalf of
the Owner Trustee and the Issuer all such documents, reports, filings,
instruments, certificates and opinions. Subject to Section 5 of this Agreement,
and in accordance with the directions of the Owner Trustee, the Administrator
shall administer, perform or supervise the performance of such other activities
in connection with the Indenture Collateral (including the Related Agreements)
as are not covered by any of the foregoing provisions and as are expressly
requested by the Owner Trustee and are reasonably within the capability of the
Administrator. Such responsibilities shall include the obtainment and
maintenance of any licenses required to be obtained or maintained by the Issuer
under the Delaware business trust statute (Chapter 38 of Title 12 of The
Delaware Code, 12 Del. Code ss. 3801 et seq. (the "Delaware Business Trust
Statute"). In addition, the Administrator shall promptly notify the Indenture
Trustee and the Owner Trustee in writing of any amendment to the Delaware
Business Trust Statute that would affect the duties or obligations of the
Indenture Trustee or the Owner Trustee under any Related Agreement and shall
assist the Indenture Trustee or the Owner Trustee in its obtainment and
maintenance of any licenses required to be obtained or maintained by the
Indenture Trustee or the Owner Trustee thereunder. In connection therewith, the
Administrator shall cause the Seller to pay all fees and expenses under such
Act.
(ii) Notwithstanding anything in this Agreement or the Related Agreements
to the contrary, the Administrator shall be responsible for promptly notifying
the Owner Trustee in the event that any withholding tax is imposed on the
Trust's payments (or allocations of income) to an Owner as contemplated in
Section 5.2(f) of the Trust Agreement. Any such notice shall specify the amount
of any withholding tax required to be withheld by the Owner Trustee pursuant to
such provision.
(iii) Notwithstanding anything in this Agreement or the Related Agreements
to the contrary, the Administrator shall be responsible for performance of the
duties set forth in Section 5.5(a)(i), (ii), (iii), (iv) and (v) of the Trust
Agreement with respect to, among other things, accounting and reports to Owners.
(iv) The Administrator shall satisfy its obligations with respect to
clauses (ii) and (iii) above by retaining, at the expense of the Issuer payable
by the Administrator, a firm of independent public accountants (the
"Accountants") acceptable to the Owner Trustee, which shall perform the
obligations of the Administrator thereunder.
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(v) The Administrator shall perform the duties of the Administrator
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Owner Trustee, and any other
duties expressly required to be performed by the Administrator under the Trust
Agreement.
(vi) In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions or otherwise
deal with any of its affiliates; provided, however, that the terms of any such
transactions or dealings shall be in accordance with any directions received
from the Issuer and shall be, in the Administrator's opinion, no less favorable
to the Issuer than would be available from unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to matters that in the
reasonable judgment of the Administrator are non-ministerial, the Administrator
shall not take any such action unless within a reasonable time before the taking
of such action, the Administrator shall have notified the Owner Trustee of the
proposed action and the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of the preceding sentence,
"non-ministerial" shall include, without limitation:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the Issuer
(other than in connection with the collection of the Contracts or Eligible
Investments);
(C) the amendment, change or modification of the Related Agreements;
(D) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) make any payments to
the Noteholders under the Related Agreements, (y) sell the Trust Estate pursuant
to Section 5.04 or 10.04 of the Indenture or Section 9.3 of the Trust Agreement
or (z) take any other action that the Issuer directs the Administrator not to
take on its behalf.
2. Records. The Administrator shall maintain appropriate books of account
and records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer, the Seller and the
Servicer at any time during normal business hours.
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3. Compensation. As compensation for the performance of the Administrator's
obligations under this Agreement and as reimbursement for its expenses related
thereto, the Administrator shall be entitled to a monthly fee to be determined
by the Seller and the Administrator, which shall be solely an obligation of the
Seller.
4. Additional Information to be Furnished to the Issuer. The Administrator
shall furnish to the Issuer from time to time such additional information
regarding the Indenture Collateral as the Issuer shall reasonably request.
5. Independence of the Administrator. For all purposes of this Agreement,
the Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Owner Trustee with respect to the manner in
which it accomplishes the performance of its obligations hereunder. Unless
expressly authorized by the Issuer, the Administrator shall have no authority to
act for or represent the Issuer or the Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner Trustee.
6. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them, or (iii) shall be deemed to confirm
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
7. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Owner Trustee or the Indenture
Trustee.
8. Term of Agreement; Resignation and Removal of Administrator. (a) This
Agreement shall continue in force until the dissolution of the Issuer, upon
which event this Agreement shall automatically terminate.
(b) The Administrator may resign from its duties hereunder by providing the
Issuer with at least 60 days' prior written notice.
(c) The Issuer may remove the Administrator without cause by providing the
Administrator with at least 60 days' prior written notice.
(d) At the sole option of the Issuer, the Administrator may be removed
immediately upon written notice of termination from the Issuer to the
Administrator if any of the following events shall occur:
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(i) the Administrator shall default in the performance of any of its
duties under this Agreement and, after notice of such default, shall not
cure such default within ten days (or, if such default cannot be cured in
such time, shall not give within ten days such assurance of cure as shall
be reasonably satisfactory to the Issuer);
(ii) a court having jurisdiction in the premises shall enter a decree
or order for relief, and such decree or order shall not have been vacated
within 60 days, in respect of the Administrator in any involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect or appoint a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for the Administrator or any
substantial part of its property or order the winding-up or liquidation of
its affairs; or
(iii) the Administrator shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, shall consent to the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official
for the Administrator or any substantial part of its property, shall
consent to the taking of possession by any such official of any substantial
part of its property, shall make any general assignment for the benefit of
creditors or shall fail generally to pay its debts as they become due.
The Administrator agrees that if any of the events specified in clauses
(ii) or (iii) of this Section shall occur, it shall give written notice thereof
to the Issuer and the Indenture Trustee within seven days after the happening of
such event.
(e) No resignation or removal of the Administrator pursuant to this Section
shall be effective until (i) a successor Administrator shall have been appointed
by the Issuer and (ii) such successor Administrator shall have agreed in writing
to be bound by the terms of this Agreement in the same manner as the
Administrator is bound hereunder.
(f) The appointment of any successor Administrator shall be effective only
after satisfaction of the Rating Agency Condition with respect to the proposed
appointment.
(g) Subject to Section 8(e) and 8(f), the Administrator acknowledges that
upon the appointment of a successor Servicer pursuant to the Sale and Servicing
Agreement, the Administrator shall immediately resign and such successor
Servicer shall automatically become the Administrator under this Agreement.
9. Action Upon Termination, Resignation or Removal. Promptly upon the
effective date of termination of this Agreement pursuant to Section 8(a) or the
resignation or removal of the Administrator pursuant to Section 8(b) or (c),
respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 8(a) deliver
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to the Issuer all property and documents of or relating to the Indenture
Collateral then in the custody of the Administrator. In the event of the
resignation or removal of the Administrator pursuant to Section 8(b) or (c),
respectively, the Administrator shall cooperate with the Issuer and take all
reasonable steps requested to assist the Issuer in making an orderly transfer of
the duties of the Administrator.
10. Notices. Any notice, report or other communication given hereunder
shall be in writing and addressed as follows:
(a) If to the Issuer or the Owner Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attn: Corporate Trust Administration
(b) If to the Administrator, to:
Green Tree Financial Servicing Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attn: Chief Financial Officer
(c) If to the Indenture Trustee, to:
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attn: Corporate Trust Administration, Structured Finance
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
11. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of the Owner Trustee,
without the consent of the Noteholders and the Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Noteholders or Certificateholders; provided that such amendment will not, in
the Opinion of Counsel satisfactory to the Indenture Trustee, materially and
adversely affect the interest of any Noteholder
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<PAGE>
or Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator, the Indenture Trustee with the written consent of the Owner
Trustee, the holders of Notes evidencing a Note Majority of each Class, the
holders of Certificates evidencing a Certificate Majority 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
Noteholders or the Certificateholders; provided, however, that no such amendment
may (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on Contracts or distributions that are
required to be made for the benefit of the Noteholders or the Certificateholders
or (ii) reduce the aforesaid percentage of the Notes and Certificates which are
required to consent to any such amendment, without the consent of the holders of
all the outstanding Notes and Certificates. Notwithstanding the foregoing, the
Administrator may not amend this Agreement without the permission of the Seller
and the Company, which permission shall not be unreasonably withheld.
12. Successors and Assigns. This Agreement may not be assigned by the
Administrator unless such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the satisfaction of the Rating
Agency Condition in respect thereof. An assignment with such consent and
satisfaction, if accepted by the assignee, shall bind the assignee hereunder in
the same manner as the Administrator is bound hereunder. Notwithstanding the
foregoing, this Agreement may be assigned by the Administrator without the
consent of the Issuer or the Owner Trustee to a corporation or other
organization that is a successor (by merger, consolidation or purchase of
assets) to the Administrator; provided that such successor organization executes
and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an
agreement in which such corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same manner as the
Administrator is bound hereunder. Subject to the foregoing, this Agreement shall
bind any successors or assigns of the parties hereto.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Minnesota, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
14. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
15. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall be an original, but all of which together shall
constitute but one and the same agreement.
16. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
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<PAGE>
17. Not Applicable to Green Tree Financial Servicing Corporation in Other
Capacities. Nothing in this Agreement shall affect any obligation Green Tree
Financial Servicing Corporation may have in any other capacity.
18. Limitation of Liability of Owner Trustee and Indenture Trustee. (a)
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by Wilmington Trust Company not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Wilmington Trust Company in its individual capacity or any beneficial owner of
the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by U.S. Bank Trust National Association not in
its individual capacity but solely as Indenture Trustee and in no event shall
U.S. Bank Trust National Association have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
19. Third-Party Beneficiary. The Owner Trustee is a third-party beneficiary
to this Agreement and is entitled to the rights and benefits hereunder and may
enforce the provisions hereof as if it were a party hereto.
20. Limitation of Liability. It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by Wilmington
Trust Company, not individually or personally but solely as Owner Trustee of
Green Tree Home Improvement and Home Equity Loan Trust 1998-F, in the exercise
of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Issuer is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Issuer, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or any other related documents.
- 12 -
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
GREEN TREE HOME IMPROVEMENT AND
HOME EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Owner Trustee
By:
-----------------------------------
Name:
Title:
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By:
-----------------------------------
Name:
Title:
GREEN TREE FINANCIAL SERVICING
CORPORATION, as Administrator
By:
-----------------------------------
Name:
Title:
- 13 -
<PAGE>
EXHIBIT A
POWER OF ATTORNEY
STATE OF )
)
COUNTY OF )
KNOW ALL MEN BY THESE PRESENTS, that Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as owner trustee
(the "Owner Trustee") for Green Tree Home Improvement and Home Equity Loan Trust
1998-F (the "Trust"), does hereby make, constitute and appoint Green Tree
Financial Servicing Corporation, as administrator under the Administration
Agreement dated as of December 1, 1998 (the "Administration Agreement"), among
the Trust, Green Tree Financial Servicing Corporation and U.S. Bank Trust
National Association, as Indenture Trustee, as the same may be amended from time
to time, and its agents and attorneys, as Attorneys-in-Fact to execute on behalf
of the Owner Trustee or the Trust all such documents, reports, filings,
instruments, certificates and opinions as it should be the duty of the Owner
Trustee or the Trust to prepare, file or deliver pursuant to the Related
Documents, or pursuant to Section 5.5(a)(i), (ii), (iii), (iv) or (v) of the
Trust Agreement, including, without limitation, to appear for and represent the
Owner Trustee and the Trust in connection with the preparation, filing and audit
of federal, state and local tax returns pertaining the Trust, and with full
power to perform any and all acts associated with such returns and audits that
the Owner Trustee could perform, including without limitation, the right to
distribute and receive confidential information, defend and assert positions in
response to audits, initiate and defend litigation, and to execute waivers of
restrictions on assessments of deficiencies, consents to the extension of any
statutory or regulatory time limit, and settlements.
All powers of attorney for this purpose heretofore filed or executed by the
Owner Trustee are hereby revoked.
A-1
<PAGE>
Capitalized terms that are used and not otherwise defined herein shall have
the meanings ascribed thereto in the Administration Agreement.
EXECUTED this ____ of December, 1998.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------------
Name:
Title:
STATE OF )
)
COUNTY OF )
Before me, the undersigned authority, on this day personally appeared
______________, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he/she signed the same for the
purposes and considerations therein expressed.
Sworn to before me this ____ day of _____________, 199__.
Notary Public - State of
A-2
<PAGE>
December 30, 1998
Merrill Lynch, Pierce, Fenner Wilmington Trust Company
& Smith Incorporated Rodney Square North
North Tower 1100 North Market Street
World Financial Center Wilmington, Delaware 19890-0001
New York, New York 10281
U.S. Bank Trust National Association
Lehman Brothers Inc. 180 East Fifth Street
Three World Financial Center St. Paul, MN 55101
New York, New York 10285
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Re: Green Tree Financial Corporation
Green Tree Home Improvement and Home Equity Loan Trust 1998-F
Ladies and Gentlemen:
We have acted as special counsel to Green Tree Financial Corporation, a
Delaware corporation ("Green Tree"), in connection with (a) the establishment of
Green Tree Home Improvement and Home Equity Loan Trust 1998-F, a Delaware
business trust (the "Trust"), pursuant to a Trust Agreement dated as of December
1, 1998 (the "Trust Agreement") between Green Tree and Wilmington Trust Company,
as Owner Trustee (the "Owner Trustee"); (b) Green Tree's execution of a Sale and
Servicing Agreement dated as of December 1, 1998, between Green Tree and the
Trust; and (c) Green Tree's execution of an Insurance and Indemnity Agreement,
dated as of December 1, 1998 (the "Insurance Agreement"), among Green Tree, the
Trust and Financial Security Assurance Inc. ("FSA"). The Trust will issue
(approximately) $450,000,000 aggregate amount of Notes (the "Notes") pursuant to
an Indenture dated as of
<PAGE>
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Lehman Brothers Inc.
Wilmington Trust Company
U.S. Bank Trust National Association
Financial Security Assurance Inc.
December 30, 1998
Page 2
December 1, 1998 (the "Indenture"), between the Trust and U.S. Bank Trust
National Association, as Trustee.
In connection with the issuance of the Notes and related transactions,
Green Tree has filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 (File No. 33-63305) (the "Registration Statement"), and
has prepared a prospectus dated October 9, 1998 the "Base Prospectus") and a
prospectus supplement dated December 16, 1998 (the "Prospectus Supplement" and
together with the Base Prospectus, the "Prospectus").
This opinion is being delivered pursuant to Section [2.02(_)] of the Sale
and Servicing Agreement, Section 4(b)(1) of the Underwriting Agreement, and
Section 3.01 of the Insurance Agreement. Capitalized terms used and not
otherwise defined herein have the meanings assigned to them in the Sale and
Servicing Agreement.
In rendering our opinion, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such documents, corporate
records, certificates of public officials and other instruments as we have
deemed necessary or advisable for purposes of this opinion, including the Sale
and Servicing Agreement and its Related Documents.
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. In rendering this
opinion, we have relied upon the representations and warranties set forth in the
Trust Agreement and have assumed that the Owner Trustee will at all times comply
with the requirements of the Trust Agreement and that the Notes will be issued
as described in the Prospectus Supplement.
Based on the foregoing, it is our opinion that the statements set forth in
the Base Prospectus under the headings "Prospectus Summary -- Tax Status",
"Certain Federal Income Tax Consequences" and "Certain State Income Tax
Consequences" and in the Prospectus Supplement under the headings "Summary of
the Terms of the Notes -- Tax Status" and "Certain
<PAGE>
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Lehman Brothers Inc.
Wilmington Trust Company
U.S. Bank Trust National Association
Financial Security Assurance Inc.
December 30, 1998
Page 3
Federal and State Income Tax Consequences", to the extent that they constitute
matters of law or legal consideration with respect thereto, including our
conclusions as set forth therein that for federal and Minnesota income tax
purposes (i) the Trust will be neither an association taxable as a corporation
nor a publicly traded partnership taxable as a corporation, nor a taxable
mortgage pool taxable as a corporation, and (ii) the Notes will constitute
indebtedness, are correct in all material respects.
Based on the federal income tax characterization of the Trust and the Notes
set forth above and the provisions of Minnesota law as of the date hereof, it is
our opinion that, for Minnesota income, franchise and excise tax purposes (i)
the Trust will not be classified as an association taxable as a corporation nor
as a publicly traded partnership taxable as a corporation nor as a taxable
mortgage pool taxable as a corporation, and (ii) the Notes will be treated as
debt. It is also our opinion that for holders of Notes who are not residents of,
or otherwise subject to tax in, Minnesota, ownership of a Note will not be a
factor in determining whether such holder is subject to Minnesota income,
franchise or excise taxes.
The opinion set forth herein is expressly subject to there being no
additional facts that would materially affect the validity of the assumptions
and conclusions set forth herein or upon which this opinion is based.
We express no opinion as to the laws of any jurisdiction other than the
laws of the State of Minnesota and the federal laws of the United States of
America. This opinion is delivered to you solely for your use. This opinion may
not be circulated or republished to, or relied upon by, any other person without
our prior written consent.
Very truly yours,
