<PAGE>
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 16, 1999
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller of
Conseco Finance Vehicle Trust 1999-B
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-91557-01 41-1859796
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification No.)
300 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)
-1-
<PAGE>
Item 1. Changes in Control of Registrant.
Not applicable.
Item 2. Acquisition or Disposition of Assets.
Not applicable.
Item 3. Bankruptcy or Receivership.
Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not applicable.
Item 5. Other Events.
On December 16, 1999, the Registrant issued $575,000,000 in aggregate
principal amount of Floating Rate Asset-Backed Notes. The Class A and
Class M notes were sold pursuant to a prospectus supplement, dated
December 10, 1999, to a prospectus dated December 10, 1999.
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-
<PAGE>
(c) Exhibits.
The following is filed herewith. The exhibit numbers correspond
with Item 601(b) of Regulation S-K.
Exhibit No. Description
----------- -----------
4.1 Trust Agreement between Conseco Finance
Securitizations Corp., as Depositor, and Wilmington
Trust Company, as Owner Trustee, dated as of
December 1, 1999.
4.2 Sale and Servicing Agreement between Conseco Finance
Vehicle Trust 1999-B, Conseco Finance Corp., as
Originator, Servicer and Guarantor, and Conseco
Finance Securitizations Corp., as Seller, dated as
of December 1, 1999.
4.3 Indenture between Conseco Finance Vehicle Trust
1999-B, as Issuer, and U.S. Bank Trust National
Association, as Indenture Trustee, dated as of
December 1, 1999.
4.4 Transfer Agreement between Conseco Finance Corp., as
Seller, and Conseco Finance Securitizations Corp.,
as Purchaser, dated as of December 1, 1999.
4.5 Administration Agreement among Conseco Finance
Vehicle Trust 1999-B, as Issuer, Conseco Finance
Securitizations Corp., as Administrator, and U.S.
Bank Trust National Association, as Indenture
Trustee, dated as of December 1, 1999.
5.1 Opinion of Dorsey & Whitney LLP as to legality.
8.1 Tax opinion of Dorsey & Whitney LLP dated December
16, 1999, relating to tax matters.
-3-
<PAGE>
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.
CONSECO FINANCE SECURITIZATIONS CORP.
By: /s/ Phyllis A. Knight
----------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
-4-
<PAGE>
EXHIBIT 4.1
CONSECO FINANCE VEHICLE TRUST 1999-B
TRUST AGREEMENT
Dated as of December 1, 1999
among
CONSECO FINANCE SECURITIZATIONS CORP.,
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..............................................1-3
SECTION 1.3. Calculations................................................1-3
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. Federal Income Tax Allocations..............................2-5
SECTION 2.12. Covenants of the Certificateholders.........................2-5
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 Owners.......................................3-3
SECTION 3.7. Access to List of Certificateholders' Names and Addresses...3-4
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
SECTION 5.3. Method of Payment...........................................5-3
-i-
<PAGE>
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. No Petition................................................11-2
SECTION 11.4. Governing Law..............................................11-2
SECTION 11.5. Severability of Provisions.................................11-2
SECTION 11.6. Certificates Nonassessable and Fully Paid..................11-3
SECTION 11.7. Third-Party Beneficiaries..................................11-3
SECTION 11.8. Counterparts...............................................11-3
-ii-
<PAGE>
SECTION 11.9. Notices...................................................11-3
SECTION 11.10. Limitation of Liability...................................11-4
Exhibit A -- Form of Certificate of Trust................................. A-1
Exhibit B -- Form of Class B Certificate.................................. B-1
Exhibit C -- Form of Representation Letter and Certification.............. C-1
-iii-
<PAGE>
THIS TRUST AGREEMENT, dated as of December 1, 1999, is made among
Conseco Finance Securitizations Corp., 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, 1999, among the Administrator, the Trust, and the Indenture Trustee,
as the same may be amended and supplemented from time to time.
Administrator: Conseco Finance 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.
Certificate Majority: means holders of Class B Certificates
representing more than 50% of the interests of the Certificateholders as a
whole.
Certificate Distribution Account: The account designated as the
Certificate Distribution Account in, and which is established and maintained
pursuant to, Section 5.1.
Certificate of Trust: The Certificate of Trust substantially in the
form of Exhibit A hereto, filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
1-1
<PAGE>
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 Class B
Certificate is registered in the Certificate Register.
CFVSC: Conseco Finance Vehicle Securitizations Corp., a Minnesota
corporation.
Class B Certificates: The Class B Asset-Backed Certificates evidencing
a beneficial interest of an Owner in the Trust, substantially in the form
attached as Exhibit B.
Code: The meaning assigned to such term in Section 5.2(f).
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.
Indemnified Parties: The meaning assigned to such term in Section 8.2.
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 Distribution Date, the close of
business on the last Business Day immediately preceding such Distribution Date.
Related Documents: The Transfer Agreement, the Sale and Servicing
Agreement, the Indenture, the Certificates, the Notes, the Administration
Agreement, the Note Depository Agreement, the Note Purchase Agreements 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.
1-2
<PAGE>
Sale and Servicing Agreement: The Sale and Servicing Agreement, dated
as of December 1, 1999 among the Trust, the Seller and Conseco Finance Corp., as
Originator and 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: Conseco Finance Securitizations Corp., 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 "Conseco Finance
Vehicle Trust 1999-B."
Trust Accounts: The Collection Account, the Certificate Distribution
Account, the Note Distribution Account and the Pre-Funding Account.
Trust Property: The property and proceeds of every description conveyed
pursuant to Section 2.5 hereof and Sections 2.01 and 2.03 of the Sale and
Servicing Agreement, together with the Trust Accounts (including all Eligible
Investments therein and all proceeds therefrom).
Underwriting Agreement: The Underwriting Agreement and related Terms
Agreement, each dated December 10, 1999, by and among Conseco Finance
Securitizations Corp., Conseco Finance Corp., and the underwriter named therein.
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.
[Reserved]
1-3
<PAGE>
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.
1-4
<PAGE>
ARTICLE II
CREATION OF TRUST
SECTION 2.1. Creation of Trust.
There is hereby formed a trust to be known as "Conseco Finance Vehicle
Trust 1999-B," 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 (net of the Pre-Funded
Amount, if any) 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
2-1
<PAGE>
(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.
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. It is the intention
and agreement of the parties hereto that, solely for income and franchise tax
purposes, the Trust shall be treated as a partnership, with the assets of the
partnership being the Contracts and the other Trust Property, the partners of
the partnership being the Certificateholders, and the Notes being debt of the
Partnership. 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, the Trust will file or cause to be
filed annual or other necessary returns, reports and other forms consistent with
the characterization of the Trust as a partnership for such tax purposes. On or
before the date hereof, the Owner Trustee shall file in the Office of the
Secretary of State the Certificate of Trust required by Section 3810(a) of the
Business Trust Statute, to be effective on the Closing Date. Effective as of the
date hereof, the
2-2
<PAGE>
Owner Trustee shall have all rights, powers and duties set forth herein and in
the Business Trust Statute with respect to accomplishing the purposes of the
Trust.
SECTION 2.7. Liability of the Certificateholders.
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 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 Minnesota,
and payments will be made by the Trust only from Delaware or 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 Certificates.
(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 Minnesota, 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.
2-3
<PAGE>
(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 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 articles of incorporation
or bylaws, or any indenture, agreement, mortgage, deed of trust or
other instrument to which it is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, or violate any law, order,
rule or regulation applicable to it of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or any of its properties.
(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 or the Notes.
2-4
<PAGE>
SECTION 2.11. Federal Income Tax Allocations.
Net income of the Trust for any month as determined for federal income
tax purposes (and each item of income, gain, loss, deduction and credit, if any,
entering into the computation thereof) shall be allocated:
(a) to the Certificateholders in equal proportions; and
(b) in the event the Noteholders of any Class are deemed to be partners
of the partnership created hereby, among such Noteholders as of the first Record
Date following the end of such month in proportion to their ownership of the
principal amount of Notes of such Class on such date, in an amount of such
income up to the sum of the Interest Amount for such Class for the related
Distribution Date, and the balance thereof shall be allocated to the
Certificateholders in accordance with clause (a) above. If the net income of the
Trust for any succeeding month is insufficient for the allocations to
Noteholders described in this clause (b), if applicable, net income shall first
be allocated to such Noteholders to make up such shortfall before being
allocated to Certificateholders as provided above.
In the event the Noteholders of any Class are deemed to be partners of
the partnership created hereby, net losses of the Trust, if any, for any month
as determined for federal income tax purposes (and each item of income, gain,
loss and deduction entering into the computation thereof) shall be allocated to
the Certificateholders to the extent the Certificateholders are reasonably
expected to bear the economic burden of such net losses, then net losses shall
be allocated among the Noteholders as of the first Record Date following the end
of such month in proportion to their ownership of principal amount of Notes of
such Class on such Record Date. Notwithstanding anything in this Agreement to
the contrary, the Certificateholders shall be allocated an aggregate of at least
1% of each item of income, profit, gain or loss of the Trust. The
Certificateholders are authorized to modify the allocations in this paragraph if
necessary or appropriate, in their sole discretion, for the allocations to
fairly reflect the economic income, gain or loss to the Certificateholders or
the Noteholders, or to comply with the provisions of the Code and the
accompanying Treasury Regulations.
SECTION 2.12. Covenants of the Certificateholders.
Each Certificateholder by becoming a Certificateholder agrees:
(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 such federal income tax
information 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.
2-5
<PAGE>
(c) until the completion of the events specified in Section 9.1(e), not
to, for any reason, institute proceedings for the Trust or the Seller, or 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.
2-6
<PAGE>
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 Class B Certificate shall be evidenced by a single certificate
issued on the Closing Date to CFVSC. 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 other Trust Property pursuant to the Sale and Servicing
Agreement, the Owner Trustee shall cause a single Certificate to be executed on
behalf of the Trust, authenticated and delivered to or upon the order of CFVSC.
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
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.
3-1
<PAGE>
(b) Upon surrender for registration of transfer of any Certificate at
the office or agency maintained pursuant to Section 3.8, and compliance with
subsection (c), 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 Trustee or any authenticating agent. At
the option of a Holder, Certificates may be exchanged for other Certificates of
the same class in authorized denominations of a like aggregate amount upon
surrender of the Certificates to be exchanged at the office or agency maintained
pursuant to Section 3.8.
(c) (1) No transfer of a Certificate shall be made by CFVSC or any
other Person unless such transfer is exempt from the registration requirements
of the Securities Act of 1933 (the "Act"), as amended, and any applicable state
securities laws or is made in accordance with the Act and laws. In the event
that any such transfer is to be made, (A) the Depositor may require a written
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from the Act and laws or is
being made pursuant to the Act and laws, which Opinion of Counsel shall not be
an expense of the Owner Trustee or the Depositor, and (B) the Owner Trustee
shall require the transferee to execute an investment letter substantially in
the form of Exhibit C attached hereto, which investment letter shall not be an
expense of the Owner Trustee or the Depositor. Any Certificateholder desiring to
effect such transfer shall, and does hereby agree to, indemnify the Owner
Trustee, the Depositor and the Certificate Registrar against any liability that
may result if the transfer is not so exempt or is not made in accordance with
such federal and state laws. In addition, no transfer of a Certificate shall be
made by CFVSC or any other person to an Affiliate of the Originator without (i)
the written Opinion of Counsel acceptable to and in form and substance
satisfactory to the Depositor that in the event the Originator became a debtor
under the United States Bankruptcy Code, a court exercising reasonable judgment
under then existing statutes and precedents would not order that the assets of
such Affiliate be consolidated with those of the Originator, which opinion shall
not be an expense of the Owner Trustee or the Depositor, and (ii) written
notification from each Rating Agency to the effect that such transfer will not
cause such Rating Agency to downgrade its then-current ratings, if any, of any
of the Notes below the lower of the then-current rating or the rating assigned
to such Notes as of the Closing Date by such Rating Agency.
(2) Any transfer, sale or other disposition not in compliance
with the provisions of this Section 3.4(c) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed to not be
the Certificateholder for any purpose hereunder, including, but not limited to,
the receipt of distributions on such Certificate, and shall be deemed to have no
interest whatsoever in such Certificate.
(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) a
pension, profit sharing or other employee benefit plan, or an individual
retirement account or Keogh plan,
3-2
<PAGE>
subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (a "Benefit Plan"), or (ii) 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 Benefit Plan's investment in the entity, including,
without limitation, an insurance company acting on behalf of its general
account.
(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, or applicable state securities law or the
Investment Company Act of 1940, as amended; 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 Certificates.
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,
3-3
<PAGE>
and neither the Owner Trustee, the Certificate Registrar nor any agent of the
Owner Trustee or the Certificate Registrar shall be affected by any notice to
the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Owner Trustee of a written request
therefor, a list, in such form as the Servicer may reasonably require, of the
names and addresses of the Certificateholders as of the most recent Record Date
for payment of distributions to Certificateholders. If 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 Trust
hereby appoints U.S. Bank Trust National Association as Paying Agent. 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
3-4
<PAGE>
Agent appointed by the Owner Trustee to execute and deliver to the Owner Trustee
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Owner Trustee that as Paying Agent, such successor Paying
Agent or additional Paying Agent will hold all sums, if any, held by it for
payment to the Certificateholders in trust for the benefit of the
Certificateholders entitled thereto until such sums shall be paid to such
Certificateholders. The Paying Agent shall return all unclaimed funds to the
Owner Trustee, and upon removal of a Paying Agent, such Paying Agent shall also
return all funds in its possession to the Owner Trustee. The provisions of
Sections 7.1, 7.3, 7.4 and 8.1 shall apply to the Owner Trustee also in its role
as Paying Agent for so long as the Owner Trustee shall act as Paying Agent and,
to the extent applicable, to any other Paying Agent appointed hereunder. Any
reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
3-5
<PAGE>
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
(i) such amendment would not materially and adversely affect the
interests of the Certificateholders, or (ii) the Note Purchase
Agreement Counterparty notifies the Owner Trustee that CFVSC has
defaulted in its obligation to purchase the Notes under the CFVSC Note
Purchase Agreement, in which event the Owner Trustee is hereby
instructed to execute any supplemental indenture without notice to or
consent of 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
4-1
<PAGE>
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 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.
4-2
<PAGE>
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 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
Distribution 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 Distribution Date pursuant to Section 5.2(a). The Depositor shall
cause the Seller to deposit in the Certificate Distribution Account an amount
equal to any net loss on such investments immediately as realized.
5-1
<PAGE>
SECTION 5.2. Application of Funds in Certificate Distribution Account.
(a) On each Distribution Date the Paying Agent will, based on the
information contained in the Monthly Report delivered on the related
Distribution 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 and deposited in the Certificate Distribution Account
pursuant to Section 6.04(a)(viii) of the Sale and Servicing Agreement:
(b) On the Distribution Date following the date on which amounts
received in respect of the Class B Certificateholder'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, 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 Distribution 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 Distribution Date immediately following such
deposit if such proceeds are not deposited in the Certificate Distribution
Account on a Distribution 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 Distribution Date following the date on which the Indenture
Trustee makes payments of money or property in respect of liquidation of the
Trust Property pursuant to Section 5.06 of the Indenture and deposits funds
received in connection with such liquidation in the Certificate Distribution
Account, the Paying Agent will distribute such funds to Certificateholders in
the manner described in Section 5.2(a).
(e) On each Distribution Date, the Owner Trustee shall send or cause to
be sent to each Certificateholder the statement required pursuant to Section
6.05 of the Sale and Servicing Agreement.
(f) 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"), the Paying Agent shall 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
5-2
<PAGE>
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 harmless against all claims or liability of
any kind arising in connection with or related to the Owner Trustee's or the
Paying Agent's reliance upon any documents, forms or information provided by any
Certificateholder to the Owner Trustee. 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.
SECTION 5.3. Method of Payment.
Subject to Section 9.1(c), distributions required to be made to
Certificateholders on any Distribution Date shall be made to each
Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such Holder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Certificate Registrar appropriate
written instructions at least five Business Days prior to such Distribution Date
and such Holder's Certificates in the aggregate evidence a denomination of not
less than $1,000,000, or, if 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 not be liable for any interest
thereon.
SECTION 5.5. Accounting; Reports; Tax Returns.
(a) It is the intention of the parties that 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 documents required
to be filed by the Trust with the Commission and otherwise take or cause to be
taken all such actions as are
5-3
<PAGE>
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 Class B Certificateholder to
sign such documents, in which case such documents shall be signed the Class B
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.
5-4
<PAGE>
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 Notes in the aggregate principal amount of $536,957,000, and the
Class M Notes in the aggregate principal amount of $38,043,000. In addition to
the foregoing, the Owner Trustee is authorized, but shall not be obligated, to
take all actions required of the Trust pursuant to the Related Documents. The
Owner Trustee is further authorized, on behalf of the Trust, to enter into the
Administration Agreement, to appoint a successor Administrator.
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 advised by counsel, that such action
is contrary to the terms hereof or of any Related Document or is otherwise
contrary to law.
6-1
<PAGE>
(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) 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
6-2
<PAGE>
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 action that would violate the
provisions of this Section.
6-3
<PAGE>
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.
6-4
<PAGE>
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 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;
7-1
<PAGE>
(f) the Owner Trustee shall not be liable for the default or misconduct
of the Administrator, the Paying Agents the Indenture Trustee or the Servicer
under any of the Related Documents or otherwise and the Owner Trustee shall have
no obligation or liability to monitor the performance of or to perform the
obligations of the Trust under this Agreement or the Related Documents that are
required to be performed by the Administrator under the Administration
Agreement, the Indenture Trustee under the Indenture, the Paying Agent under
this Agreement 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
7-2
<PAGE>
Trustee that such action will result in such consequences, the Owner Trustee
will appoint an additional or separate trustee to proceed with such action.
SECTION 7.2. Furnishing of Documents.
The Owner Trustee shall furnish to the 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
7-3
<PAGE>
vice president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its agents
or attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any Related Document.
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 and 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 Product or the
maintenance of any such perfection and priority of any security interest created
by any Contract in any Product, or for or with respect to the sufficiency of the
Trust Property or its ability to generate the payments to be distributed to
Certificateholders under this Agreement or the Noteholders under the Indenture,
including, without limitation: the existence, condition and ownership of any
Product; the existence and enforceability of any insurance thereon; the
existence and contents of any Contract or any computer or other record thereof;
the validity of the assignment of any Contract to the Trust or of any
intervening assignment; the completeness of any Contract; the performance or
enforcement of any Contract; the compliance by the Seller or the Servicer with
any warranty or representation made under any Related Document or in any related
document or the accuracy of any such warranty or representation or any action of
the Indenture Trustee or the Servicer taken in the name of the Owner Trustee.
7-4
<PAGE>
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.
7-5
<PAGE>
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 Conseco Finance Corp. 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 Conseco
Finance Corp. 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.
The Originator 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 the
Originator 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.
8-1
<PAGE>
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of the Trust.
(a) The respective obligations and responsibilities of the Depositor,
the General Partner and the Owner Trustee created by this Agreement and the
Trust created by this Agreement shall terminate upon the later of (i) the
maturity or other liquidation of the last Contract (including the purchase as of
any Distribution Date by the Certificateholder 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, or (iii) by the
written consent of 100% of the Noteholders and 100% of the Certificateholders.
In any case, there shall be delivered to the Owner Trustee, the Indenture
Trustee and the Rating Agencies an Opinion of Counsel that all applicable
preference periods under federal, state and local bankruptcy, insolvency and
similar laws have expired with respect to the payments pursuant to clause (ii);
provided, however, that in no event shall the trust created by this Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants living on the date of this Agreement of Rose Kennedy of the
Commonwealth of Massachusetts; and provided, further, that the rights to
indemnification under Section 8.2 shall survive the termination of the Trust.
The Servicer shall promptly notify the Owner Trustee of any prospective
termination pursuant to this Section 9.1. 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 given pursuant to Section 8.01(b) of the Sale
and Servicing Agreement, the Owner Trustee shall mail written notice to each
Certificateholder specifying (i) the Distribution Date upon which final payment
of the Certificates shall be made upon presentation and surrender of
Certificates at the office of the Paying Agent therein specified, (ii) the
amount of any such final payment, and (iii) that the Record Date otherwise
applicable to such Distribution Date is not 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 6.04 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
9-1
<PAGE>
and Servicing Agreement. Upon presentation and surrender of the Certificates,
the Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.2.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Owner Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that remain
subject to this Agreement. Any funds which are payable to Certificateholders
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Owner Trustee to The United Way (but only upon termination of this
Agreement), and the Certificateholders, by acceptance of their Certificates,
hereby waive any rights with respect to such funds.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
9-2
<PAGE>
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee.
The Owner Trustee shall at all times be a corporation (i) satisfying
the provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized
to exercise corporate trust powers; (iii) having a combined capital and surplus
of at least $50,000,000 and subject to supervision or examination by Federal or
State authorities; (iv) having (or having a parent which has) a long-term debt
rating of at least AA by Fitch (if rated by Fitch) or AA- by S&P 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
10-1
<PAGE>
and expenses, including any indemnity payments, due to the outgoing Owner
Trustee have been paid and until acceptance of appointment by the successor
Owner Trustee pursuant to Section 10.3. The 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 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. Any successor Owner Trustee appointed hereunder shall promptly
file an amendment to the Certificate of Trust as required by the Business Trust
Statute.
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
10-2
<PAGE>
Product may at the time be located, the Administrator and the Owner Trustee
acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Owner Trustee to act
as co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Property, and to vest in such Person,
in such capacity, such title to the Trust, or any part thereof, and, subject to
the other provisions of this Section, such powers, duties, obligations, rights
and trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, the Owner Trustee shall
have the power to make such appointment. No co-trustee or separate trustee under
this Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 10.1 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.1.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust Property or
any portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(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 X. 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
10-3
<PAGE>
lawful act under or in respect of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Owner Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
10-4
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Amendment.
(a) This Agreement may be amended by the Depositor and the Owner
Trustee, without the consent of any of the Certificateholders or Noteholders,
(i) to cure any ambiguity, or (ii) to correct, supplement or modify any
provisions in this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder or Noteholder.
(b) This Agreement may also be amended from time to time, by the
Depositor and the Owner Trustee with the consent of a Certificate Majority 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 Interest Rate
or the Class M 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.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee unless
such parties have previously received such notification.
(e) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to Section 11.1(b) to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Certificateholders and Noteholders provided for in this
Agreement) and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the Owner
Trustee may prescribe, including the establishment of record dates.
11-1
<PAGE>
(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
Depositor, 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. No Petition.
The Owner Trustee, by entering into this Trust Agreement, and each
Certificateholder, by accepting a Certificate, hereby covenant and agree that
they will not at any time institute against the Seller, the Issuer or the
Certificateholder, or join in any institution against the Seller, the Issuer or
the Certificateholder, 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, this Trust Agreement or any of the Related Documents.
SECTION 11.4. 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 11.5. 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
11-2
<PAGE>
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 11.6. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of
the Trust. The fractional undivided interests in the Trust represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and Certificates upon execution thereof by the Owner
Trustee pursuant to Section 3.3 are and shall be deemed fully paid.
SECTION 11.7. 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 and the
Certificateholders shall be deemed to be third party beneficiaries of this
Agreement to the extent expressly provided herein. However, the Owner Trustee
will not be deemed to be a fiduciary of the Indenture Trustee, the Noteholders
or the Certificateholders. Except as otherwise provided in this Agreement, no
other Person shall have any right or obligation hereunder.
SECTION 11.8. 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 11.9. 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 Conseco Finance Corp., 1100
Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota 55102-1639,
Attention: Chief Financial Officer, (b) in the case of the Owner Trustee, at the
Corporate Trust Office, and (c) in the case of each Rating Agency, One State
Street Plaza, 31st Floor, New York, New York 10004 (for Fitch) and 55 Water
Street, 35th Floor, New York, New York 10041 Attention: Asset-Backed
Surveillance (for Standard & Poor's) 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.
11-3
<PAGE>
SECTION 11.10. 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 Conseco Finance
Vehicle Trust 1999-B, 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.
11-4
<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.
CONSECO FINANCE SECURITIZATIONS CORP.,
as Depositor
By ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
as Owner Trustee
By ________________________________
Name:
Title:
Acknowledged (with respect to Section 8.2):
CONSECO FINANCE CORP.
By: _________________________
Name: _________________________
Title:_________________________
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
CONSECO FINANCE VEHICLE TRUST 1999-B
THIS Certificate of Trust of CONSECO FINANCE VEHICLE TRUST 1999-B (the
"Trust"), dated as of December 1, 1999, is being duly executed and filed by the
undersigned, a Delaware corporation, as trustee, to form a business trust under
the Delaware Business Trust Act (12 Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is CONSECO
FINANCE VEHICLE TRUST 1999-B.
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 16, 1999.
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: _____________________
A-1
<PAGE>
EXHIBIT B
FORM OF CLASS B CERTIFICATE
THIS CLASS B CERTIFICATE IS SUBORDINATED IN RIGHT OF
PAYMENT TO THE NOTES TO THE EXTENT DESCRIBED
IN THE SALE AND SERVICING AGREEMENT, THE
INDENTURE AND THE TRUST AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3.4 OF THE TRUST AGREEMENT REFERRED TO
HEREIN.
CONSECO FINANCE VEHICLE TRUST 1999-B
evidencing a beneficial interest in the Trust, as defined below, the property of
which includes a pool of retail installment sale contracts and promissory notes
secured by new and used commercial trucks and trailers and sold to the Trust by
Conseco Finance Securitizations Corp.
This Certificate does not represent an obligation of, or an interest in, Conseco
Finance Corp. or any affiliate thereof.
Certificate No. Percentage Interest: ____%
First Distribution Date:
January 17, 2000
Servicer:
Conseco Finance Corp.
This Certificate may not be acquired by (a) a pension, profit sharing
or other employee benefit plan, or an individual retirement account or Keogh
Plan, subject to Title I of ERISA or Section 4975 of the Internal Revenue Code
of 1986, as amended (a "Benefit Plan") or (b) an entity whose underlying assets
include plan assets by reason of such Benefit 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 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 Underwriter that it is not a Benefit Plan
Investor. Any transfer of this Certificate in violation of the foregoing shall
be void and of no effect.
B-1
<PAGE>
THIS CERTIFIES THAT Conseco Finance Vehicle Securitizations Corp. is
the registered owner of a nonassessable, fully paid, fractional undivided
interest in the Conseco Finance Vehicle Trust 1999-B (the "Trust"). The Trust
was created pursuant to a Trust Agreement, dated as of December 1, 1999 (the
"Trust Agreement"), between Conseco Finance Securitizations Corp., 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, 1999 (the "Sale and Servicing Agreement"), among the Trust, the
Depositor and Conseco Finance Corp., as Originator and Servicer.
This Certificate is the duly authorized Class B Certificate issued
under the Trust Agreement (herein called the "Class B Certificate"). The Trust
has also issued under the Indenture, dated as of December 1, 1999, between the
Trust and U.S. Bank Trust National Association, as trustee, the Asset-Backed
Notes (the "Notes") designated as the Class A and Class M Notes. This Class B
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes (as more fully described in the
Trust Agreement) a pool of retail installment sale contracts and promissory
notes (the "Contracts") for new and used commercial trucks and trailers (the
"Products"), certain monies due thereunder on or after the Cutoff Date, an
assignment of the Seller's security interests in the Products, certain bank
accounts and property (including the right to receive Liquidation Proceeds)
securing the Contracts, and proceeds of all of the foregoing.
Under the Trust Agreement, there will be distributed on the 15th day of
each month or, if such 15th day is not a Business Day, the next succeeding
Business Day (the "Distribution Date"), commencing on January 18, 2000, to the
person in whose name this Certificate is registered at the close of business on
the Business Day immediately preceding such Distribution Date (the "Record
Date"), such Certificateholder's fractional undivided interest in the amounts
then distributable on the Class B Certificate to the extent of the funds
available therefor.
It is the intent and agreement of the Depositor, the Servicer and the
Certificateholders that, for purposes of Federal income, state and local income
and franchise and any other income taxes, the Trust will be treated as a
partnership and the Certificateholders will be treated as partners in that
partnership. The Certificateholders, by acceptance of a Certificate, agree to
treat, and to take no action inconsistent with the treatment of, the
Certificates for such tax purposes as partnership interests in the Trust.
The Certificateholder, by its acceptance of a Class B 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.
B-2
<PAGE>
Except as provided in the Trust Agreement, distributions on this Class
B 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 Class B 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 Class B 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, Class B Certificates are exchangeable for new Class B
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
Class B Certificate is registered as the owner hereof for the purpose of
receiving distributions and for all other purposes, and neither
B-3
<PAGE>
the Owner Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Class B
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 Class B Certificateholder 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 20% 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 Class B 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.
B-4
<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: December 16, 1999
CONSECO FINANCE VEHICLE TRUST 1999-B
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: _________________________
B-5
<PAGE>
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Trust Agreement.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: _________________________________
as Authenticating Agent
B-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ____________________________________________________________ (PLEASE INSERT
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE)
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated: *
Signature Guaranteed:
*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatsoever. Such signature must be
guaranteed by a member firm of The New York Stock Exchange, Inc. or a commercial
bank or trust company.
B-7
<PAGE>
EXHIBIT C
FORM OF REPRESENTATION LETTER AND CERTIFICATION
___________________
Conseco Finance Securitizations Corp. Credit Suisse First Boston Corporation
1100 Landmark Towers Eleven Madison Avenue
345 St. Peter Street New York, New York 10010
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
Re: Conseco Finance Vehicle Trust 1999-B
Ladies and Gentlemen:
This is to notify you as to the transfer of Conseco Finance Vehicle
Trust 1999-B Class B Certificate, No ____.
The undersigned is the holder of the Class B Certificate and with this
notice hereby deposits with the Trustee a certificate representing the
Certificate and requests that Class B 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.:
C-1
<PAGE>
In connection with the proposed purchase, the undersigned hereby
confirms that:
1. The undersigned is not (a) a pension, profit sharing or other
employee benefit plan, or an individual retirement account or Keogh Plan,
subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (a "Benefit Plan") or (b) an entity whose underlying assets
include plan assets by reason of such Benefit Plan's investment in the entity
(including an insurance company acting on behalf of its general account) (each,
a "Benefit Plan Investor").
2. The undersigned understands that the Class B Certificate has not
been and will not be registered under the Securities Act of 1933 (the "1933
Act") and may be resold (which resale is not currently contemplated) only if
registered pursuant to the provisions of the 1933 Act or if an exemption from
registration is available, that Conseco Finance Securitizations Corp. is not
required to register the Class B Certificate and that any transfer must comply
with Section 3.4 of the Trust Agreement relating to the Certificates.
3. The undersigned will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Class B
Certificate.
4. The undersigned is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Class B Certificate and
is able to bear the economic risk of such investment.
5. The undersigned is acquiring the Class B Certificate as principal
for its own account (or for the account of one or more other institutional
investors for which it is acting as duly authorized fiduciary or agent) for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the undersigned's property shall at all times be and remain
within its control.
6. The undersigned understands that such Class B Certificate will bear
a legend substantially as set forth in the form of Class B Certificate included
in the Trust Agreement.
7. The undersigned agrees that it will obtain from any undersigned of
the Class B Certificate from it the same representations, warranties and
agreements contained in the foregoing paragraphs 1 through 6 and in this
paragraph 7.
8. The undersigned understands that any purported transfer of any Class
B Certificate in contravention of the restrictions and conditions set forth in
paragraphs 1 through 7 above (including any violation of the representation in
paragraph 1 by an investor who continues to hold a Class B Certificate occurring
any time after the transfer in which it acquired such Class B 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.
C-2
<PAGE>
9. The person signing this letter on behalf of the ultimate beneficial
purchaser of the Class B Certificate has been duly authorized by such beneficial
purchaser of the Class B Certificate to do so.
10. The Class B Certificate purchased by the undersigned should be
registered in the name set forth on Schedule 1 hereto. All payments on the Class
B Certificates held by the undersigned should be wired in accordance with the
instructions set forth on Schedule 1 hereto unless the undersigned otherwise
notifies the Owner 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 Class
B Certificate, the Depositor, the Servicer, the Trustee and the Underwriter 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 Depositor, the Servicer, the Owner Trustee or the Underwriter in
conjunction with the purchase of Class B Certificate 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
C-3
<PAGE>
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: ________________________________________________
C-4
<PAGE>
EXHIBIT 4.2
CONSECO FINANCE VEHICLE TRUST 1999-B
SALE AND SERVICING AGREEMENT
among
CONSECO FINANCE VEHICLE TRUST 1999-B
as Issuer
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller
and
CONSECO FINANCE CORP.
as Originator, Servicer and Guarantor
Dated as of December 1, 1999
<PAGE>
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
SECTION 2.03. Conveyance of the Subsequent Contracts...................2-3
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................3-1
SECTION 3.01. Representations and Warranties Regarding the Seller
and Originator and Covenants of the Originator...........3-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract.................................................3-2
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate...............................3-5
SECTION 3.04. Representations and Warranties Regarding the
Contract Files...........................................3-6
SECTION 3.05. Repurchase of Contracts for Breach of
Representations and Warranties...........................3-6
ARTICLE IV PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS................................4-1
SECTION 4.01. Custody of Contracts.....................................4-1
SECTION 4.02. Filings..................................................4-2
SECTION 4.03. Name Change or Relocation................................4-2
SECTION 4.04. Chief Executive Office...................................4-2
SECTION 4.05. Costs and Expenses.......................................4-2
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. Repossession.............................................5-5
SECTION 5.11. Commingling of Funds.....................................5-6
SECTION 5.12. Retitling; Security Interests............................5-6
SECTION 5.13. Servicer Advances........................................5-6
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer........5-6
-i-
<PAGE>
SECTION 5.15. Annual Report of Accountants.............................5-7
SECTION 5.16. Certain Duties of the Servicer Under the Trust
Agreement................................................5-7
SECTION 5.17. Annual Statement as to Compliance; Notice of
Servicer Termination Event...............................5-7
SECTION 5.18. Maintenance of Security Interests in Products............5-8
SECTION 5.19. Covenants, Representations, and Warranties of Servicer...5-8
SECTION 5.20. Purchase of Contracts Upon Breach of Covenant...........5-10
ARTICLE VI DISTRIBUTIONS; TRUST ACCOUNTS;
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. Distributions............................................6-3
SECTION 6.05. Statements to Securityholders............................6-4
SECTION 6.06. Pre-Funding Account......................................6-5
SECTION 6.07. Capitalized Interest Account.............................6-6
ARTICLE VII SERVICE TRANSFER...............................................7-1
SECTION 7.01. Event of Termination.....................................7-1
SECTION 7.02. Transfer.................................................7-2
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor.......7-2
SECTION 7.04. Notification to Securityholders..........................7-3
SECTION 7.05. Effect of Transfer.......................................7-3
SECTION 7.06. Transfer of Collection Account...........................7-4
SECTION 7.07. Limits on Liability......................................7-4
SECTION 7.08. Waiver of Past Defaults..................................7-4
ARTICLE VIII TERMINATION..................................................8-1
SECTION 8.01. Class B Certificateholder's Purchase Option;
Auction Sale; Accelerated Principal Distribution
Amount...................................................8-1
SECTION 8.02. Liquidation or Sale of Trust Estate......................8-2
ARTICLE IX INDEMNITIES.....................................................9-1
SECTION 9.01. Originator'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 Originator..................10-1
SECTION 10.03. Amendment...............................................10-2
SECTION 10.04. Notices.................................................10-3
SECTION 10.05. Merger and Integration..................................10-4
-ii-
<PAGE>
SECTION 10.06. Headings................................................10-5
SECTION 10.07. Governing Law...........................................10-5
SECTION 10.08. Limitation of Liability.................................10-5
Exhibit A -- Form of Assignment
Exhibit B -- Form of Certificate Regarding Repurchased Contracts
Exhibit C -- Form of Monthly Report
Exhibit D -- Form of Certificate of Servicing Officer
Exhibit E -- Form of Addition Notice
Exhibit F -- Form of Subsequent Transfer Instrument
Exhibit G -- Form of Officer's Certificate (Subsequent Transfer)
-iii-
<PAGE>
THIS SALE AND SERVICING AGREEMENT, dated as of December 1, 1999, among
Conseco Finance Vehicle Trust 1999-B (the "Trust"), Conseco Finance
Securitizations Corp., a corporation organized and existing under the laws of
the State of Minnesota, as Seller (the "Seller") and Conseco Finance Corp., a
corporation organized and existing under the laws of the State of Delaware, as
originator of the Contracts described herein (the "Originator"), and as Servicer
(the "Servicer").
WHEREAS, in the regular course of its business, Conseco Finance Corp.
purchases, originates and services certain retail installment sales contracts
and promissory notes for the purchase of commercial trucks and trailers (the
"Products"), each of which contracts provides for installment payments by or on
behalf of the purchaser and grants a lien on or security interest in a Product;
and
WHEREAS, the Seller, in the ordinary course of its business, acquires
pools of Contracts, as hereinafter defined, from Conseco Finance Corp. and
arranges the securitization of those Contracts; and
WHEREAS, the Seller, the Originator, the Servicer and the Trust wish to
set forth the terms and conditions pursuant to which the Trust will acquire the
"Contracts," as hereinafter defined, and the Servicer will service the
Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as provided herein:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. General.
(a) 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.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Indenture.
(c) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person include its permitted successors and assignees.
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.
"Accelerated Principal Distribution Amount" means, as to any
Distribution Date, the Amount Available remaining after payment of the amounts
described in clauses (i) through (iv)
1-1
<PAGE>
of Section 6.04(a) and the payment of the Total Principal Distribution Amount;
provided that the Accelerated Principal Distribution Amount for any Distribution
Date shall be zero unless:
(i) the aggregate Accelerated Principal Distribution Amount distributed
on prior Distribution Dates does not equal or exceed $3,093,065, and
the Accelerated Principal Distribution Amount to be distributed on such
Distribution Date, when added to the aggregate Accelerated Principal
Distribution Amount distributed on prior Distribution Dates, shall be
limited such that the aggregate Accelerated Principal Distribution
Amount distributed on that and all prior Distribution Dates is equal to
$3,093,065; or
(ii) such Accelerated Principal Distribution Amount is being
distributed in accordance with to Section 8.01(e).
"Addition Notice" means, with respect to the transfer of Subsequent
Contracts to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit E, which shall be given not later than five
Business Days prior to the related Subsequent Transfer
Date, of the Seller's designation of Subsequent Contracts to be sold to the
Trust and the aggregate Cut-off Date Principal Balance of such Subsequent
Contracts.
"Advance Payment" means, with respect to any Monthly Period, any
payment by an Obligor that was not due under the related Contract during or
before such Monthly Period and which payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement as the same may be
amended or supplemented from time to time.
"Amount Available" means, as to any Distribution Date, an amount equal
to the Collected Funds for that Distribution Date plus any amounts required to
be deposited in the Collection Account on or before such Distribution Date
pursuant to Sections 6.02, 6.06, 8.01 and 8.02 of this Agreement, Section 10.04
of the Indenture or Section 9.3 of the Trust Agreement.
"Amount Held for Future Distribution" means, as to any Distribution
Date, the total of the amounts held in the Collection Account on the last day of
the related Monthly Period on account of Advance Payments in respect of such
Monthly Period.
"Assignment" means the Assignment from the Seller to the Trust
substantially in the form of Exhibit A, whereby the Seller assigns the Initial
Contracts to the Trust.
1-2
<PAGE>
"Business Day" means any day other than (a) a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in Minneapolis,
Minnesota, New York, New York, Wilmington, Delaware or any other location of any
successor Servicer, successor Owner Trustee or successor Trustee are authorized
or obligated by law, executive order or governmental decree to be closed.
"Capitalized Interest Account" means the account established and
maintained pursuant to Section 6.07.
"Certificate Distribution Account" means the account established and
maintained pursuant to Section 6.01(c).
"Certificate Majority" means Holders of Certificates representing more
than 50% of the interest of the Certificates as a whole.
"Certificates" means the Class B Asset-Backed Certificates issued under
the Trust Agreement.
"CFVSC Note Purchase Agreement" means the Note Purchase Agreement,
dated as of December 16, 1999, between Credit Suisse First Boston, New York
Branch, and Conseco Finance Vehicle Securitizations Corp.
"Class" means pertaining to each Class of Notes or Certificates, as
applicable.
"Class A Notes" means the Class A Asset-Backed Notes issued by the
Trust pursuant to the Indenture.
"Class A Final Scheduled Distribution Date" means January 10, 2001,
subject to extension on or after the Mandatory Tender Date to the Distribution
Date in the month that is six months after the maturity date of the
then-outstanding Contract with the latest maturity date by 100% of the
Noteholders as provided in Section 9.07 of the Indenture.
"Class A Interest Amount" means, with respect to any Distribution Date,
an amount equal to interest accrued at the Class A Interest Rate on the Class A
Principal Balance from the preceding Distribution Date (or, in the case of the
first Distribution Date, from the Closing Date).
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A Notes on such Distribution Date pursuant to Section
8.02(c)(1)(i) of the Indenture is less than the Class A Interest Amount for such
Distribution Date.
"Class A Interest Rate" means a per annum rate of interest equal to one
month LIBOR plus 0.160%, but in no case more than 9.96%, calculated on the basis
of the actual number of days elapsed and a year of 360 days.
1-3
<PAGE>
"Class A LIBOR Carryforward Amount" means, with respect to any
Distribution Date (or the Mandatory Tender Date), an amount equal to the product
of
(i) the difference (but not less than zero) of (A) LIBOR for the
related Interest Accrual Period plus 0.160%, minus (B) the
Class A Interest Rate, times
(ii) the Class A Principal Balance, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360,
plus any Unpaid Class A LIBOR Carryforward Shortfall with respect to the
immediately preceding Distribution Date, plus an amount equal to the product of
(i) the Unpaid Class A LIBOR Carryforward Shortfall with respect
to the immediately preceding Distribution Date, times
(ii) LIBOR for the related Interest Accrual Period plus 0.160%, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360.
"Class A Principal Balance" means, as to any Distribution Date, the
Original Class A Principal Balance less all amounts distributed to Holders of
Class A Notes on any prior Distribution Date on account of principal pursuant to
Section 8.02(c) of the Indenture.
"Class M Final Scheduled Distribution Date" means January 10, 2001,
subject to extension on or after the Mandatory Tender Date to the Distribution
Date in the month that is six months after the maturity date of the
then-outstanding Contract with the latest maturity date by 100% of the
Noteholders as provided in Section 9.07 of the Indenture.
"Class M Interest Amount" means, with respect to any Distribution Date,
an amount equal to interest accrued at the Class M Interest Rate on the Class M
Principal Balance from the preceding Distribution Date (or, in the case of the
first Distribution Date, from the Closing Date).
"Class M Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class M Notes on such Distribution Date pursuant to Section
8.02(c)(2)(i) of the Indenture is less than the Class M Interest Amount for such
Distribution Date.
"Class M Interest Rate" means a per annum rate of interest equal to one
month LIBOR plus 0.420%, but in no case more than 9.96%, calculated on the basis
of the actual number of days elapsed and a year of 360 days.
1-4
<PAGE>
"Class M LIBOR Carryforward Amount" means, with respect to any
Distribution Date, an amount equal to the product of
(i) the difference (but not less than zero) of (A) LIBOR for the
related Interest Accrual Period plus 0.420%, minus (B) the
Class M Interest Rate, times
(ii) the Class M Principal Balance, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360,
plus any Unpaid Class M LIBOR Carryforward Shortfall with respect to the
immediately preceding Distribution Date, plus an amount equal to the product of
(i) the Unpaid Class M LIBOR Carryforward Shortfall with respect
to the immediately preceding Distribution Date, times
(ii) LIBOR for the related Interest Accrual Period plus 0.420%, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360.
"Class M Notes" means the Class M Asset-Backed Notes issued by the
Trust pursuant to the Indenture.
"Class M Principal Balance" means, as to any Distribution Date, the
Original Class M Principal Balance less all amounts distributed to Holders of
Class M Notes on prior Distribution Dates on account of principal pursuant to
Section 8.02(c) 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 Principal Balance in the case of a Class A
Note, and the Original Class M Principal Balance in the case of a Class M Note).
The aggregate Class Percentage Interests for each Class of Notes or Certificates
shall equal 100%.
"Class Principal Balance" means, as to any date, the Class A Principal
Balance or the Class M Principal Balance, as appropriate.
"Closing Date" means December 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
1-5
<PAGE>
"Collateral Security" means, with respect to any Contract, (i) the
security interests, if any, granted by or on behalf of the related Obligor with
respect thereto, including a first priority perfected security interest in the
related Product, (ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Contract, whether
pursuant to the agreement giving rise to such Contract or otherwise, together
with all financing statements signed by the Obligor describing any collateral
securing such Contract, (iii) all security agreements granting a security
interest in the related Product and all guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Contract whether pursuant to the agreement giving rise
to such Contract or otherwise, and (iv) all records in respect of such Contract.
"Collected Funds" means, as to any Distribution Date, an amount equal
to (a) the sum of (i) the amount on deposit in the Collection Account as of the
close of business on the last day of the related Monthly Period (exclusive of
any amounts deposited therein pursuant to Sections 8.01 or 8.02 of this
Agreement or Section 10.04 of the Indenture, (ii) any amounts required to be
deposited in the Collection Account on or before the Business Day immediately
preceding such Distribution Date pursuant to Sections 5.09 or 5.13, (iii) any
amounts deposited in the Collection Account pursuant to Section 6.07, and (iv)
any amount deposited in the Collection Account in respect of principal on the
Contracts (exclusive of any amounts deposited therein pursuant to Sections 6.06,
8.01 or 8.02 of this Agreement, Section 10.04 of the Indenture or Section 9.3 of
the Trust Agreement) after the last day of the related Monthly Period through
and including the third Business Day prior to the Distribution Date, but in no
event later than the 10th day of the month in which such Distribution Date
occurs, reduced by (b) the sum as of the close of business on the last day of
the related Monthly Period of (i) the Amount Held for Future Distribution, (ii)
amounts permitted to be withdrawn by the Trustee from the Collection Account
pursuant to clauses (b) - (e), inclusive, of Section 6.03; and (iii) with
respect to all Distribution Dates other than the Distribution Date in December
1999, any amount deposited in the Collection Account in respect of principal on
the Contracts (exclusive of any amounts deposited therein pursuant to Sections
6.06, 8.01 or 8.02 of this Agreement, Section 10.04 of the Indenture or Section
9.3 of the Trust Agreement) on or after the first day of the related Monthly
Period and through and including the third Business Day of the preceding
Distribution Date, but in no event later than the 10th day of the related
Monthly Period.
"Collection Account" means the account established and maintained
pursuant to Section 6.01(a).
"Computer Tape" means the computer tape generated by the Originator
which provides information relating to the Contracts and which was used by the
Originator in selecting the Contracts, and includes the master file and the
history file.
"Contract File" means, as to each Contract, (a) the original copy of
the Contract, including the executed evidence of the obligation of the Obligor;
(b) either (i) the original title document for the related Product or a
duplicate certified by the appropriate governmental authority which issued the
original thereof or the application for such title document or (ii) if the laws
of the jurisdiction in which the related Product is located do not provide for
the issuance of title documents for goods of the type including the Product,
other evidence of ownership of the
1-6
<PAGE>
related Product which is customarily relied upon in such jurisdiction as
evidence of title to such goods; (c) evidence of one or more of the following
types of perfection of the security interest in the related Product granted by
such Contract, as appropriate: (i) notation of such security interest on the
title document, (ii) a financing statement meeting the requirements of the UCC,
with evidence of recording indicated thereon (if required to perfect a security
interest in the related Product under the UCC as in force in the relevant
state), or (iii) such other evidence of perfection of a security interest in
goods of the type including the Product as is customarily relied upon in the
jurisdiction in which the related Product is located; (d) the assignment of the
Contract from the originator (if other than the Originator or a wholly-owned
subsidiary of the Originator) to the Originator or a wholly-owned subsidiary of
the Originator; (e) any extension, modification or waiver agreement(s); (f) a
credit application signed by the Obligor, or a copy thereof; and (g) if required
by Section 5.09, a certificate of insurance or application form for insurance
signed by the Obligor, or copies thereof.
"Contract Rate" means, with respect to any particular Contract, the
rate of interest specified in that Contract and computed in accordance with the
method specified in that Contract.
"Contracts" means the retail installment sales contracts and promissory
notes described in the List of Contracts and constituting part of the corpus of
the Trust, which Contracts are to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, all related security interests and any
and all rights to receive payments which are due pursuant thereto on or after
the Cutoff Date, but excluding any rights to receive payments which are due
pursuant thereto prior to the Cutoff Date.
"Corporate Trust Office" means 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
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 Originator" means Dorsey & Whitney LLP or other legal
counsel for the Originator.
"CSFB Note Purchase Agreement" means the Note Purchase Agreement, dated
as of December 16, 1999, among the Trust, the Indenture Trustee and Credit
Suisse First Boston, New York Branch, as the same may be amended from time to
time.
"Cutoff Date" means the Initial Cutoff Date with respect to the Initial
Contracts or the Subsequent Cutoff Date with respect to the Subsequent
Contracts.
1-7
<PAGE>
"Cutoff Date Pool Principal Balance" means the aggregate of the Cutoff
Date Principal Balances of the Contracts.
"Cutoff Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cutoff Date after giving effect to all
installments of principal due prior thereto.
"Defaulted Contract" means a Contract with respect to which the
Servicer commenced repossession or foreclosure procedures, made a sale of such
Contract to a third party for repossession, foreclosure or other enforcement, or
as to which there was a payment delinquent 180 or more days (excluding any
Contract deemed delinquent solely because the Obligor's required monthly payment
was reduced as a result of bankruptcy or similar proceedings).
"Delinquent Payment" means, as to any Contract, with respect to any
Monthly Period, any payment or portion of a payment of principal or interest
that was originally scheduled to be made during such Monthly Period under such
Contract and was not received or applied during such Monthly Period, whether or
not any payment extension has been granted by the Servicer.
"Determination Date" means the third Business Day prior to each
Distribution Date during the term of this Agreement.
"Distribution Date" means the fifteenth day of each calendar month
during the term of this Agreement, or if such day is not a Business Day, the
next succeeding Business Day, commencing on January 18, 2000; provided that the
Distribution Date in January 2001 shall be January 10, 2001.
"Due Date" means, as to any Contract, the date of the month on which
the scheduled monthly payment for such Contract is due.
"Electronic Ledger" means the electronic master record of installment
sale contracts of the Originator.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) a trust
account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Indenture Trustee, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the capital and surplus of the bank holding company) of not less than
$50,000,000 and the securities of such depository institution (or, if such
depository institution is a subsidiary of a bank holding company system and such
depository institution's securities are not rated, the securities of the bank
holding company) shall have a credit rating from Standard & Poor's (if rated by
Standard & Poor's) and Fitch (if rated by Fitch) in one of its generic credit
rating categories which signifies investment grade; or (iii) an account that
will not cause Standard & Poor's and Fitch to downgrade or withdraw their
then-current ratings assigned to the Notes, as confirmed in writing by Standard
& Poor's and Fitch.
1-8
<PAGE>
"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 F-1 by Fitch
(if rated by Fitch), or whose unsecured long-term debt has been rated in one of
the two highest rating categories by Standard & Poor's and Fitch (if rated by
Fitch) in the case of unsecured long-term debt, or who shall otherwise be
acceptable to Standard & Poor's and Fitch.
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any agency
or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of
America and which are noncallable;
(ii) 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 F-1+ by Fitch (if rated by
Fitch);
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then
available from Fitch (if rated by Fitch) and Standard & Poor's and
whose only investments are in securities described in clauses (i) and
(ii) above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) above;
(v) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at least AAA
by Standard & Poor's and in one of the two highest rating categories
from Fitch (if rated by Fitch) at the time of such investment;
provided, however, that securities issued by any particular corporation
will not be Eligible
1-9
<PAGE>
Investments to the extent that investment therein will cause the then
outstanding principal amount of securities issued by such corporation
and held as part of the corpus of the Trust to exceed 10% of amounts
held in the Collection Account; and
(vi) commercial paper having a rating of at least A-1+ from
Standard & Poor's and at least F-1+ by Fitch (if rated by Fitch) at the
time of such investment or pledge as a security.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
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 Conseco Finance Corp. or any Person qualified
to act as Servicer of the Contracts under applicable federal and state laws and
regulations, which Person services not less than an aggregate of $100,000,000 in
outstanding principal amount of retail installment sales contracts and/or
consumer installment Contracts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or
any similar replacement bond, meeting the requirements of Section 5.09, as such
bond relates to Contracts comprising a portion of the corpus of the Trust.
"Fitch" means Fitch IBCA, Inc., or any successor thereto; provided that
if Fitch no longer has a rating outstanding on any Class of Notes, then
references herein to "Fitch" 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 Fitch's shall be deemed to
have the equivalent meanings with respect to ratings by or requirements of such
NRSRO.
"Formula Principal Distribution Amount" means, as of any Distribution
Date (but subject to the last sentence of this definition), the sum of the
following amounts with respect to the related Monthly Period, in each case
computed in accordance with the method specified in the relevant Contract:
1-10
<PAGE>
(i) all scheduled payments of principal due on each
outstanding Contract during the related Monthly Period as specified in
the amortization schedule at the time applicable thereto (after
adjustments for previous Partial Principal Prepayments 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 Contract which,
during the related Monthly Period, was purchased by the Originator
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 Contracts during the related
Monthly Period; plus
(iv) the aggregate Scheduled Principal Balance of all
Contracts that became Liquidated Contracts during the related Monthly
Period; plus the amounts of any reduction in the outstanding principal
balance of a Contract during such Monthly Period ordered as a result of
a bankruptcy or similar proceeding involving the related Obligor; plus
(v) all collections in respect of principal on the Contracts
received during the current month up to and including the third
Business Day prior to such Distribution Date (but in no event later
than the 10th day of the month in which such Distribution Date occurs),
minus
(vi) with respect to all Distribution Dates other than the
Distribution Date in January 2000, all collections of principal on the
Contracts received during the related Monthly Period up to and
including the third Business Day prior to the preceding Distribution
Date (but in no event later than the 10th day of the prior month).
"Formula Principal Shortfall" means, with respect to any Distribution
Date, the Total Principal Distribution Amount for such Distribution Date less
the funds available to pay such Total Principal Distribution Amount pursuant to
Section 6.04(a)(v) of this Agreement.
"Indenture" means the Indenture, dated as of December 1, 1999, 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,
Dorsey & Whitney LLP, or any Person who (i) is in fact independent of the Seller
and the Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Seller or the Servicer or in an
Affiliate of either and (iii) is not connected with the Seller 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
1-11
<PAGE>
shall be furnished to the Trustee, such opinion or certificate shall state that
the signatory has read this definition and is Independent within the meaning set
forth herein.
"Initial Cutoff Date" means December 1, 1999.
"Insurance Policy" means, with respect to each Contract, the policy of
insurance (if any) required to be maintained for the related Product by Section
5.09, and which, as provided in said Section 5.09, may be a blanket policy
maintained by the Servicer in accordance with the terms and conditions of said
Section 5.09.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract.
"Interest Accrual Period" means, with respect to a Distribution Date,
the period from and including the preceding Distribution Date (or, in the case
of the first Distribution Date, from and including the Closing Date) to but
excluding such Distribution Date.
"LIBOR" means, for any Interest Accrual Period, the London interbank
offered quotations for one-month Dollar deposits on the related LIBOR
Determination Date determined by the Trustee in accordance with the provisions
of Section 8.04 of the Indenture.
"LIBOR Determination Date" means, for any Interest Accrual Period
following the initial Interest Accrual Period, the second Business Day prior to
the commencement of the second and each subsequent Interest Accrual Period. For
purposes of this definition, the term "Business Day" means any day on which
banks in London and New York are open for the transaction of international
business.
"Liquidated Contract" means any Defaulted Contract as to which the
Servicer has determined that all amounts which it expects to recover from or on
account of such Contract through the date of disposition of the related Product
have been recovered; provided that any defaulted Contract in respect of which
the related Product has been realized upon and disposed of and the proceeds of
such disposition have been received shall be deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Contract, on or prior to the date on which the
related Product is disposed of, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds and
proceeds realized on the repurchase of any Product by the originating dealer for
breach of warranties) received in connection with the liquidation of Defaulted
Contracts, whether through repossession, foreclosure sale or otherwise,
including any rental income realized from any repossessed Product.
1-12
<PAGE>
"List of Contracts" means the list identifying each Contract
constituting part of the corpus of the Trust, which list (a) identifies each
Contract and (b) sets forth as to each Contract (i) the Cutoff Date Principal
Balance, (ii) the amount of monthly payments due from the Obligor, (iii) the
Contract Rate and (iv) the maturity date, the List of Contracts as of the
Closing Date is attached to the Assignment , and shall be revised on each
Subsequent Transfer Date to add the Subsequent Contracts then being transferred
to the Trust.
"Minimum Purchase Price" has the meaning assigned in Section 8.01.
"Monthly Period" means a calendar month during the term of this
Agreement. With respect to a Distribution Date, "related Monthly Period" means
the calendar month immediately preceding the month in which the Distribution
Date occurs.
"Monthly Report" has the meaning assigned in Section 5.14.
"Monthly Servicing Fee" means, as of any Distribution Date, one-twelfth
of the product of 0.75% and the Pool Scheduled Principal Balance for the
immediately preceding Distribution Date.
"Net Liquidation Loss" means, as to a Liquidated Contract, the amount,
if any, by which (a) the outstanding principal balance of such Liquidated
Contract plus accrued and unpaid interest thereon to the date on which such
Liquidated Contract became a Liquidated Contract exceeds (b) the Net Liquidation
Proceeds for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, all
Liquidation Proceeds received on or prior to the last day of the Monthly Period
in which such Contract became a Liquidated Contract, net of Liquidation
Expenses.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(b).
"Note Majority" means, as to each Class of Notes, Holders of Notes
representing a majority of the Principal Balance of such Class of Notes.
"Note Pool Factor" means, with respect to any Distribution Date and
each Class of Notes, an eight-digit decimal figure equal to the outstanding
principal balance of such class of Notes as of such Distribution Date (after
giving effect to all distributions on such date) divided by the Original
Principal Balance of such Class of Notes as of the Closing Date.
"Note Principal Balance" means, as of any Distribution Date, the sum of
the Class A Principal Balance and the Class M Principal Balance.
"Note Purchase Agreements" means the CSFB Note Purchase Agreement and
the CFVSC Note Purchase Agreement.
"Notes" means the Class A Notes or Class M Notes.
1-13
<PAGE>
"NRSRO" means any nationally recognized statistical rating o
rganization.
"MN UCC" means the Uniform Commercial Code as in effect in the State of
Minnesota.
"Obligor" means a Product buyer or other Person who is indebted under a
Contract.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, President or any Vice President
of such Person and delivered to the Owner Trustee and/or the Trustee as
applicable.
"Opinion of Counsel" means a written opinion of counsel, who may,
except as expressly provided herein, be salaried counsel for the Servicer,
acceptable to the Indenture Trustee, the Owner Trustee and the Seller.
"Original Class A Principal Balance" means $536,957,000.
"Original Class M Principal Balance" means $38,043,000.
"Original Class Principal Balance" means, with respect to any Class,
the Original Class A Principal Balance or the Original Class M Principal
Balance, as appropriate.
"Original Note Principal Balance" means the sum of the Original Class A
Principal Balance and Original Class M 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).
"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.
"Pool Scheduled Principal Balance" means, as of any Distribution Date,
the aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the related Monthly Period.
"Post-Funding Payment Date" means the Payment Date on, or the first
Payment Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means with respect to any date of determination,
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Contracts to the Trust on such date.
1-14
<PAGE>
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 6.06.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000.00, or (b) the close of business on
February 1, 2000, or (c) the date on which a Servicer Termination Event occurs.
"Principal Prepayment" means a payment or other recovery of principal
on a Contract (exclusive of Liquidation Proceeds) which is received in advance
of its scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled payment date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Products" means commercial trucks and trailers or other vehicles or
property financed by and securing the Contracts.
"Record Date" means the Business Day immediately preceding the related
Distribution Date.
"Related Documents" means the Transfer Agreement, the Trust Agreement,
the Indenture, the Administration Agreement, the Note Purchase Agreements, the
Certificates, the Notes and the Underwriting Agreement. The Related Documents
executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05 or Section 5.20, an amount equal to (a) the remaining
principal amount outstanding on such Contract, plus (b) interest at the Contract
Rate on such Contract from the end of the Monthly Period with respect to which
the Obligor last made a payment through the end of the immediately preceding
Monthly Period.
"Responsible Officer" means, with respect to the Owner Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
1-15
<PAGE>
"Sale Date" means the Distribution Date as of which the corpus of the
Trust is sold pursuant to Section 10.04 of the Indenture or Section 9.03 of the
Trust Agreement.
"Scheduled Principal Balance" means, as to any Contract and any
Distribution Date or the Cutoff Date, the principal balance of such Contract as
of the Due Date in the Monthly Period immediately preceding such Distribution
Date or as of the Due Date immediately preceding the Cutoff Date, as the case
may be, as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
of an Obligor or similar proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous Partial Principal Prepayments and to
the payment of principal due on such Due Date and irrespective of any
delinquency in payment by, or extension granted to, the related Obligor.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means the Conseco Finance Corp., a Delaware corporation,
until any Service Transfer hereunder and thereafter means the new servicer
appointed pursuant to Article VII.
"Servicer Advance" means, with respect to any Distribution Date, the
amount, if any, deposited by the Servicer in the Collection Account pursuant to
Section 5.13.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"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 or Certificates, then references herein to
"Standard & Poor's" shall be deemed to refer to the NRSRO then rating any Class
of the Notes or Certificates (or, if more than one such NRSRO is then rating any
Class of the Notes or Certificates, to such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Standard &
Poor's shall be deemed to have the equivalent meanings with respect to ratings
by or requirements of such NRSRO.
"Subsequent Cut-off Date" means the date specified as such in the
applicable Subsequent Transfer Instrument.
"Subsequent Contract" means a Contract sold by the Seller to the Trust
pursuant to Section 2.03, such Contract being identified as such in the
Subsequent Transfer Instrument.
1-16
<PAGE>
"Subsequent Transfer Date" means, with respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Contracts are sold
to the Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Owner Trustee,
the Originator and the Seller substantially in the form of Exhibit F, by which
the Seller sells Subsequent Contracts to the Trust.
"Total Principal Distribution Amount" means, for any Distribution Date,
the sum of:
(i) the Formula Principal Distribution Amount for such
Distribution Date, plus
(ii) the aggregate of all Formula Principal Shortfalls, if
any, for prior Distribution Dates.
"Trust" means the Conseco Finance Vehicle Trust 1999-B.
"Trust Accounts" means the Collection Account, the Note Distribution
Account, the Certificate Distribution Account and the Pre-Funding Account.
"Trust Agreement" means the Trust Agreement dated as of December 1,
1999 between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Property" means the property conveyed to the Trust pursuant to
Section 2.01(a).
"Uncollectible Advance" means, with respect to any Determination Date,
the portion of any Servicer Advances which the Servicer has determined in good
faith will not be ultimately recoverable by the Servicer from insurance policies
on the Product, the Obligor or out of Net Liquidation Proceeds. The
determination by the Servicer that it has made an Uncollectible Advance shall be
evidenced by an Officer's Certificate delivered to the Trustee.
"Underwriter" means Credit Suisse First Boston Corporation.
"Underwriting Agreement" means the Underwriting Agreement and related
Terms Agreement, each dated December 10, 1999, among the Originator, the Seller
and the Underwriter.
"Unpaid Class A Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class A Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class A
Notes on account of any Unpaid Class A Interest Shortfall pursuant to Section
8.02(c)(1)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent
1-17
<PAGE>
payment thereof is legally permissible) at the Class A Interest Rate on such
remainder from such immediately prior Distribution Date to the current
Distribution Date.
"Unpaid Class A LIBOR Carryforward Shortfall" means, with respect to
any Distribution Date, the difference, if any, between (A) the Class A LIBOR
Carryforward Amount for such Distribution Date, and (B) the amount actually paid
with respect to the Class A LIBOR Carryforward Amount pursuant to Section
6.04(a)(vi) on such Distribution Date.
"Unpaid Class M Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-2 Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class M Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class M
Notes on account of any Unpaid Class M Interest Shortfall pursuant to Section
8.02(c)(2)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class M Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class M LIBOR Carryforward Shortfall" means, with respect to
any Distribution Date, the difference, if any, between (A) the Class M LIBOR
Carryforward Amount for such Distribution Date, and (B) the amount actually paid
with respect to the Class M LIBOR Carryforward Amount pursuant to Section
6.04(a)(vii) on such Distribution Date.
"Weighted Average Contract Rate" means, as to any Distribution Date,
the weighted average (determined by Scheduled Principal Balance) of the Contract
Rates of all Contracts that were outstanding during the prior related Monthly
Period.
1-18
<PAGE>
ARTICLE II
TRANSFER OF CONTRACTS
SECTION 2.01. Transfer of Contracts.
(a) Subject to the terms and conditions of this Agreement, the Seller
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 Seller in and
to (1) the Initial Contracts (including, without limitation, the Collateral
Security), and all moneys payable thereon or in respect to the Initial
Contracts, including any liquidation proceeds therefrom but excluding payments
due on the Initial Contracts prior to the Initial Cutoff Date, (2) the Insurance
Policies on any Products securing an Initial Contract for the benefit of the
creditor of such Initial Contract and all blanket insurance policies to the
extent they relate to the Initial Contracts, (3) the Transfer Agreement and each
Subsequent Transfer Agreement, (4) the Errors and Omissions Protection Policy as
such policy relates to the Contracts, (5) all items contained in the Contract
Files, (6) the Trust Accounts and all funds on deposit therein from time to time
and all investments and proceeds thereof (including all income thereon), and (7)
all proceeds and products of the foregoing.
(b) Although the parties intend that the conveyance pursuant to this
Agreement of the Seller's right, title and interest in and to the Contracts and
the Collateral Security pursuant to this Agreement and each Subsequent Transfer
Instrument shall constitute a purchase and sale and not a pledge of security for
loans from the Certificateholders and/or the Noteholders, if such conveyances
are deemed to be a pledge of security for contracts 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. The parties also
intend and agree that the Seller shall be deemed to have granted to the Trust,
and the Seller 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)(6) above, and all proceeds thereof, to secure the Secured Obligations,
and that this Agreement shall constitute a security agreement under applicable
law. If the trust created by this Agreement terminates prior to the satisfaction
of the claims of any Person under any Certificates, any Notes or the Secured
Obligations, the security interest created hereby shall continue in full force
and effect and the Owner Trustee shall be deemed to be the collateral agent for
the benefit of such Person.
SECTION 2.02. Conditions to Acceptance by Owner Trustee.
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 Originator (which
certification may be part of the Assignment delivered pursuant to
Section 2.02(f)).
2-1
<PAGE>
(b) A letter from PricewaterhouseCoopers LLP or another
nationally recognized accounting firm, stating that such firm has
reviewed the Initial Contracts on a statistical sampling basis and,
based on such sampling, concluding that, except with respect to those
Initial Contracts so specified in the letter, the 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
Seller and the Originator or of the executive committee of the board of
directors of the Seller and the Originator 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 Seller and the Originator,
as applicable.
(d) Officially certified recent evidence of due incorporation
and good standing of the Seller under the laws of the State of
Minnesota and of the Servicer under the laws of the State of Delaware.
(e) Evidence of filing with the Secretary of State of
Minnesota of (i) a UCC-1 financing statement, executed by the
Originator as debtor, naming the Seller as secured party and listing
the Contracts as collateral, and (ii) a UCC-1 financing statement,
executed by the Seller as debtor, naming the Trust as secured party and
listing the Contracts as collateral.
(f) An executed copy of the Assignment substantially in the
form of Exhibit A hereto.
(g) Evidence of continued coverage of the Servicer under the
Errors and Omissions Protection Policy.
(h) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts prior to the Closing
Date which were due on or after the Initial Cutoff Date, together with
an Officer's Certificate of the Servicer to the effect that such amount
is correct.
(i) An Officer's Certificate of the Originator confirming that
the Originator's internal audit department has reviewed the original or
a copy of each Contract and each Contract File, that each Contract and
Contract File conforms in all material respects with the List of
Contracts and that each Contract File is complete in all material
respects and that each Product securing a Contract is covered by an
Insurance Policy as required by Section 3.02(f).
(j) Evidence of the deposit of $9,202,870.91 in the
Pre-Funding Account and $-0- in the Capitalized Interest Account.
(k) Such other documents and certificates as the Trust may
request.
2-2
<PAGE>
SECTION 2.03. Conveyance of the Subsequent Contracts.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Indenture Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Seller of the purchase price
therefor, the Seller shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey to the Trust by execution and delivery of a
Subsequent Transfer Instrument, all the right, title and interest of the Seller
in and to the Subsequent Contracts identified on the List of Contracts attached
to the Subsequent Transfer Instrument, including all rights to receive payments
on or with respect to the Subsequent Contracts due after the related Subsequent
Cut-off Date, all items with respect to such Subsequent Contracts in the related
Contract Files, and all rights of the Seller under the related Subsequent
Transfer Agreement. The transfer to the Trust by the Seller of the Subsequent
Contracts shall be absolute and is intended by the Seller, the Owner Trustee,
the Indenture Trustee, the Noteholders and the Certificateholders to constitute
and to be treated as a sale of the Subsequent Contracts by the Seller to the
Trust.
The purchase price paid by the Trust shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balance of such Subsequent
Contracts. The purchase price of Subsequent Contracts shall be paid solely from
amounts in the Pre-Funding Account.
(b) The Seller shall transfer to the Trust the Subsequent Contracts,
and the Trust shall release funds equal to the purchase price therefor from the
Pre-Funding Account only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Owner Trustee and the
Indenture Trustee with an Addition Notice at least five Business Days
prior to the Subsequent Transfer Date and shall have provided any
information reasonably requested by the Owner Trustee and the Indenture
Trustee with respect to the Subsequent Contracts;
(ii) the Seller shall have delivered to the Owner Trustee a
duly executed Subsequent Transfer Instrument substantially in the form
of Exhibit F, which shall include a List of Contracts identifying the
related Subsequent Contracts;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, the Seller shall not be
insolvent nor shall it have been made insolvent by such transfer nor
shall it be aware of any pending insolvency;
(iv) the Pre-Funding Period shall not have ended;
(v) the Seller shall have delivered to the Trustee an
Officer's Certificate, substantially in the form attached hereto as
Exhibit G, confirming the satisfaction of each condition precedent and
the representations specified in this Section 2.03 and in Sections
3.01, 3.02, 3.03 and 3.04; and
2-3
<PAGE>
(vi) the Seller and the Originator shall have delivered to the
Trustee Opinions of Counsel addressed to S&P, Fitch, the Owner Trustee
and the Indenture Trustee with respect to the transfer of the
Subsequent Contracts substantially in the form of the Opinions of
Counsel delivered on the Closing Date regarding certain bankruptcy,
corporate and tax matters.
(c) Before the last day of the Pre-Funding Period, the Seller shall
deliver to the Trustee evidence that, as a result of the purchase by the Trust
of the Subsequent Contracts, none of the ratings assigned to the Securities as
of the Closing Date by S&P or Fitch will be reduced, withdrawn or qualified.
(d) Although the parties intend that the conveyance pursuant to each
Subsequent Transfer Instrument of the Seller's right, title and interest in and
to the related Subsequent Contracts shall constitute a purchase and sale and not
a pledge of security for Contracts from the Certificateholders and/or the
Noteholders, if such conveyance is deemed to be a pledge of security for 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 the related Subsequent Transfer Instrument and that the Seller
shall be deemed to have granted to the Trust, and the Seller hereby grant to the
Trust, a perfected first-priority security interest in the items designated in
the related Subsequent Transfer Instrument, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement and the related Subsequent
Transfer Instrument shall constitute a security agreement under applicable law.
If the Trust 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.
2-4
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Seller and the Originator 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. The repurchase obligation of the
Originator 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 Originator set forth in the
Officer's Certificate delivered pursuant to Section 2.02(i) or Section 3.02,
3.03 or 3.04 of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Seller and
Originator and Covenants of the Originator.
The representations and warranties set forth in this Section 3.01 shall
survive delivery by the Seller 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 Originator shall cure such breach in all
material respects.
(a) Organization and Good Standing. Each of the Seller and the
Originator, as applicable, 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. Each of the Seller and the Originator, as applicable, 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 Seller.
(b) Authorization; Binding Obligations. Each of the Seller and the
Originator 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 each of the Seller and the Originator 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. Neither the Seller nor the Originator is
required to obtain the consent of any other party or any consent, license,
approval or authorization from, or
3-1
<PAGE>
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
(d) No Violations. The execution, delivery and performance by the
Seller and the Originator 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 related Articles of
Incorporation or Bylaws of the Seller and the Originator, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
either the Seller or the Originator is a party or by which either the Seller or
the Originator 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 Seller and the Originator threatened, against the Seller and
the Originator 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 Seller and the Originator have a material adverse effect on
the transactions contemplated by this Agreement and Related Documents.
(f) Licensing. Each of the Seller and the Originator 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 each of the
Seller and the Originator is at 1100 Landmark Towers, 345 St. Peter Street, St.
Paul, Minnesota 55102-1639.
(h) Absolute Sale. The Seller 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 Seller's estate, for purposes
of Section 541 of the United States Bankruptcy Code, as amended.
(i) No Default. Neither the Seller nor the Originator is 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 its condition (financial or other) or
operations or its properties or the consequences of which would materially and
adversely affect its performance hereunder and under its other Related
Documents. Neither the Seller nor the Originator is in default under any
agreement involving financial obligations or on any outstanding obligation which
would materially adversely impact its financial condition or operations or legal
documents associated with the transaction contemplated by this Agreement or the
other Related Documents.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
The Originator has made the following representations and warranties to
the Seller in the Transfer Agreement, which representations and warranties the
Seller has assigned to the Trust for the benefit of the Noteholders and the
Certificateholders, as of the Closing Date with respect to each Initial Contract
and, as of each Subsequent Transfer Date, with respect to each Subsequent
3-2
<PAGE>
Contract identified on the List of Contracts attached to the related Subsequent
Transfer Instrument:
(a) List of Contracts. The information set forth in the List of
Contracts is true and correct as of its date.
(b) Payments. The most recent scheduled payment was made by or on
behalf of the Obligor (without any advance from the Seller, the Originator or
any Person acting at the request of the Seller or the Originator) or was not
delinquent for more than 59 days.
(c) No Waivers. The terms of the Contract have not been waived, altered
or modified in any respect, except by instruments or documents identified in the
Contract File.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Contract is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
(f) Insurance Coverage. The Product securing the Contract is covered by
an Insurance Policy to the extent (if any) required by Section 5.09. All
premiums due as of the Closing Date on such insurance have been paid in full.
(g) Origination. The Contract was originated by a dealer of commercial
trucks and trailers, or by the Originator, in the regular course of its business
and, if originated by a dealer, was purchased by the Originator in the regular
course of its business.
(h) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract or an interest therein pursuant to the Transfer Agreement or this
Agreement, or pursuant to transfers of the Securities, unlawful or render the
Contract unenforceable.
(i) Compliance with Law. At the date of origination of the Contract,
all requirements of any federal and state laws, rules and regulations applicable
to the Contract, including, without limitation, usury, truth in lending and
equal credit opportunity laws, have been complied with, and the Originator shall
for at least the period of this Agreement, maintain in its possession, available
for the Owner Trustee's inspection, and shall deliver to the Owner Trustee upon
demand, evidence of compliance with all such requirements. Such compliance is
not affected by the Trust's ownership of the Contract.
3-3
<PAGE>
(j) Contract in Force. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Product securing the
Contract has not been released from the lien of the Contract in whole or in
part.
(k) Valid Security Interest. The Contract creates a valid and
enforceable perfected first priority security interest in favor of the
Originator in the Product covered thereby as security for payment of the Cutoff
Date Principal Balance of such Contract. The Originator has assigned all of its
right, title and interest in such Contract, including the security interest in
the Product covered thereby, to the Seller. The Seller has and will have a valid
and perfected and enforceable first priority security interest in such Contract
and Product.
(l) Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal capacity to
execute the Contract.
(m) Good Title. In the case of a Contract purchased from a dealer, the
Originator purchased the Contract for fair value and took possession thereof in
the ordinary course of its business, without knowledge that the Contract was
subject to a security interest. The Originator has not sold, assigned or pledged
the Contract to any person and prior to the transfer of the Contract by the
Originator to the Seller, the Originator had good and marketable title thereto
free and clear of any encumbrance, equity, contract, pledge, charge, claim or
security interest and was the sole owner thereof with full right to transfer the
Contract to the Seller. No financing statement describing or referring to any
Contract (other than any financing statement naming the Seller as secured party,
or filed by the Originator as secured party to perfect its interest in a
Contract purchased from a dealer) is on file in any public office.
(n) No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract
(except payment delinquencies permitted by clause (b) above). The Originator has
not waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above. As of the Closing
Date, the related Product is, to the best of the Originator's knowledge, free of
damage and in good repair.
(o) No Liens. There are, to the best of the Originator's knowledge, no
liens or claims which have been filed for work, labor or materials affecting the
Product securing the Contract which are or may be liens prior to, or equal or
coordinate with, the lien of the Contract.
(p) Equal Installments. Each Contract has a fixed Contract Rate and
provides for substantially level monthly payments which fully amortize the
contract over its term, except for (a) $30,648,677.81 of the Initial Contracts,
or 5.30% of the Initial Contracts by Cutoff Date Principal Balance, that have a
final payment that is substantially higher than the regular payment amount, and
(b) $32,120,813.08 of the Initial Contracts, or 5.55% of the Initial Contracts
by Cutoff Date Principal Balance, that do not require monthly payments for a
one- to three-month "skip period" during each calendar year.
3-4
<PAGE>
(q) Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
(r) One Original. There is only one original executed Contract (other
than an original in the possession of the relevant Obligor), which Contract has
been delivered to the Trust or its custodian on or before the Closing Date. Each
Contract has been stamped to reflect the assignment of such Contract to the
Trust.
(s) Notation of Security Interest. With respect to each Contract, if
the related Product is located in a state in which notation of a security
interest on the title document is required or permitted to perfect such security
interest, the title document shows, or if a new or replacement title document
with respect to such Product is being applied for such title document will be
issued within 180 days and will show, the Originator as the holder of a first
priority security interest in such Product; if the related Product is located in
a state in which the filing of a financing statement under the UCC is required
to perfect a security interest in goods of the type including the Product, such
filings or recordings have been duly made and show the Originator as secured
party. In any case, the Trust has the same rights as the secured party of record
would have (if such secured party were still the owner of the Contract) against
all Persons (including the Originator and any trustee in bankruptcy of the
Originator) claiming an interest in such Product.
(t) No Government Contracts. No Obligor is the United States government
or an agency, authority, instrumentality or other political subdivision of the
United States government.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
(a) Amounts. The aggregate principal amounts payable by Obligors under
the Contracts as of the Cutoff Date equal the Cutoff Date Pool Principal
Balance.
(b) Characteristics. Following the end of the Pre-Funding Period, the
Contracts will have the following characteristics as of the Cutoff Date:
(i) the Weighted Average Contract Rate will be at least 10.71%;
(ii) the aggregate Cutoff Date Principal Balance of Contracts
secured by trucks that were new at the time of origination of
the related Contract will represent not less than 66% of the
Cutoff Date Pool Principal Balance;
(iii) the aggregate Cutoff Date Principal Balance of Contracts with
balloon payments at the end of their stated term will
represent not more than 5.5% of the Cutoff Date Pool Principal
Balance;
(iv) the aggregate Cutoff Date Principal Balance of Contracts with
original scheduled maturities of greater than 60 months will
represent not more than 6% of the Cutoff Date Pool Principal
Balance;
3-5
<PAGE>
(v) the aggregate Cutoff Date Principal Balance of Contracts that
provide for a one- to three-month "skip period" will represent
not more than 5.6% of the Cutoff Date Pool Principal Balance;
and
(vi) the aggregate Cutoff Date Principal Balance of Contracts whose
Obligors are located in any single state (by billing address)
will represent not more than 17% of the Cutoff Date Pool
Principal Balance
(c) Computer Tape. The Computer Tape made available by the Originator
was complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Contracts.
(d) Marking Records. By the Closing Date, the Originator has caused the
portions of the Electronic Ledger relating to the Contracts to be clearly and
unambiguously marked to indicate that such Contracts constitute part of the
Trust and are owned by the Trust in accordance with the terms of the trust
created hereunder.
(e) No Adverse Selection. Except for the effect of the representations
and warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract
Files.
(a) Possession. Immediately prior to the Closing Date, the Originator
will have possession of each original Contract and the related Contract File and
there are and there will be no custodial agreements in effect materially and
adversely affecting the rights of the Originator 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 Originator pursuant to the Transfer
Agreement, and by Seller pursuant to this Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
SECTION 3.05. Repurchase of Contracts for Breach of Representations and
Warranties.
(a) The Originator shall repurchase a Contract, at its Repurchase
Price, not later than the last day of the Monthly Period prior to the Monthly
Period that is 90 days after the day on which the Originator, the Seller, the
Servicer, the Owner Trustee or the Indenture Trustee first discovers, or the
Originator or the Servicer should have discovered, a breach of a representation
or warranty of the Originator set forth in Sections 3.02, 3.03 or 3.04 of this
Agreement or 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 Originator first
becomes aware of such a breach, such discovering party shall notify the
Originator in writing within five Business Days of the date of such discovery
and (ii) with respect to any Contract incorrectly described on the List of
Contracts with respect to unpaid principal balance, which the Originator
3-6
<PAGE>
would otherwise be required to repurchase pursuant to this Section, the
Originator may, in lieu of repurchasing such Contract, deposit in the Collection
Account no later than the first Determination Date that is 90 or more days from
the date of such discovery cash in an amount sufficient to cure such deficiency
or discrepancy. Any such cash so deposited shall be accounted for as a
collection of principal or interest on such Contract, according to the nature of
the deficiency or discrepancy. Notwithstanding any other provision of this
Agreement, the obligation of the Originator 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 Originator
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 Originator shall defend and indemnify the Owner Trustee, the
Trust, the Indenture Trustee, and the Securityholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, arising out of any claims which may be asserted against or
incurred by any of them as a result of any third-party action arising out of any
breach of any representation set forth in the Officer's Certificate delivered
pursuant to Section 2.02(i) or Section 3.02, 3.03 or 3.04 of this Agreement.
SECTION 3.06. Covenants Regarding the Seller and Class B
Certificateholder.
With respect to the Seller and, for so long as CFVSC is the Class B
Certificateholder, with respect to CFVSC, the Originator covenants that:
(a) it will at all times hold out to the public, including the
respective creditors of the Originator, the Seller and CFVSC, that it
is a separate entity from the others. The Originator, the Seller and
CFVSC will not share a common logo. The Originator will not hold out or
consider the Seller or CFVSC as a department or division of the
Originator.
(b) Other than the payment of certain of the organizational
expenses of the Seller and CFVSC by the Originator, each of the Seller
and CFVSC will be responsible for the payment of all its losses,
obligations and expenses, and it will be adequately capitalized to
conduct its business.
(c) All transactions and dealings between the Originator and
the Seller or CFVSC will be on such terms and conditions as would be
generally available to entities unaffiliated with the Originator in
comparable transactions. All such transactions have been and will be
made only with prior approval of the Seller's or CFVSC's (as
applicable) 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 Originator,
3-7
<PAGE>
the Seller or CFVSC will not be made if the party making the transfer
is insolvent or would be rendered insolvent by the transfer.
(d) Following the formation of the Trust, the Originator 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 the Seller and CFVSC
and that the assets of the Seller and CFVSC will not be available for
payment of creditors' claims in the event of the insolvency of the
Originator.
(e) Each of the Seller and CFVSC will comport itself in a
manner consistent with the factual assumptions contained in the
"nonconsolidation opinions" of Dorsey & Whitney LLP dated December 16,
1999 rendered in connection with the issuance of the Notes.
3-8
<PAGE>
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
(a) Subject to the terms and conditions of this Section, the Trust
appoints the Servicer to maintain custody of the Contract Files for the benefit
of the Trust and the Servicer shall maintain custody of the Contract Files for
the benefit of the Trust and shall act as custodian therefor.
(b) The Servicer agrees to maintain the related Contract Files at its
office where they are currently maintained, or at such other offices of the
Servicer in the State of Minnesota as shall from time to time be identified to
the Trust by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Trust, Indenture
Trustee and the Securityholders, maintain accurate records pertaining
to each Contract to enable it to comply with the terms and conditions
of this Agreement, maintain a current inventory thereof, conduct annual
physical inspections of Contract Files held by it under this Agreement
and certify to the Trust and the Indenture Trustee annually that it
continues to maintain possession of such Contract Files;
(ii) implement policies and procedures, in writing and signed
by a Servicing Officer, with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes; and
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Trust, the Indenture
Trustee and the Securityholders.
(d) In performing its duties under this Section, the Servicer agrees to
act with reasonable care, using that degree of skill and care that it exercises
with respect to similar contracts owned and/or serviced by it. The Servicer
shall promptly report to the Trust and the Indenture Trustee any failure by it
to hold the Contract Files as herein provided and shall promptly take
appropriate action to remedy any such failure. In acting as custodian of the
Contract Files, the Servicer agrees further not to assert any beneficial
ownership interests in the Contracts or the Contract Files. The Servicer agrees
to indemnify the Trust, Owner Trustee, the Indenture Trustee and the
Securityholders for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever which may be imposed on,
incurred or
4-1
<PAGE>
asserted against them as the result of any act or omission by the Servicer
relating to the maintenance and custody of the Contract Files; provided,
however, that the Servicer will not be liable for any portion of any such amount
resulting from the negligence or willful misconduct of any indemnified party.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Seller shall cause the UCC-1
financing statement referred to in Section 2.02(e)(ii) to be filed. The Servicer
on behalf of the Trust shall cause to be filed all necessary continuation
statements of such UCC-1 financing statement. From time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Securityholders' interests in the Contracts
and their proceeds and the Products against all other persons, including,
without limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title. The
Servicer will maintain the first priority perfected security interest of the
Trust in each Product so long as the related Contract is property of the Trust.
SECTION 4.03. Name Change or Relocation.
(a) During the term of this Agreement, the Seller shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Owner Trustee, the Indenture Trustee and the
Servicer. In addition, following any such change in the name, identity,
structure or location of the chief executive office of the Seller, the Seller
shall given written notice of any such change to Standard & Poor's and Fitch.
(b) If any change in the Seller'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 Seller, 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 Seller 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'
4-2
<PAGE>
right, title and interest in and to the Contracts, including the Collateral
Security and all proceeds thereof.
4-3
<PAGE>
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer,
service and make collections on the Contracts and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Contracts to the Obligor. The Servicer may delegate duties under this Agreement
to any of the Servicer's Affiliates. In addition, the Servicer may at any time
perform the specific duty of repossessing Products through subcontractors who
are in the business of servicing consumer receivables. The Servicer may also
perform other specific duties through subcontractors; provided that the Servicer
gives notice to each of the Trust, the Indenture Trustee, Standard & Poor's and
Fitch of the use of any such subcontractors; and provided further that no such
delegation of duties by the Servicer shall relieve the Servicer of its
responsibility with respect thereto. The Owner Trustee, on behalf of the Trust
and at the request of a Servicing Officer, shall furnish the Servicer with any
powers of attorney or other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. Conseco
Finance Corp. is hereby appointed the Servicer until such time as any Service
Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the highest degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer;
provided, however, that notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance on any Contract.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder,
maintain such books of account and other records as will enable the Trust and
the Indenture Trustee to determine the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Trust and Indenture Trustee and their authorized agents reasonable access during
normal business hours to the Servicer's records relating to the Contracts and
will cause its personnel to assist in any examination of such records by the
Trust and Indenture Trustee or their authorized agents. The examination referred
to in this Section will be conducted in a manner which does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations. Without otherwise limiting the scope of the examination the Trust and
Indenture Trustee may make, the Trust and Indenture Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Electronic Ledger and records relating thereto for
5-1
<PAGE>
conformity to Monthly Reports prepared pursuant to Section 5.14 and compliance
with the standards represented to exist as to each Contract in this Agreement.
The Servicer shall provide to any Securityholder such access to the
records relating to the Contracts only in such cases where the Servicer is
required by applicable statutes or regulations, whether applicable to the
Servicer or to such Securityholder, to permit Securityholder to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section. Any
Securityholder, by its acceptance of a Certificate or Note (or by acquisition of
its beneficial interest therein), as applicable, shall be deemed to have agreed
to keep confidential and not to use for its own benefit any information obtained
by it pursuant to this Section, except as may be required by applicable law.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by the Trust and the Indenture Trustee.
(c) On or before the ninth Business Day of each month, the Servicer
will provide to the Indenture Trustee a Computer Tape setting forth a list of
all the outstanding Contracts and the outstanding principal balance of each such
Contract as of the end of the next preceding Monthly Period.
SECTION 5.05. Collections.
(a) The Servicer shall pay into the Collection Account: (i) as promptly
as practicable (not later than the next Business Day) following receipt thereof
all payments from Obligors and Net Liquidation Proceeds (other than late payment
penalty fees, extension fees and assumption fees, which shall be retained by the
Servicer as additional compensation for servicing the Contracts, and any
payments that were due prior to the Cutoff Date, which shall be remitted to the
Originator); and (ii) on the Business Day immediately prior to each Distribution
Date, all Servicer Advances required to be made with respect to such
Distribution Date pursuant to Section 5.13.
(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
Distribution Date. Once such funds are invested, such institution shall not
change the investment of such funds. All income and gain from such investments
shall be added to the Collection Account and distributed on such Distribution
Date pursuant to Section 6.04(a). The Trustee 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
5-2
<PAGE>
Collection Account not so invested must be insured to the extent permitted by
law by the Federal Deposit Insurance Corporation.
SECTION 5.06. Enforcement.
(a) The Servicer shall, consistent with customary servicing procedures
and the terms of this Agreement, act with respect to the Contracts in such
manner as will maximize the receipt of principal and interest on such Contracts
and Liquidation Proceeds with respect to Liquidated Contracts.
(b) The Servicer may sue to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the 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.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. Without limitation of the foregoing, in exercising
recourse rights, the Servicer is authorized on behalf of the Trust to reassign
the Contract or to resell the related Product to the person against whom
recourse exists at the price set forth in the document creating the recourse.
(d) So long as the Originator is the Servicer, the Servicer may grant
to the Obligor on any Contract any rebate, refund or adjustment out of the
Collection Account that the Servicer in good faith believes is required because
of prepayment in full of the Contract. The Servicer will not permit any
rescission or cancellation of any Contract.
(e) So long as Conseco Finance Corp. 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 the last scheduled maturity date of any Contract as of the applicable
Cutoff Date.
(f) The Servicer shall enforce any due-on-sale clause in a Contract if
such enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related Product the Servicer shall use its best efforts
to obtain an assumption agreement in connection therewith.
5-3
<PAGE>
(g) Any provision of this Agreement to the contrary notwithstanding,
the Servicer shall not agree to the modification or waiver of any provision of a
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, and the Originator (if the Originator is not the
Servicer) on the next succeeding Distribution Date by certification of a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payments which are required to
be deposited in the Collection Account pursuant to Section 5.05 have been so
deposited). The Servicer is authorized to execute an instrument in satisfaction
of such Contract and to do such other acts and execute such other documents as
the Servicer deems necessary to discharge the Obligor thereunder and eliminate
the lien on the related Product. The Servicer shall determine when a Contract
has been paid in full; to the extent that insufficient payments are received on
a Contract credited by the Servicer as prepaid or paid in full and satisfied,
the shortfall shall be paid by the Servicer out of its own funds.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its
duties hereunder, including all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Products securing such Contracts) shall be paid by the Servicer
and the Servicer shall not be entitled to reimbursement hereunder, except that
the Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Contract for Liquidation Expenses incurred by it. The Servicer shall not incur
such Liquidation Expenses unless it determines in its good faith business
judgment that incurring such expenses will increase the Net Liquidation Proceeds
on the related Contract.
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 one or more physical damage
insurance policies; in each case, issued by a company authorized to issue such
policies in the state in which the related Product is located and in an amount
which is not less than the maximum insurable value of such Product or the
principal balance due from the Obligor on the related Contract, whichever is
less; provided, however, that the amount of coverage provided by each Insurance
Policy shall be sufficient to avoid the application of any co-insurance clause
contained therein; and provided, further, that such Insurance Policies may
provide for customary deductible amounts. Each Insurance Policy caused to be
maintained by the Servicer shall contain a standard loss payee clause in favor
of the Servicer and its successors and assigns. If any Obligor is in default in
the payment of premiums on its Insurance Policy or Policies, the Servicer shall
pay such premiums out of its own funds and
5-4
<PAGE>
may separately add such premium to the Obligor's obligation as provided by the
Contract, but shall not add such premium to the remaining principal balance of
the Contract.
(b) The Servicer may, in lieu of causing individual Insurance Policies
to be maintained pursuant to subsection (a) of this Section 5.09, maintain one
or more blanket insurance policies covering any losses caused by damage to such
Product that would have been covered by an individual Insurance Policy. Any such
blanket policy shall be substantially in the form and in the amount carried by
the Servicer as of the date of this Agreement. The Servicer shall pay the
premium for such policy on the basis described therein and shall deposit into
the Collection Account from its own funds any deductible amount with respect to
claims under such blanket insurance policy relating to the Contracts. The
Servicer shall not, however, be required to deposit any deductible amount with
respect to claims under individual Insurance Policies maintained pursuant to
subsection (a) of this Section. If the insurer under such blanket insurance
policy shall cease to be acceptable to the Servicer, the Servicer shall exercise
its best reasonable efforts to obtain from another insurer a replacement policy
comparable to such policy.
(c) With respect to each Product that has been repossessed in
connection with a defaulted Contract, the Servicer shall either (i) maintain one
or more Insurance Policies thereon or (ii) self-insure such Products and deposit
into the Collection Account from its own funds any losses caused by damage to
such Product that would have been covered by an Insurance Policy.
(d) The Servicer shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among Persons which service a
portfolio of retail installment sales 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. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Product or take
such other steps that in the Servicer's reasonable judgment will maximize the
receipt of principal and interest or Net Liquidation Proceeds with respect to
the Contract secured by such Product (which may include retitling) subject to
the requirements of the applicable state and federal law, no later than five
Business Days after the time when such Contract becomes a Defaulted Contract. In
connection with such repossession or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be consistent with Section 5.02. In the event that title to any Product is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Indenture Trustee, as trustee, or, at
its election, to its nominee on behalf of the Indenture Trustee, as trustee.
5-5
<PAGE>
SECTION 5.11. Commingling of Funds.
So long as the Originator is Servicer, any collections in respect of
Contracts collected by the Originator shall, prior to the deposit thereof in the
Collection Account, be held in bank accounts entitled substantially as follows:
"[name of depository], as agent for U.S. Bank Trust National Association and
other trustees and Conseco Finance Corp., as their interests may appear."
SECTION 5.12. Retitling; Security Interests.
(a) If, at any time, a Service Transfer has occurred and the Originator
is no longer the Servicer and the new Servicer is unable to foreclose upon a
Product because the title document for such Product does not show such Servicer
or the Indenture Trustee as the holder of the first priority security interest
in the Product, such Servicer shall take all necessary steps to apply for a
replacement title document showing it or the Indenture Trustee as the secured
party.
(b) In order to facilitate the Servicer's actions, as described in
subsection (a) of this section, the Originator will provide the Servicer with
any necessary power of attorney permitting it to retitle the Product. If the
Servicer is still unable to retitle the Product, the Originator will take all
actions necessary to act with the Servicer to foreclose upon the Product.
(c) If at any time during the term of this Agreement the Trust or the
Indenture Trustee receives written notice from the Originator or the Servicer
that the Originator does not have a long-term senior debt rating from Standard &
Poor's of BBB- or higher and from Fitch of BBB or higher, or if the Trust or the
Indenture Trustee otherwise becomes aware of the same, the Trust, the Indenture
Trustee and the Servicer, at the Originator's expense, shall take such action as
may, in the opinion of counsel to the Indenture Trustee, be necessary to perfect
the security interests in the Products securing the Contracts in the name of the
Indenture Trustee by amending the title documents of such Products or by such
other reasonable means as may, in the opinion of counsel to the Indenture
Trustee, be necessary or prudent. The Originator agrees to pay all expenses
related to such perfection and to take all action necessary therefor.
SECTION 5.13. Servicer Advances.
Not later than the Business Day immediately preceding each Distribution
Date, the Servicer shall advance to the Trust (each such advance, a "Servicer
Advance") all Delinquent Payments for the immediately preceding Monthly Period
by depositing the aggregate amount of such Delinquent Payments in the Collection
Account, provided, however, that the Servicer shall be obligated to advance
Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such advances from subsequent
collections, including Net Liquidation Proceeds.
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 Originator (if the
5-6
<PAGE>
Originator is not the Servicer), Standard & Poor's and Fitch a "Monthly Report,"
substantially in the form of Exhibit C hereto.
(b) Each Monthly Report pursuant to Section 5.14(a) shall be
accompanied by a certificate of a Servicing Officer substantially in the form of
Exhibit D, certifying the accuracy of the Monthly Report and that no Event of
Termination or event that with notice or lapse of time or both would become an
Event of Termination has occurred, or if such event has occurred and is
continuing, specifying the event and its status.
(c) The Originator and (if different from the Originator) the Servicer
shall, on request of the Trust, the Indenture Trustee, Standard & Poor's, Fitch
or a Securityholder, furnish the Trust, the Indenture Trustee, Standard &
Poor's, Fitch or a Securityholder such underlying data as may be reasonably
requested.
SECTION 5.15. Annual Report of Accountants.
On or before March 31 of each year, commencing March 31, 2000, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
make available to the Trust, the Indenture Trustee, Standard & Poor's and Fitch
a report stating that such firm has examined selected documents and records
relating to the servicing of retail installment sales contracts, 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. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Trust, the Indenture Trustee, and
each of Standard & Poor's and Fitch, on or before March 31 (or 90 days after the
end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 2000, an officer's certificate signed by any Responsible
Officer of the Servicer, dated as of December 31 (or other applicable date) of
the immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as shall
have elapsed from the Closing Date to the date of the first such certificate)
and of its performance under this
5-7
<PAGE>
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 Originator or the Servicer shall deliver to the Trust, the
Indenture Trustee, the Servicer or the Originator (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 an Event of Termination under Section 7.01.
SECTION 5.18. Maintenance of Security Interests in Products.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created by each Contract in the related
Product on behalf of the Trust, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
refiling, and re-registering of all security agreements, financing statements
and continuation statements as are necessary to maintain the security interest
granted by the Obligors under the respective Contracts. The Trust hereby
authorizes the Servicer, and the Servicer agrees, to take any and all steps
necessary to re-perfect such security interest on behalf of the Trust as
necessary because of the relocation of a Product or for any other reason. In the
event that the assignment of a Contract to the Trust is insufficient, without a
notation on the related Product's certificate of title, or without fulfilling
any additional administrative requirements under the laws of the state in which
the Product is located, to perfect a security interest in the related Product in
favor of the Trust, the Servicer hereby agrees that the Servicer's designation
as the secured party on the certificate of title is in its capacity as agent of
the Trust.
(b) Upon the occurrence of an Event of Termination, the Trust and the
Servicer shall take or cause to be taken such action as may, in the opinion of
counsel to the Trust, be necessary to perfect or re-perfect the security
interests in the Products securing the Contracts in the name of the Trust by
amending the title documents of such Products or by such other reasonable means
as may, in the opinion of counsel to the Trust, be necessary or prudent. The
Servicer hereby agrees to pay all expenses related to such perfection or
re-perfection and to take all action necessary therefor.
SECTION 5.19. 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 and the Owner Trustee
relies in authenticating the Certificates.
(a) Organization and Good Standing. The Servicer 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.
5-8
<PAGE>
The Servicer 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
Servicer.
(b) Authorization; Binding Obligations. The Servicer 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 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 Servicer 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 Servicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses, approvals
and authorizations as have been obtained.
(d) No Violations. The execution, delivery and performance by the
Servicer 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 related Certificate of Incorporation or
Bylaws of the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or by
which the Servicer 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 Servicer threatened, against the Servicer 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 Servicer
have a material adverse effect on the transactions contemplated by this
Agreement and Related Documents.
(f) Chief Executive Office. The chief executive office of the Servicer
is at 1100 Landmark Towers, 345 St. Peter Street, St. Paul, Minnesota
55102-1639.
(g) No Default. The Servicer 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 its condition (financial or other) or operations or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under its other Related Documents. The Servicer is
not in default under any agreement involving financial obligations or on any
outstanding obligation which
5-9
<PAGE>
would materially adversely impact its financial condition or operations or legal
documents associated with the transaction contemplated by this Agreement or the
other Related Documents.
(h) Liens in Force. The Product securing each Contract shall not be
released in whole or in part from the security interest granted by the Contract,
except upon payment in full of the Contract or as otherwise contemplated herein.
(i) No Impairment. The Servicer shall do nothing to impair the rights
of the Trust, the Indenture Trustee or the Securityholders in the Contracts, the
Insurance Policies or the other Trust Property.
(j) No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Contract, except in accordance with Section 5.06.
SECTION 5.20. Purchase of Contracts Upon Breach of Covenant.
Upon discovery by any of the Servicer, the Trust or the Indenture
Trustee of a breach of any of the covenants set forth in Section 5.06(d),
5.06(e), 5.18 or 5.19, the party discovering such breach shall give prompt
written notice to the others; provided, however, that the failure to give any
such notice shall not affect any obligation of the Servicer. Not later than the
last day of the Monthly Period that is 90 days after its discovery or receipt of
notice of any breach of any such covenant which materially and adversely affects
the interests of the Securityholders or the Trust in any Contract (including any
Liquidated Contract), the Servicer shall, unless it shall have cured such breach
in all material respects, purchase from the Trust the Contract affected by such
breach and pay the related Repurchase Price. It is understood and agreed that
the obligation of the Servicer to purchase any Contract (including any
Liquidated Contract) with respect to which such a breach has occurred and is
continuing shall, if such obligation is fulfilled, constitute the sole remedy
against the Servicer for such breach available to the Securityholders, the
Trust, or the Indenture Trustee on behalf of the Noteholders; provided, however,
that the Servicer shall indemnify the Owner Trustee, the Trust, the Indenture
Trustee, and the Securityholders against all costs, expenses, losses, damages,
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.
5-10
<PAGE>
ARTICLE VI
DISTRIBUTIONS; TRUST ACCOUNTS;
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. 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. 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 Pre-Funding Account on behalf of
the Trust, and shall deposit therein the Pre-Funded Amount pursuant to Section
2.02(j). The Pre-Funding 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) The Servicer shall establish the Capitalized Interest Account on
behalf of the Trust, and shall deposit therein $-0- pursuant to Section 2.02(j).
The Capitalized Interest Account shall be an Eligible Account and shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(f) All amounts held in the Collection Account, the Pre-Funding Account
and the Capitalized Interest Account (but not the Note Distribution Account or
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 Distribution Date for the Monthly Period to which such amounts
relate. Any such written direction shall certify that any such investment is
authorized by this Section 6.01(d). Such investments in Eligible Investments
shall be made in the name of the Indenture Trustee on behalf of the Trust, and
such investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Collection Account or the Pre-Funding 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
6-1
<PAGE>
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 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 and
the Pre-Funding Account shall be deposited in the Collection Account and
distributed on the next Distribution Date pursuant to Section 6.06. The Servicer
shall deposit in the applicable Collection Account and the Pre-Funding Account,
as applicable, 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) Servicer Advances. The Servicer shall deposit in the Collection
Account immediately prior to each Distribution Date all Servicer Advances
required to be made pursuant to Section 5.13.
(c) Repurchased Contracts. The Originator 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 5.20.
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 Originator 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;
6-2
<PAGE>
(c) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement
is permitted pursuant to Section 5.08;
(d) to withdraw any amount deposited in the Collection Account
that was not required to be deposited therein; or
(e) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clauses (a) and (b),
the Originator'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. Distributions.
(a) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Monthly Certificate
delivered pursuant to Section 5.14) to make the following deposits and
distributions by 11:00 a.m. (Minnesota time), to the extent of the Amount
Available for such Distribution Date and in the following order of priority:
(i) Servicing Fee. If Conseco Finance Corp. or an Affiliate is
not the Servicer, then to the Servicer, the Servicing Fee for the
related Monthly Period.
(ii) Servicer Advances. After payment of the amount specified
in clause (i) above, to reimburse the Servicer for Uncollectible
Advances and for Servicer Advances made with respect to Delinquent
Payments that were recovered during the related Monthly Period.
(iii) Class A Interest. After payment of the amounts specified
in clauses (i) and (ii) above, to the Note Distribution Account, the
sum of the Class A Interest Amount and any Unpaid Class A Interest
Shortfall;
(iv) Class M Interest. After payment of the amounts specified
in clauses (i) through (iii) above, to the Note Distribution Account,
the Class M Interest Amount and any Unpaid Class M Interest Shortfall;
(v) Note Principal. After payment of the amounts specified in
clauses (i) through (iv) above, to the Note Distribution Account, the
Total Principal Distribution Amount, plus the Accelerated Principal
Distribution Amount, if applicable.
(vi) Class A LIBOR Carryforward Amount. After payment of the
amounts specified in clauses (i) through (v) above, to the Note
Distribution Account, the Class A LIBOR Carryforward Amount.
6-3
<PAGE>
(vii) Class M LIBOR Carryforward Amount. After payment of the
amounts specified in clauses (i) through (vi) above, to the Note
Distribution Account, the Class M LIBOR Carryforward Amount.
(viii) Class B Certificate Distribution Amount. After payment
of the amounts specified in clauses (i) through (vii) above, to the
Certificate Distribution Account, the Class B Certificate Distribution
Amount.
SECTION 6.05. Statements to Securityholders.
(a) On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder, and the Owner Trustee shall include with
each distribution to each Certificateholder, a statement (which statement shall
also be provided to each Rating Agency) based on information in the Monthly
Report delivered on the related Determination Date pursuant to Section 5.14,
setting forth the following information:
(i) the amount of such distribution to Holders of each Class
of Notes and the Certificates allocable to interest, separately
identifying any Unpaid Class A Interest Shortfall and any Unpaid Class
M Interest Shortfall included in such distribution and any remaining
Unpaid Class A Interest Shortfall and Unpaid Class M Interest Shortfall
after giving effect to such distribution;
(ii) the Class A Interest Carryover Shortfall and the Class M
Interest Carryover Shortfall, if any, for such Distribution Date;
(iii) the amount of such distribution to Holders of each Class
of Notes allocable to principal, separately identifying the Formula
Principal Distribution Amount and any Formula Principal Shortfall
included therein;
(iv) the Class A Principal Balance and the Class M Principal
Balance after giving effect to the distribution of principal on such
Distribution Date;
(v) the amount of such distribution attributable to the Class
A LIBOR Carryforward Amount and the Class M LIBOR Carryforward Amount,
and any remaining unpaid Class A LIBOR Carryforward Amount and unpaid
Class M LIBOR Carryforward Amount;
(vi) the amount of the Monthly Servicing Fee paid to the
Servicer with respect to such Monthly Period;
(vii) the Pool Scheduled Principal Balance for such
Distribution Date;
(viii) the Note Pool Factor for each Class after giving effect
to the distribution of principal on such Distribution Date;
6-4
<PAGE>
(ix) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days and (b) 60 or more days;
(x) the number and aggregate Scheduled Principal Balance of
Contracts that become Defaulted Contracts during the related Monthly
Period;
(xi) the number and aggregate Scheduled Principal Balance of
Defaulted Contracts as of the last day of the related Monthly Period;
(xii) the number and aggregate Schedule Principal Balance of
Contracts that became Liquidated Contracts during the related Monthly
Period and the related Net Liquidation Losses; and
(xiii) the aggregate amount of Servicer Advances made by the
Servicer with respect to such Distribution Date, and the aggregate
amount paid to the Servicer as reimbursement of Servicer Advances made
on prior Distribution Dates.
In the case of information furnished pursuant to clauses (i) through
(v) above, the amounts shall be expressed as a dollar amount per $1,000
denomination of Note.
(b) The Owner Trustee and the Indenture Trustee shall inform any of the
Noteholders, Certificateholders or Credit Suisse First Boston Corporation
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
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 6.06. Pre-Funding Account.
(a) Amounts on deposit in the Pre-Funding Account shall be withdrawn by
the Indenture Trustee on any Subsequent Transfer Date an amount equal to 100% of
the Cut-off Date Principal Balance of each Subsequent Contract transferred and
assigned to the Indenture Trustee on such Subsequent Transfer Date and pay such
amount to or upon the order of the Originator upon satisfaction of the
conditions set forth in Section 2.03(b) with respect to such transfer and
assignment. On the Post-Funding Payment date, any funds remaining in the
Pre-Funding Account (other than funds consisting of investment earnings) shall
be deposited in the Collection Account and added to the Amount Available.
(b) The Owner Trustee on behalf of the Trust shall be the legal owner
of the Pre-Funding Account. The Seller shall be the beneficial owner of the
Pre-Funding Account, subject
6-5
<PAGE>
to the foregoing power of the Indenture Trustee to transfer amounts in the
Pre-Funding Account to the Collection Account. All amounts earned on deposits in
the Pre-Funding Account shall be taxable to the Seller. The Trustee shall
release to the Seller all investment earnings in the Pre-Funding Account on the
Post-Funding Payment Date.
SECTION 6.07. Capitalized Interest Account.
a. On the Distribution Dates occurring in January 2000 and February
2000, if the Monthly Report for such Remittance Date indicates that the Amount
Available (after payment of the amounts specified in clause (i) of Section
6.04(a)) is not sufficient to pay the Class A Interest Amount plus the Class M
Interest Amount,, the Trustee shall withdraw the amount of such deficiency, or
the amount of funds in the Capitalized Interest Account (net of any investment
earnings thereon), if less, and shall deposit such funds in the Collection
Account for distribution on such Distribution Date in order first to pay any
deficiency in the Amount Available to pay the Class A Interest Amount, and
second to pay any deficiency in the Amount Available to pay the Class M Interest
Amount.
b. Any funds remaining in the Capitalized Interest Account after the
Remittance Date in February 2000 shall be distributed to the Class B
Certificateholder. After such date no further amounts shall be deposited in or
withdrawn from the Capitalized Interest Account. Any losses on such investments
shall be deposited in the Capitalized Interest Account by the Class B
Certificateholder out of its own funds immediately as realized.
6-6
<PAGE>
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event of Termination.
"Event of Termination" means the occurrence of any of the following
(each a "Servicer Termination Event"):
(a) Any failure by the Servicer to make any deposit into an account
required to be made hereunder and the continuance of such failure for a period
of five Business Days after the Servicer has become aware, or should have become
aware, that such deposit was required;
(b) Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement (other than a
covenant or agreement which is elsewhere in this Section specifically dealt
with), which failure shall (i) materially and adversely affect the rights of the
Trust, the Indenture Trustee, or the Securityholders and (ii) continue
unremedied for 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by Holders of
Notes evidencing not less than 25% of the Note Principal Balance or, if the
Notes have been paid in full, by Certificateholders evidencing not less than a
Certificate Majority.
(c) Any assignment by the Servicer of its duties hereunder except as
specifically permitted hereunder, or any attempt to make such an assignment;
(d) A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
(e) The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
(f) The failure of the Servicer to be an Eligible Servicer.
7-1
<PAGE>
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, either the
Trust, the Indenture Trustee, a Note Majority, or, if the Notes have been paid
in full, a Certificate Majority, by notice in writing to the Servicer (and to
the Indenture Trustee and Trust if given by the Certificateholders or
Noteholders) may terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), or upon resignation of the Servicer in
accordance with Section 10.01, all authority and power of the Servicer under
this Agreement, whether with respect to the Contracts, the Contract Files or
otherwise (except with respect to the Collection Account, the transfer of which
shall be governed by Section 7.06), shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 7.02; and, without limitation, the
Indenture Trustee is authorized and empowered to execute and deliver on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments (including, without limitation, documents required to make the
Indenture Trustee or a successor servicer the sole lienholder or legal title
holder of record of each Product) and to do any and all acts or things necessary
or appropriate to effect the purposes of such notice of termination. Each of the
Originator and the Servicer agrees to cooperate with the Indenture Trustee in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Indenture Trustee
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts and the execution
of any documents required to make the Indenture Trustee or a successor servicer
the sole lienholder or legal title holder of record in respect of each Product.
The Servicer shall be entitled to receive any other amounts which are payable to
the Servicer under this Agreement, at the time of the termination of its
activities as Servicer. The Servicer shall transfer to the new servicer (i) the
Servicer's records relating to the Contracts in such electronic form as the new
servicer may reasonably request and (ii) any Contracts and Contract Files in the
Servicer's possession.
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02 or the resignation of the Servicer in accordance with
Section 10.01, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Indenture Trustee will not assume any
obligations of the Originator pursuant to Section 3.05 and (ii) the Indenture
Trustee shall not be liable for any acts or omissions of the Servicer occurring
prior to such Service Transfer or for any breach by the Servicer of any of its
obligations contained herein or in any related document or agreement. As
compensation therefor, the Indenture Trustee shall be entitled to receive
reasonable compensation not in excess of the Monthly Servicing Fee.
Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling
so to act, or shall, if it is legally unable so to act, appoint, or petition a
court of competent jurisdiction to appoint, an
7-2
<PAGE>
Eligible Servicer as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, unless the Indenture Trustee is prohibited by law from so acting, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor out of payments on
Contracts as it and such successor shall agree; provided, however, that no such
monthly compensation shall, without the written consent of 100% of the
Noteholders, exceed the Monthly Servicing Fee. The Indenture Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.04. Notification to Securityholders.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Indenture Trustee, the Trust,
Standard & Poor's, and Fitch.
(b) Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Owner Trustee on
behalf of the Trust shall give written notice thereof to Standard & Poor's,
Fitch and the Certificateholders at their respective addresses appearing on the
Certificate Register and the Indenture Trustee shall give written notice thereof
to Noteholders at their respective addresses appearing in the Note Register.
(c) The Owner Trustee on behalf of the Trust shall give written notice
to Standard & Poor's and Fitch at least 30 days prior to the date upon which any
Eligible Servicer (other than the Trustee) is to assume the responsibilities of
Servicer pursuant to Section 7.03, naming such successor Servicer.
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 Originator pursuant to Article IX and Sections 3.05 and 5.19) other than
those relating to the management, administration, servicing or collection of the
Contracts.
7-3
<PAGE>
SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.02, if the Collection
Account shall be maintained with the Servicer and an Event of Termination shall
occur and be continuing, the Servicer shall, after five days' written notice
from the Indenture Trustee, or in any event within ten days after the occurrence
of the Event of Termination, establish an Eligible Account with an institution
other than the Servicer and promptly transfer all funds in the Collection
Account to such new account, which shall thereafter be deemed the Collection
Account for the purposes hereof.
SECTION 7.07. Limits on Liability.
The Servicer will be liable to the Trust, the Owner Trustee, the
Indenture Trustee and the Securityholders only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement and will have no
other obligations or liabilities hereunder. Neither the Servicer nor any of its
directors, officers, employees or agents will have any liability to the Trust,
the Owner Trustee, the Indenture Trustee or the Securityholders (except as
explicitly provided in this Agreement) for any action taken, or for refraining
from taking any action, pursuant to this Agreement, other than any liability
that would otherwise be imposed by reason of the Servicer's breach of this
Agreement or willful misfeasance, bad faith or negligence (including errors in
judgment) in the performance of its duties, or by reason of reckless disregard
of obligations and duties under this Agreement or any violation of law.
SECTION 7.08. Waiver of Past Defaults.
A Note Majority or, if the Notes have been paid in full, Certificate
Majority may, on behalf of all Holders of Notes and Certificates, waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Termination arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
7-4
<PAGE>
ARTICLE VIII
TERMINATION
SECTION 8.01. Class B Certificateholder's Purchase Option; Auction
Sale; Accelerated Principal Distribution Amount.
(a) The Class B Certificateholder shall, subject to subsection (b)
hereof, have the option to purchase all of the Contracts and all property
acquired in respect of any Contract remaining in the Trust at a price (such
price being referred to as the "Minimum Purchase Price") equal to the greater
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
property has been acquired and whose fair market value is included
pursuant to clause (y) below), together with accrued and unpaid
interest on each such Contract at a rate per annum equal to the
Weighted Average Contract Rate, plus (y) the fair market value of such
acquired property (as reasonably determined by the Servicer as of the
close of business on the third Business Day preceding the date of such
purchase), and
(ii) the aggregate Principal Balance of the Notes as of the
date of such purchase (less any amounts on deposit in the Collection
Account, the Note Distribution Account or the Certificate Distribution
Account on such purchase date and representing payments of principal in
respect of the Contracts) plus an amount necessary to pay the Class A
Formula Interest Distribution Amount and the Class M Interest Amount,
any Unpaid Class A Interest Shortfall, and any Unpaid Class M Interest
Shortfall due on the Distribution Date occurring in the calendar month
following such purchase date, plus the Class A LIBOR Carryforward
Amount and the Class M LIBOR Carryforward Amount, if any, for such
Distribution Date (less any amounts on deposit in the Collection
Account, the Note Distribution Account or the Certificate Account on
such purchase date and representing payments of interest in respect of
the Contracts, net of any amounts required to be paid therefrom to the
Servicer or any Person other than the Noteholders or
Certificateholders).
(b) The purchase by the Class B Certificateholder of all of the
Contracts pursuant to this Section 8.01 shall be conditioned upon:
(i) the Pool Scheduled Principal Balance, at the time of any
such purchase, aggregating not more than 20% of the Cut-off Date Pool
Principal Balance,
(ii) the Class B Certificateholder having provided the
Indenture Trustee, the Owner Trustee and the Depository (if any) with
at least 30 days' written notice, and
(iii) the Indenture Trustee not having accepted a qualifying
bid for the Contracts pursuant to subsection (e) below.
8-1
<PAGE>
(c) The Class B Certificateholder may assign its rights under this
Section 8.01, separately from its other rights as Holder of the Class B
Certificate, by giving written notice of such assignment to the Trustee.
Following the Trustee's receipt of such notice of assignment, the Trustee shall
recognize only such assignee (or its assignee in turn) as the Person entitled to
exercise the purchase option set forth in Section 8.01(a).
(d) The Servicer shall notify the Indenture Trustee and the Class B
Certificateholder (whether or not the Class B Certificateholder has then
assigned its rights under this Section 8.01 pursuant to subsection (c)) no later
than two Business Days after the Determination Date relating to the first
Monthly Period which includes the date on which the Pool Scheduled Principal
Balance first becomes equal to or less than 20% of the Cut-off Date Pool
Principal Balance, to the effect that the Pool Scheduled Principal Balance is
then equal to or less than 20% of the Cutoff Date Pool Principal Balance.
(e) If the Class B Certificateholder (or its assignee) has not
delivered to the Indenture Trustee the notice of exercise of its purchase option
required by subsection (b) by the Payment Date occurring in the month following
the Determination Date specified in subsection (d), then on the following
Payment Date and each Payment Date thereafter the Notes shall be entitled to
receive the Accelerated Principal Distribution Amount to be distributed in
accordance with Section 6.04(a)(v).
SECTION 8.02. Liquidation or Sale of Trust Estate.
Upon any sale of the assets of the Trust pursuant to Sections 10.04 of
the Indenture, 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
Distribution Date on which such proceeds are deposited in the Collection Account
(or, if such proceeds are not so deposited on a Distribution Date, on the
Distribution Date immediately following such deposit), the Trust shall instruct
the Indenture Trustee to distribute such funds, together with all other amounts
available, in accordance with the terms of Section 6.04(a).
8-2
<PAGE>
ARTICLE IX
INDEMNITIES
SECTION 9.01. Originator's Indemnities.
The Originator will defend and indemnify the Trust, the Owner Trustee,
the Indenture Trustee (including the paying agent and any other agents of the
Owner Trustee and the Indenture Trustee), and the Securityholders against any
and all costs, expenses, losses, damages, taxes, claims and liabilities,
including reasonable fees and expenses of counsel and expenses of litigation of
any third-party claims arising out of or resulting from (i) the origination of
any Contract (including but not limited to truth in lending requirements) or the
servicing of such Contract prior to its transfer to the Trust (but only to the
extent such cost, expense, loss, damage, tax, claim or liability is not provided
for by the Originator's repurchase of such Contract pursuant to Section 3.05),
(ii) the use or ownership of any Products by the Originator or the Servicer or
any Affiliate of either, or (iii) the Originator'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 Originator under this Section shall not terminate upon a
Service Transfer pursuant to Article VII, except that the obligation of the
Originator under this Section shall not relate to the actions of any subsequent
Servicer after a Service Transfer.
SECTION 9.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Owner Trustee, Indenture Trustee, or
the Securityholders under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Trust, the Owner Trustee, Indenture Trustee,
and the Securityholders expressly disclaim such assumption.
SECTION 9.03. Servicer's Indemnities.
(a) The Servicer shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee (including the Paying Agent and
any other agents of the Owner Trustee and the Indenture Trustee), their
respective officers, directors, agents and employees and the Noteholders from
and against any and all costs, expenses, losses, claims, damages and liabilities
to the extent that such cost, expense, loss, claim, damage or liability arose
out of, or was imposed upon any of them through the Servicer's breach of this
Agreement, the negligence, willful misfeasance or bad faith of the Servicer in
the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
(b) Indemnification under this Section 9.03 shall include,
without limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to this
Section and the recipient thereafter collects any of such
9-1
<PAGE>
amounts from others, the recipient shall promptly repay such amounts collected
to the Servicer, together with any interest earned thereon.
(c) Conseco Finance Corp., in its individual capacity, hereby
acknowledges that the indemnification provisions in the Transfer Agreement
benefitting the Trust, the Owner Trustee and the Indenture Trustee are
enforceable by each hereunder.
(d) The provisions of this Section shall survive the
termination of the Related Documents.
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
Originator 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 Originator 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 or Monthly Servicing and Guaranty Fee payable to it. The Servicer
shall not resign from the obligations and duties hereby imposed on it except
upon determination that the performance of its duties hereunder is no longer
permissible under applicable law or is in material conflict by reason of
applicable law with any other activities carried on by it. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel for the Servicer to such effect addressed and delivered to
the Trust and the Indenture Trustee. No such resignation shall become effective
until the Indenture Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Sections
7.02 and 7.03.
Notwithstanding the foregoing:
(a) Any person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be the successor of
the Servicer hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person to the Servicer shall satisfy the
criteria set forth in the definition of an Eligible Servicer. The
Servicer shall promptly notify Standard & Poor's and Fitch of any such
merger to which it is a party.
(b) The Servicer may delegate duties under this Agreement to
any of the Servicer's Affiliates. In addition, the Servicer may at any
time perform the specific duty of repossessing Products through
subcontractors who are in the business of servicing consumer
receivables, and may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to the Trust
and the Indenture Trustee and each of Standard & Poor's and Fitch, and
provided further that no such delegation of duties by the Servicer
shall relieve the Servicer of its responsibility with respect thereto.
SECTION 10.02. Assignment or Delegation by Originator.
Except as specifically authorized hereunder, and except for its
obligations as Servicer which are dealt with under Article V and Article VII,
the Originator may not convey and assign or delegate any of its rights or
obligations hereunder absent the prior written consent of a Note Majority and a
Certificate Majority, and any attempt to do so without such consent shall be
void.
10-1
<PAGE>
It is understood that the foregoing does not prohibit the pledge or assignment
by the Originator of any right to payment pursuant to Article VI.
Notwithstanding the foregoing, any person into which the Originator may
be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Originator shall be a party, or any
Person succeeding to the business of the Originator, shall be the successor of
the Originator 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 Originator shall promptly notify Standard & Poor's
and Fitch of any such merger to which it is a party.
SECTION 10.03. Amendment.
(a) This Agreement may be amended from time to time by the Originator,
the Servicer, the Seller and the Trust, with the prior written consent of the
Indenture Trustee but without the consent of any of the Securityholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, including, without limitation, to add or amend any provision as
required by Standard & Poor's, Fitch, or any other nationally recognized
statistical rating organization in order to improve or maintain the rating of
any Class of Notes or the Certificates, provided, however, that such action
shall not, as evidenced by an Opinion of Counsel for the Originator, adversely
affect in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originator, the Servicer, the Seller and the Trust with the prior written
consent of the Indenture Trustee and with the consent of a Certificate Majority
and a Note Majority with respect to each Class (which consent of any Holder of a
Certificate or Note given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Certificate or Note and of any Certificate or Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Certificate or Note)
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates or Notes; provided, however, no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts or
distributions required to be made on any Certificate or Note or the Class A
Interest Rate or Class M Interest Rate, (b) amend any provisions of Section 6.04
in such a manner as to affect the priority of payment of interest, principal or
premium to Noteholders or Certificateholders, or (c) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of the Holders of all Securities then outstanding, and
provided further, that the Rating Agency Condition has been satisfied.
(c) Concurrently with the solicitation of any consent pursuant to this
Section 10.03, the Indenture Trustee shall furnish written notification to
Standard & Poor's and Fitch of such solicitation. Promptly after the execution
of any amendment pursuant to this Section 10.03, the
10-2
<PAGE>
Indenture Trustee shall furnish written notification of the substance of such
amendment to Standard & Poor's, Fitch and each Securityholder.
(d) It shall not be necessary for the consent of Securityholders under
this Section 10.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Securityholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(e) Each of the Owner Trustee and Indenture Trustee may, but shall not
be obligated to, enter into any such amendment which affects its own rights,
duties or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section, the
Owner Trustee and Indenture Trustee shall be entitled to receive an unqualified
Opinion of Counsel to the Servicer to the effect that such amendment is
authorized or permitted by the Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 10.03, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Securityholder hereunder shall be bound thereby.
SECTION 10.04. Notices.
All communications and notices pursuant hereto to the Servicer, the
Originator, the Trust, the Owner Trustee, the Indenture Trustee, Standard &
Poor's and Fitch shall be in writing and delivered (by facsimile or other means)
or mailed to it at the appropriate following address:
If to the Originator, the Guarantor or the Servicer:
Conseco Finance Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (651) 293-5746
If to the Seller:
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (651) 293-5846
10-3
<PAGE>
If to the Trust or Owner Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopier Number: 302-651-8882
If to the Indenture Trustee:
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Administration,
Structured Finance
Telecopier Number: (612) 244-0089
If to Standard & Poor's:
Standard & Poor's Ratings Services
55 Water Street
New York, New York 10041
Attention: Asset-Backed Surveillance
Telecopier Number: (212) 208-8208
If to Fitch:
Fitch IBCA, Inc.
One State Street Plaza
New York, New York 10004
Attention: ABS Surveillance Group
Telecopier Number: (212) 635-0474
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.
10-4
<PAGE>
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 Conseco Finance Vehicle
Trust 1999-B under the Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or the other Related Documents.
10-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 16th
day of December, 1999.
ISSUER:
CONSECO FINANCE VEHICLE TRUST 1999-B
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:
CONSECO FINANCE SECURITIZATIONS CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
ORIGINATOR AND SERVICER:
CONSECO FINANCE CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
10-6
<PAGE>
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:
------------------------------
10-7
<PAGE>
EXHIBIT A
FORM OF ASSIGNMENT
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1999 among Conseco Finance Corp. (the "Originator"),
Conseco Finance Securitizations Corp., as Seller, (the "Seller"), and Conseco
Finance Vehicle Trust 1999-B, the Seller does hereby transfer, assign, set over
and otherwise convey to the Trust all right, title and interest of the
Originator in (i) the retail installment sales contracts and promissory notes
for the purchase of a variety of Products (collectively, the "Initial
Contracts") identified in the List of Contracts delivered pursuant to Section
2.02(a) of the Agreement, a copy of which List is attached hereto, including,
without limitation, all related Collateral Security, all security interests
created thereby and any and all rights to receive payments which are due
pursuant thereto from and after December 1, 1999, but excluding any rights to
receive payments which were due pursuant thereto prior to December 1, 1999, (ii)
the Insurance Policies on any Products securing an Initial Contract for the
benefit of the creditor of such Contract and all rights under all blanket
insurance policies to the extent they relate to the Contracts, (iii) all rights
of the Seller under the Transfer Agreement and each Subsequent Transfer
Agreement; (iv) the Errors and Omissions Protection Policy as such policy
relates to the Contracts, (v) all items contained in the Contract Files, (vi)
the Trust Accounts and all funds on deposit therein from time to time and all
investments and proceeds thereof (including all income thereon), and (vii) all
proceeds 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 16th day of December, 1999.
CONSECO FINANCE SECURITIZATIONS CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
A-1
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS
CONSECO FINANCE CORP.
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Conseco Finance
Corp., a Delaware corporation (the "Originator"); 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, 1999 among the Originator, the Servicer, Conseco Finance
Securitizations Corp., as Seller, and Conseco Finance Vehicle Trust 1999-B (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 [Originator] [Servicer] on the date hereof pursuant
to Section [3.05] [5.20] of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts,
such Contracts may, pursuant to Section [3.05] [5.20] of the Agreement,
be assigned by the Trust to the [Originator] [Servicer].
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ________, 19__.
CONSECO FINANCE CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
B-1
<PAGE>
EXHIBIT C
FORM OF MONTHLY REPORT
CONSECO FINANCE VEHICLE TRUST 1999-B
Distribution Date: ________
1. Amount Available ________
(a) Collection Account balance as of last day
of related Monthly Period ________
(b) Payments on account
of principal deposited during ________
first 10 days of current month
(c) Less payments on account of principal deposited
during first 10 days of preceding month ________
(d) Repurchase Proceeds ________
(e) Servicer Advances ________
(f) Self-Insurance Payments ________
(g) Termination Payments ________
(h) Payments on Liquidation or Auction of Trust Estate ________
2. Monthly Servicing Fee (if Conseco Finance is not the Servicer) ________
3. Servicer Advances reimbursed ________
Note Interest
- -------------
4. Amount actually distributed on account of Note
interest (current plus carryover) ________
5. Class A Principal Balance ________
6. Class A Interest Amount ________
7. Class M Principal Balance ________
8. Class M Interest Amount ________
9. Amount applied to Class A Interest Amount ________
10. Amount applied to Class M Interest Amount ________
C-1
<PAGE>
11. Class A Interest Carryover Shortfall ________
12. Amount applied to Unpaid Class A Interest Shortfall ________
13. Remaining Unpaid Class A Interest Shortfall ________
14. Class M Interest Carryover Shortfall ________
15. Amount applied to Unpaid Class M Interest Shortfall ________
16. Remaining Unpaid Class M Interest Shortfall ________
Total Principal Distribution Amount
- -----------------------------------
17. Formula Principal Distribution Amount: ________
(a) Scheduled principal ________
(b) Principal Prepayments ________
(c) Liquidated Contracts ________
(d) Repurchases ________
18. Aggregate of Formula Principal Shortfalls from prior
Distribution Dates ________
19. Total Principal Distribution Amount (line 17, plus line 18) ________
20. Amount actually distributed on account of principal
(lesser of line 19 or remaining Amount Available):
(a) Class A ________
(b) Class M ________
21. Formula Principal Shortfall for this Distribution Date (line
17 minus line 20, but not less than zero) ________
22. Accelerated Principal Distribution Amount (if applicable) ________
23. Class A LIBOR Carryforward Amount ________
24. Class M LIBOR Carryforward Amount ________
Portfolio Information
- ---------------------
25. Pool Scheduled Principal Balance ________
26. Pool Factor
(a) Class A ________
(b) Class M ________
C-2
<PAGE>
Aggregate Scheduled Balances of delinquent Contracts
as of Determination Date
27. 30 - 59 days
(a) Number ________
(b) Aggregate Principal Amount ________
28. 60 - 89 days
(a) Number ________
(b) Aggregate Principal Amount ________
29. 90 days or more
(a) Number ________
(b) Aggregate Principal Amount ________
30. Aggregate Scheduled Balances and number of Contracts that
became Defaulted Contracts this month ________
31. Aggregate Scheduled Balances and number of all Defaulted
Contracts as of end of month ________
32. Number of Products in Repossession of as of end of month ________
33. Number of Contracts that became Liquidated Contracts ________
34. Aggregate Amount of Servicer Advances with
respect to current Distribution Date ________
35. Amount paid to Servicer as reimbursement for
prior Servicer Advances ________
The amounts of principal and interest distributions set out above are
expressed as a dollar amount per $1,000 denomination of Note.
Please contact ____________________ of U.S. Bank Trust National
Association, ____________________ with any questions regarding this Statement or
your Distribution.
C-3
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE OF SERVICING OFFICER
CONSECO FINANCE CORP.
The undersigned certifies that [s]he is a [title] of Conseco Finance
Corp., a Delaware corporation (the "Originator"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Servicer
pursuant to Section 5.14 of the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1999 among the Servicer, Conseco Finance Securitizations
Corp., as Seller, and Conseco Finance Vehicle Trust 1999-B (all capitalized
terms used herein without definition having the respective meanings specified in
the Agreement), and further certifies that:
1. The Monthly Report for the period from ________________ to
________________ attached to this certificate is complete and accurate
in accordance with the requirements of Section 5.14 of the Agreement;
and
2. As of the date hereof, no Event of Termination or event
that with notice or lapse of time or both would become an Event of
Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ___ day
of ________________, 19___.
CONSECO FINANCE CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
D-1
<PAGE>
EXHIBIT E
FORM OF ADDITION NOTICE
-----------------------
_________________, 2000
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, MN 55101
Re: Sale and Servicing Agreement (the "Agreement"), dated as of
December 1, 1999, among Conseco Finance Corp. (the
"Originator") , Conseco Finance Securitizations Corp. (the
"Seller") and Conseco Finance Vehicle Trust 1999-B (the "Trust")
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the
meanings given them in the Agreement. The Seller hereby notifies the Indenture
Trustee of an assignment to the Trust of Subsequent Contracts on the date and in
the amounts set forth below:
Subsequent Transfer Date:_______________________
Cut-off Date Principal Balance of Subsequent Contracts to be assigned
to Trust on Subsequent Transfer Date: $__________________
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
CONSECO FINANCE SECURITIZATIONS CORP.
By:
---------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION
By:
---------------------------------
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
--------------------------------------
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1999, among the undersigned, Conseco Finance Corp. and
Conseco Finance Vehicle Trust 1999-B (the "Trust"), the undersigned does hereby
transfer, assign, set over and otherwise convey, without recourse, to the Trust
all right, title and interest of the Seller in and to (1) the retail installment
sales contracts and promissory notes identified in the List of Contracts
attached hereto (each a "Subsequent Contract"), and all moneys payable thereon
or in respect to the Subsequent Contracts, including any liquidation proceeds
therefrom but excluding payments due on the Subsequent Contracts prior to _____,
1999 (the "Subsequent Cut-off Date"), (2) all rights of the Seller under the
Subsequent Transfer Agreement with Conseco Finance Corp., (3) the Errors and
Omissions Protection Policy as such policy relates to the Subsequent Contracts,
(4) all items contained in the related Contract Files, and (5) all proceeds and
products of the foregoing.
This Subsequent Transfer Instrument is made pursuant to and upon the
representation and warranties on the part of the undersigned contained in
Section 2.03 and Article III of the Agreement and no others. All undefined
capitalized terms used in this Subsequent Transfer Instrument have the meanings
given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Subsequent Transfer
Instrument to be duly executed this _____ day of ____________, 1999.
CONSECO FINANCE SECURITIZATIONS CORP.
[Seal] By:
Name:
Title:
F-1
<PAGE>
EXHIBIT G
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
---------------------------------------------------
The undersigned certifies that [s]he is a [title] of Conseco Finance
Securitizations Corp., a Minnesota corporation (the "Seller"), and that as such
he is duly authorized to execute and deliver this certificate on behalf of the
Seller in connection with the Sale and Servicing Agreement dated as of December
1, 1999 (the "Agreement") among the Seller, Originator, Conseco Finance Corp.
and Conseco Finance Vehicle Trust 1999-B. All capitalized terms used herein
without definition have the respective meanings specified in the Agreement. The
undersigned further certifies that:
1. This Certificate is delivered in connection with the sale to the
Trust on _______________ (the "Subsequent Transfer Date") of Contracts (the
"Subsequent Contracts") identified in the List of Contracts attached to the
Subsequent Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and
warranties in Section 3.01, 3.02, 3.03 and 3.04 of the Agreement are true and
correct; all representations and warranties in Sections 3.02 and 3.03 of the
Agreement with respect to the Subsequent Contracts are true to the best of his
knowledge; and all representations in Section 3.04 of the Agreement with respect
to the Subsequent Contracts are true and correct.
3. All conditions precedent to the sale of the Subsequent Contracts to
the Trust under Section 2.03 of the Agreement have been satisfied.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of _______________, 1999.
By:
Name:
Title:
G-1
<PAGE>
EXHIBIT 4.3
CONSECO FINANCE VEHICLE TRUST 1999-B
--------------------
INDENTURE
Dated as of December l , 1999
--------------------
U.S. BANK TRUST NATIONAL ASSOCIATION
Trustee
<PAGE>
CROSS REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1).................................................. 6.11
(a)(2)................................................ 6.11
(a)(3)................................................ 6.10
(a)(4)................................................ N.A.
(a)(5)................................................ 6.11
(b)................................................... 6.08; 6.11
(c)................................................... N.A.
311(a)..................................................... 6.12
(b)................................................... 6.12
(c)................................................... N.A.
312(a)..................................................... 7.01
(b)................................................... 7.02
(c)................................................... 7.02
313(a)..................................................... 7.04
(b)(1)................................................ 7.04
(b)(2)................................................ 7.04
(c)................................................... 11.05
(d)................................................... 7.04
314(a)..................................................... 7.03
(b)................................................... 3.06 11.15
(c)(1)................................................ 11.01
(c)(2)................................................ 11.01
(c)(3)................................................ 11.01
(d)................................................... 11.01
(e)................................................... 11.01
(f)................................................... 11.01
315(a)..................................................... 6.01
(b)................................................... 6.05 11.05
(c)................................................... 6.01
(d)................................................... 6.01
(e)................................................... 5.14
316(a)(last sentence)...................................... 1.01
(a)(1)(A)............................................. 5.12
(a)(1)(B)............................................. 5.13
(a)(2)................................................ N.A.
(b)................................................... 5.08
(c)................................................... N.A.
317(a)(1).................................................. 5.03
(a)(2)................................................ 5.03
(b)................................................... 3.03
318(a)..................................................... 11.07
- ---------------
Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
Page
----
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........1-8
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..........................................2-1
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
ARTICLE III COVENANTS......................................................3-1
SECTION 3.01. Payment of Principal, Interest and Premium...............3-1
SECTION 3.02. Maintenance of Office or Agency..........................3-1
SECTION 3.03. Money for Payments To Be Held in Trust...................3-1
SECTION 3.04. Existence................................................3-3
SECTION 3.05. Protection of Trust Estate...............................3-3
SECTION 3.06. Opinions as to Trust Estate..............................3-3
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
SECTION 3.22. Removal of Administrator.................................3-9
-i-
<PAGE>
SECTION 3.23. Income Tax Characterization..............................3-9
SECTION 3.24. Investment Company Act...................................3-9
ARTICLE IV SATISFACTION AND DISCHARGE......................................4-1
SECTION 4.01. Satisfaction and Discharge of Indenture..................4-1
SECTION 4.02. Application of Trust Money...............................4-2
SECTION 4.03. Repayment of Moneys Held by Paying Agent.................4-2
SECTION 4.04. Release of Trust Estate..................................4-2
ARTICLE V REMEDIES.........................................................5-1
SECTION 5.01. Events of Default........................................5-1
SECTION 5.02. Rights upon Event of Default.............................5-2
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee; Authority of Trustee.........................5-2
SECTION 5.04. Remedies.................................................5-4
SECTION 5.05. Optional Preservation of the Contracts...................5-4
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 Noteholders...................................5-7
SECTION 5.13. Waiver of Past Defaults..................................5-7
SECTION 5.14. Undertaking for Costs....................................5-7
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 Trustee........................................6-1
SECTION 6.02. Rights of Trustee........................................6-2
SECTION 6.03. Individual Rights of Trustee.............................6-3
SECTION 6.04. Trustee's Disclaimer.....................................6-3
SECTION 6.05. Notice of Defaults.......................................6-4
SECTION 6.06. Reports by Trustee to Holders............................6-4
SECTION 6.07. Compensation and Indemnity...............................6-4
SECTION 6.08. Replacement of Trustee...................................6-4
SECTION 6.09. Successor Trustee by Merger..............................6-6
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee............6-6
SECTION 6.11. Eligibility; Disqualification............................6-7
SECTION 6.12. Preferential Collection of Claims Against Issuer.........6-7
SECTION 6.13. Trustee to Cooperate.....................................6-7
SECTION 6.14. Sale and Servicing Agreement.............................6-8
SECTION 6.15. Trustee Advances.........................................6-8
-ii-
<PAGE>
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS.................................7-1
SECTION 7.01. Issuer To Furnish Trustee Names and Addresses to
Noteholders..............................................7-1
SECTION 7.02. Preservation of Information; Communications to
Noteholders..............................................7-1
SECTION 7.03. Reports by Issuer........................................7-1
SECTION 7.04. Reports by Trustee.......................................7-2
ARTICLE VIII ACCOUNTS, DISBURSEMENTS AND RELEASES..........................8-1
SECTION 8.01. Collection of Money......................................8-1
SECTION 8.02. Trust Accounts...........................................8-1
SECTION 8.03. General Provisions Regarding Accounts....................8-2
SECTION 8.04. Determination of LIBOR...................................8-3
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
SECTION 9.07. Changes to Terms of Notes................................9-4
ARTICLE X REDEMPTION OF NOTES; MANDATORY TENDER...........................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
SECTION 10.04. Contract Pool Auction...................................10-2
SECTION 10.05. Mandatory Tender........................................10-3
ARTICLE XI MISCELLANEOUS..................................................11-1
SECTION 11.01. Compliance Certificates and Opinions, etc...............11-1
SECTION 11.02. Form of Documents Delivered to Trustee..................11-2
SECTION 11.03. Acts of Noteholders.....................................11-3
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating Agencies...11-4
SECTION 11.05. Notices to Noteholders; Waiver..........................11-4
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
SECTION 11.16. Trust Obligation........................................11-6
-iii-
<PAGE>
SECTION 11.17. No Petition.............................................11-6
SECTION 11.18. Inspection..............................................11-7
SECTION 11.19. Limitation of Liability.................................11-7
Exhibit A -- Schedule of Contracts
Exhibit B -- Form of Depository Agreement
Exhibit C -- Form of Class A Note
Exhibit D -- Form of Class M Note
-iv-
<PAGE>
INDENTURE, dated as of December l, 1999, between Conseco Finance
Vehicle Trust 1999-B, 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 "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
Asset-Backed Notes (the "Class A Notes") and Class M Asset-Backed Notes (the
"Class M Notes") which are referred to collectively as the "Notes"):
As security for the payment and performance by the Issuer of its
obligations under this Indenture and the Notes, the Issuer hereby grants,
transfers and assigns to the Trustee at the Closing Date, on behalf of and for
the benefit of the Noteholders, without recourse, to secure the payment and
performance of the Secured Obligations, the following (collectively, the
"Indenture Collateral").
GRANTING CLAUSE FIRST
All of the Issuer's right, title and interest, whether now owned or
hereafter acquired, whether now existing or hereafter arising and wherever
located, 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 Cutoff Date; (b) the Insurance Policies on any
Products securing a Contract for the benefit of the creditor of such Contract
and all blanket insurance policies to the extent they relate to the Contracts;
(c) the Errors and Omissions Protection Policy as such policy relates to the
Contracts; (d) all items contained in the Contract Files; (e) 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); (f) the CSFB Note Purchase Agreement, the Transfer
Agreement and the Sale and Servicing Agreement, and any Subsequent Transfer
Agreements and Subsequent Transfer Instruments; 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").
GRANTING CLAUSE SECOND
All other property of every name and nature from time to time
hereafter by delivery or by writing of any kind conveyed, pledged, assigned or
transferred, as and for additional security hereunder by the Issuer or by anyone
in its behalf or with its written consent to the Trustee, which is hereby
authorized to receive any and all such property at any and all times and to hold
and apply the same subject to the terms hereof.
<PAGE>
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Trustee, for the benefit of the Holders of the Notes, acknowledges
such Grant. The Trustee on behalf of the Holders of the Notes accepts the trusts
under this Indenture in accordance with the provisions of this Indenture and
agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
<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, 1999, among the Administrator, the Issuer and the Trustee, as the
same may be amended and supplemented from time to time.
"Administrator" means Conseco Finance Servicing Corporation, a Delaware
corporation, or any successor Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter).
"Book-Entry Note" means any Note registered in the name of the
Depository or its nominee, ownership of which is reflected on the books of the
Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in Minneapolis,
Minnesota, New York, New York, Wilmington, Delaware or any other location of any
successor Servicer, successor Owner Trustee or successor Trustee are authorized
or obligated by law, executive order or governmental decree to remain closed.
"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>
"Certificates" means the Class B Asset-Backed Certificates issued under
the Trust Agreement.
"Class A Notes" means the Class A Asset-Backed Notes substantially in
the form of Exhibit C-1.
"Class M Notes" means the Class M Asset-Backed Notes substantially in
the form of Exhibit C-2.
"Closing Date" means December 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the account established and maintained
pursuant to Section 6.01(a) of the Sale and Servicing Agreement.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Indenture is located at 180 East
Fifth Street, St. Paul, Minnesota 55101, Attention: Corporate Trust
Administration, Structured Finance; or at such other address as the Trustee may
designate from time to time by notice to the Noteholders and the Issuer, or the
principal corporate trust office of any successor Trustee (and such successor
Trustee will notify the Noteholders and the Issuer of its address).
"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
$536,957,000 in aggregate principal amount of the Class A Notes and $38,043,000
in aggregate principal amount of the Class M 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
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.
"Distribution Date" means the fifteenth day of each calendar month
during the term of this Indenture or if such day is not a Business Day, the next
succeeding Business Day,
1-2
<PAGE>
commencing in January 2000; provided that the Distribution Date in January 2001
shall be January 10, 2001.
"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 Distribution Date" means the Class A Final Scheduled
Distribution Date or the Class M Final Scheduled Distribution Date, as
applicable.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Indenture Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Indenture Collateral and all
other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the Granting party or otherwise and
generally to do and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indenture" means this Indenture as amended or supplemented from time
to time.
1-3
<PAGE>
"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 Depositor, the Servicer, the Seller 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
Depositor, the Servicer, the Seller or any Affiliate of any of the foregoing
Persons and (c) is not connected with the Issuer, any such other obligor, the
Depositor, the Servicer, the Seller or any Affiliate of any of the foregoing
Persons as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Insolvency Event" means, with respect to any Person, (i) an
involuntary case or other proceeding is commenced in a court having jurisdiction
in the premises in respect of such Person or any substantial part of its
property under any applicable Insolvency Law now or hereafter in effect, seeking
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the ordering of the winding-up or liquidation of such Person's
affairs, and either (A) an order for relief is entered in such case or other
proceeding or (B) such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 consecutive days or (ii) the
commencement by such Person of a voluntary case under any applicable Insolvency
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 debts as such debts become due, or the taking
of action by such Person in furtherance of any of the foregoing.
"Insolvency Laws" means the Federal Bankruptcy Code, as amended (Title
11 of the United States Code) and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar debtor relief laws
from time to time in effect affecting the rights of creditors generally.
"Interest Rate" means the Class A Interest Rate or the Class M 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.
1-4
<PAGE>
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
"LIBOR Carryforward Amount" means any Class A LIBOR Carryforward Amount
or any Class M LIBOR Carryforward Amount, as applicable.
"Mandatory Tender Date" means January 5, 2001.
"Note" means a Class A Note or a Class M Note.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(b) 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 Purchase Agreement Counterparty" means Credit Suisse First
Boston, New York Branch.
"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 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 Trustee and which
shall comply with any applicable requirements of Section 11.01, and shall be in
form and substance satisfactory to the Trustee.
"Original Class A Principal Balance" means $536,957,000.
"Original Class M Principal Balance" means $38,043,000.
"Original Note Principal Balance" means the sum of the Original Class A
Principal Balance and Original Class M Principal Balance.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
1-5
<PAGE>
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor, satisfactory to the Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Related Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Depositor, the
Servicer, the Seller or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that the Trustee
knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Depositor, the Servicer, the Seller or any Affiliate of any of the
foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or class of Notes, as applicable, Outstanding at the date of determination.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, or any successor
owner trustee under the Trust Agreement.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the distributions from the Note Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"Person" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of
1-6
<PAGE>
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.
"Purchase Price" means, with respect to any Note, the Principal Balance
thereof on the Mandatory Tender Date, all interest thereon accrued to but
excluding the Mandatory Tender Date but not paid, and any Class A LIBOR
Carryforward Amount or Class A LIBOR Carryforward Amount, as applicable,
allocable to such Note.
"Rating Agency" means each of Standard & Poor's and Fitch, so long as
such Persons maintain a rating on the Notes; and if either Standard & Poor's or
Fitch no longer maintains a rating on the Notes, such other nationally
recognized statistical rating organization selected by the Seller.
"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 Servicer, the Trustee, the Owner Trustee
or the Issuer in writing that such action will not result in a reduction or
withdrawal of the then current rating of the Notes.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the last Business Day immediately preceding such
Distribution Date or Redemption Date.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.01, or the Distribution Date specified by the Servicer or
the Issuer pursuant to Section 10.01(a).
"Redemption Price" means 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, and plus any LIBOR
Carryforward Amounts that have accrued and are unpaid for each such Class of
Notes.
"Reference Banks" shall mean three major banks in the London interbank
market selected by the Servicer to determine and provide LIBOR on the basis of
quotations of the offered rates for one-month United States dollar deposits
following the LIBOR Determination Date.
"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 Transfer Agreement, the Trust Agreement,
the Note Purchase Agreements, the Certificates, the Notes, the Sale and
Servicing Agreement, the Administration Agreement, the Depository Agreement and
the Underwriting Agreement and
1-7
<PAGE>
related Terms Agreement, between the Company and the Underwriters of the Notes.
The Related Documents executed by any party are referred to herein as "such
party's Related Documents," "its Related Documents" or by a similar expression.
"Responsible Officer" means, with respect to the Trustee, any officer
of the Trustee assigned by the Trustee to administer its corporate trust affairs
relating to the Trust Estate.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of December 1, 1999, among the Issuer, the Seller, the Originator 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 Trustee for the benefit of the
Noteholders under this Indenture or the Notes.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Termination Date" means the date on which the Trustee shall have
received payment and performance of all Secured Obligations.
"Trust Estate" means all money, instruments, rights and other property
that are subject or intended to be subject to the lien and security interest of
this Indenture for the benefit of the Noteholders (including, without
limitation, the Indenture Collateral Granted to the Trustee), including all
proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"Trustee" means U.S. Bank Trust National Association, a national
banking association organized under the laws of the United States, as Trustee
under this Indenture, or any successor Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
1-8
<PAGE>
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless otherwise specified:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(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.
1-9
<PAGE>
ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A Notes and the Class M Notes, in each
case together with the Trustee's certificate of authentication, shall be in
substantially the forms set forth in Exhibits C-1 and C-2, 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 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 and C-2 are part of the terms of this
Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of an Issuer Order, authenticate and
deliver Class A Notes in an aggregate principal amount of $536,957,000 and Class
M Notes in an aggregate principal amount of $38,043,000. The aggregate principal
amount of Class A Notes and Class M Notes outstanding at any time may not exceed
that amount except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with
2-1
<PAGE>
such variations not inconsistent with the terms of this Indenture as the
officers executing such Notes may determine, as evidenced by their execution of
such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Trustee shall authenticate and the Noteholder shall
obtain from the Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations, of a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes in
any authorized denominations, of a like aggregate principal amount, upon
surrender of the Notes to be exchanged at such office or agency. Whenever any
Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee
shall authenticate and the Noteholder shall obtain from the Trustee, the Notes
which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the
2-2
<PAGE>
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing, with such signature guaranteed by a commercial bank or
trust company located, or having a correspondent located, in The City of New
York or the city in which the Corporate Trust Office is located, or by a member
firm of a national securities exchange, and such other documents as the Trustee
may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee and such security or indemnity as may be
required by them to hold the Issuer and the Trustee harmless, then, in the
absence of notice to the Issuer, the Note Registrar or the Trustee that such
Note has been acquired by a bona fide purchaser, the Issuer shall execute and
upon its request the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement
Note; provided, however, that if any such destroyed, lost or stolen Note, but
not a mutilated Note, shall have become or within seven days shall be due and
payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer and the Trustee shall be entitled to
recover such replacement Note (or such payment) from the Person to whom it was
delivered or any Person taking such replacement Note from such Person to whom
such replacement Note was delivered or any assignee of such Person, except a
bona fide purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time
2-3
<PAGE>
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.06. Person Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the forms of the
Class A Note and the Class M Note set forth in Exhibits C-1 and C-2,
respectively, and such interest shall be payable on each Distribution Date as
specified therein, subject to Section 3.01. Any installment of interest or
principal, if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Distribution Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the Record Date, by check mailed first-class, postage prepaid to such
Person's address as it appears on the Note Register on such Record Date, except
that, unless Definitive Notes have been issued pursuant to Section 2.11, with
respect to Notes registered on the Record Date in the name of the nominee of the
Depository, payment will be made by wire transfer in immediately available funds
to the account designated by such nominee and except for (i) the final
installment of principal payable with respect to such Note on a Distribution
Date and (ii) the Redemption Price for any Note called for redemption pursuant
to Section 10.01(a), which shall be payable as provided in subsection (b) below.
Notwithstanding the above, any holder of 5% or more of the Outstanding Amount of
a Class of Notes may request payment of interest and principal by wire transfer
in immediately available funds to the account of such holder subject to the
exceptions contained in clauses (i) and (ii) of the immediately preceding
sentence. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Distribution Date as provided in the forms of the Class A Note and the Class M
Note set forth in Exhibits C-1 and C-2, 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 be continuing and the Trustee or a Note Majority have declared
the Notes to be immediately due and payable in the manner provided in Section
5.02. All principal payments on a Class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto. The Trustee shall notify the Person
in whose name a Note is registered at the close of business on the Record Date
preceding the Distribution Date on which the Issuer expects that the final
installment of principal of and interest on such Note will be paid. Such notice
shall be
2-4
<PAGE>
mailed no later than five days prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it, provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Depository
(or the Trustee as custodian on its behalf), by or on behalf of the Issuer. Each
such Note shall initially be registered on the Note Register in the name of Cede
& Co., the nominee of the initial Depository, and no Note Owner will receive a
Definitive Note representing such Note Owner's interest in such Note, except as
provided in Section 2.11. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Depository for all purposes of this Indenture (including
the payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole holder of the Notes,
and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Depository and shall be limited to those established by law and
agreements between such Note Owners and the Depository and/or the
Depository Participants. Pursuant to the Depository Agreement, unless
and until Definitive Notes are issued pursuant to Section 2.11, the
initial Depository will make book-entry transfers among the Depository
Participants and receive and transmit payments of principal of and
interest on the Notes to such Depository Participants; and
2-5
<PAGE>
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount of the
Notes, the Depository shall be deemed to represent such percentage only
to the extent that it has received instructions to such effect from
Note Owners and/or Depository Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to the Trustee.
SECTION 2.10. Notices to Depository. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Depository and shall have no
obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Administrator advises the
Trustee in writing that the Depository is no longer willing or able properly to
discharge its responsibilities with respect to the Notes, and the Administrator
is unable to locate a qualified successor, (ii) the Administrator at its option
advises the Trustee in writing that it elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Default, a
Note Majority advises the Depository in writing that the continuation of a
book-entry system through the Depository is no longer in the best interests of
the Note Owners, then the Depository shall notify all Note Owners and the
Trustee of the occurrence of any such event and of the availability of
Definitive Notes to Note Owners requesting the same. Upon surrender to the
Trustee of the Note or Notes representing the Book-Entry Notes by the
Depository, accompanied by registration instructions, the Issuer shall execute
and the Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Depository. None of the Issuer, the Note Registrar or the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Trustee shall recognize the Holders
of the Definitive Notes as Noteholders.
2-6
<PAGE>
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal, Interest and Premium. The Issuer
will duly and punctually pay the principal and interest on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, the Issuer will cause to be distributed all amounts on deposit in the
Note Distribution Account on a Distribution Date in accordance with Section
8.02(c). Amounts properly withheld under the Code by any Person from a payment
to any Noteholder of interest and/or principal shall be considered as having
been paid by the Issuer to such Noteholder for all purposes of this Indenture.
The Notes shall be subject to mandatory tender on the
Mandatory Tender Date to the Note Purchase Agreement Counterparty, acting
pursuant to the CSFB Note Purchase Agreement. On the Mandatory Tender Date, the
Issuer will pay the Purchase Price of each Note in accordance with Section
10.05, so long as and to the extent that it has received the Purchase Price
thereof from the Note Purchase Agreement Counterparty pursuant to the CSFB Note
Purchase Agreement.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will maintain
in St. Paul, Minnesota, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Trustee to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Trustee of the
location, and of any change in the location, of any such office or agency. If at
any time the Issuer shall fail to maintain any such office or agency or shall
fail to furnish the Trustee with the address thereof, such surrenders, notices
and demands may be made or served at the Corporate Trust Office, and the Issuer
hereby appoints the Trustee as its agent to receive all such surrenders, notices
and demands.
SECTION 3.03. Money for Payments To Be Held in Trust. As provided in
Section 8.02, all payments of amounts due and payable with respect to any Notes
that are to be made pursuant to Section 8.02(c) from amounts withdrawn from the
Note Distribution Account shall be made on behalf of the Issuer by the 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 Distribution 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 (unless the
Paying Agent is the Trustee) shall promptly notify the Trustee of its action or
failure so to act.
3-1
<PAGE>
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
(ii) give the Trustee notice of any default (of which it has
actual knowledge) by the Issuer (or any other obligor upon the Notes)
in the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and upon
Issuer Request shall be deposited by the Trustee in the Collection Account; and
the Holder of such Note shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of
3-2
<PAGE>
such money then remaining will be repaid to or for the account of the Issuer.
The Trustee may also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment (including, but not limited
to, mailing notice of such repayment to Holders whose Notes have been called but
have not been surrendered for redemption or whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the Trustee
or of any Paying Agent, at the last address of record for each such Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Indenture Collateral and each
other instrument or agreement included in the Trust Estate.
SECTION 3.05. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee to
be prior to all other liens in respect of the Trust Estate, and the Issuer shall
take all actions necessary to obtain and maintain, in favor of the Trustee, for
the benefit of the Noteholders, a first lien on and a first priority, perfected
security interest in the Trust Estate. The Issuer will from time to time execute
and deliver all such supplements and amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, all as prepared by the Servicer and delivered to the Issuer, and
will take such other action necessary or advisable to:
(i) grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Indenture Collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Trustee in such Trust Estate against the claims of all
persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required by the Trustee pursuant to this Section.
3-3
<PAGE>
SECTION 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the
Issuer shall furnish to the Trustee an Opinion of Counsel to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Trustee's first priority perfected security interest in
the collateral for the benefit of the Noteholders, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest; and
(b) Within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cutoff
Date, the Issuer shall furnish to the Trustee an Opinion of Counsel, dated as of
a date during such 90-day period, to the effect that, in the opinion of such
counsel, either (i) all financing statements and continuation statements have
been executed and filed that are necessary to create and continue the Trustee's
first priority perfected security interest in the collateral for the benefit of
the Noteholders, and reciting the details of such filing or referring to prior
Opinions of Counsel in which such details are given, or (ii) no such action
shall be necessary to perfect such security interest.
SECTION 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, the Sale and Servicing Agreement or such
other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officers' Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Related Documents
and in the instruments and agreements included in the Trust Estate, including
but not limited to filing or causing to be filed all UCC financing statements
and continuation statements required to be filed by the terms of this Indenture
and the Sale and Servicing Agreement in accordance with and within the time
periods provided for herein and therein.
(d) If the Issuer shall have knowledge of the occurrence of an "Event
of Termination" under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Trustee and the Rating Agencies thereof, and shall specify
in such notice the action, if any, the Issuer is taking with respect of such
default. If an "Event of Termination" shall arise from the failure of the
3-4
<PAGE>
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 7.02 of the Sale and
Servicing Agreement, as promptly as possible thereafter, a successor servicer
shall be appointed in accordance with Section 7.03 of the Sale and Servicing
Agreement.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Sale and Servicing Agreement, the Issuer shall promptly notify the
Trustee. As soon as a successor Servicer is appointed, the Issuer shall notify
the Trustee of such appointment, specifying in such notice the name and address
of such successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer, the Trustee or the Company of their respective
duties under the Related Documents if the effect thereof would adversely affect
the Holders of the Notes.
SECTION 3.08. Negative Covenants. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by this Indenture or the
Sale and Servicing Agreement, sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer, including
those included in the Trust Estate, unless directed to do so by the
Trustee;
(ii) claim any credit on, or make any deduction from the
principal, interest or premium payable in respect of, the Notes (other
than amounts properly withheld from such payments under the Code) or
assert any claim against any present or former Noteholder by reason of
the payment of the taxes levied or assessed upon any part of the Trust
Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien in favor of the Trustee
created by this Indenture to be amended, hypothecated, subordinated,
terminated or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this Indenture
except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance
(other than the lien in favor of the Trustee created by this Indenture)
to be created on or extend to or otherwise arise upon or burden the
Trust Estate or any part thereof or any interest therein or the
proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Product and arising solely as a result of an action or omission of the
related Obligor), (C) permit the lien in favor of the Trustee created
by this Indenture not to constitute a valid first priority (other than
with respect to any such tax, mechanics' or other lien) security
interest in the Trust Estate, or (D) amend, modify or fail to comply
with the provisions of the Related Documents without the prior written
consent of the Trustee.
3-5
<PAGE>
SECTION 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year ended December 31, 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 Trustee, in form and substance
satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture and each
other Related Document on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Trustee to
the effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created in favor of the Trustee by this Indenture
shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (a)(v) of this Section 3.10 or
that no such actions will be taken) each stating that such
consolidation or merger and such supplemental indenture comply with
this Article III and
3-6
<PAGE>
that all conditions precedent herein provided for relating to such
transaction have been compiled with (including any filing required by
the Exchange Act); and
(vii) the Issuer or the Person (if other than the Issuer)
formed by or surviving such consolidation or merger has a net worth,
immediately after such consolidation or merger, that is (a) greater
than zero and (b) not less than the net worth of the Issuer immediately
prior to giving effect to such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Indenture or the Sale and Servicing
Agreement), unless
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the United
States of America or any State, (B) expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form and
substance satisfactory to the Trustee, the due and punctual payment of
the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture and each
Related Document on the part of the Issuer to be performed or observed,
all as provided herein, (C) expressly agree by means of such
supplemental indenture that all right, title and interest so conveyed
or transferred shall be subject and subordinate to the rights of
Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall make
all filings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Trustee to
the effect that such transaction will not have any material adverse tax
consequence to the Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created in favor of the Trustee by this Indenture
shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an
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
3-7
<PAGE>
conveyance or transfer and such supplemental indenture comply with this
Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any
filing required by the Exchange Act); and
(vii) the Person acquiring by conveyance or transfer the
properties or assets of the Issuer has a net worth, immediately after
such conveyance or transfer, that is (a) greater than zero and (b) not
less than the net worth of the Issuer immediately prior to giving
effect to such conveyance or transfer.
SECTION 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10(b), the Issuer will be released from every
covenant and agreement of this Indenture to be observed or performed on the part
of the Issuer with respect to the Notes immediately upon the delivery of written
notice to the Trustee stating that the Issuer is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the Related Documents
and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes and (ii) any other Indebtedness permitted
by or arising under the Related Documents. The proceeds of the Notes and the
Certificates shall be used exclusively to fund the Issuer's purchase of the
Contracts and the other assets specified in the Sale and Servicing Agreement,
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, 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.
3-8
<PAGE>
SECTION 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17. Restricted Payments. Except as expressly permitted by
this Indenture or the Sale and Servicing Agreement, the Issuer shall not,
directly or indirectly, (i) make any distribution (by reduction of capital or
otherwise), whether in cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest in the Issuer or
otherwise with respect to any ownership or equity interest or security in or of
the Issuer or to the Servicer, (ii) redeem, purchase, retire or otherwise
acquire for value any such ownership or equity interest or security or (iii) set
aside or otherwise segregate any amounts for any such purpose. The Issuer will
not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the Related
Documents.
SECTION 3.18. Notice of Events of Default. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Default or
Event of Default hereunder and each default on the part of the Servicer or the
Originator of its obligations under the Sale and Servicing Agreement.
SECTION 3.19. Further Instruments and Acts. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the noncompliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
Related Document.
SECTION 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 10.03 of the
Sale and Servicing Agreement or Section 11.1 of the Trust Agreement to eliminate
the requirements thereunder that the Trustee or the Holders of the Notes consent
to amendments thereto as provided therein.
SECTION 3.22. Removal of Administrator. So long as any Notes are issued
and Outstanding, the Issuer shall not remove the Administrator without cause
unless the Rating Agency Condition shall have been satisfied in connection with
such removal.
SECTION 3.23. Income Tax Characterization. For purposes of federal
income, state and local income and franchise and any other income taxes, the
Issuer will treat the Notes as indebtedness of the Issuer. The Issuer, by
entering into this Indenture, and each Noteholder, by its acceptance of its Note
(and each Note Owner by its acceptance of an interest in the applicable
Book-Entry Note), agree to treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebtedness of the Issuer.
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
3-9
<PAGE>
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.
3-10
<PAGE>
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, 3.17, 3.20, 3.21, 3.23 and 3.24, (v) the
rights, obligations and immunities of the Trustee hereunder (including the
rights of the Trustee under Section 6.07 and the obligations of the Trustee
under Section 4.02) and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Trustee payable to all or any
of them, and the Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.05 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.03) have
been delivered to the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at the applicable
Final Scheduled Distribution Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as part of the Trust Estate cash or direct obligations of or
obligations guaranteed by the United States of America (which will
mature prior to the date such amounts are payable), in trust in an
Eligible Account in the name of the Trustee for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation when
due to the applicable Final Scheduled Distribution Date or Redemption
Date (if Notes shall have been called for redemption pursuant to
Section 10.01(a)), as the case may be;
4-1
<PAGE>
(B) the Issuer has paid or caused to be paid all Secured
Obligations; and
(C) the Issuer has delivered to the Trustee an Officers'
Certificate, an Opinion of Counsel and (if required by the TIA
or the Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been
complied with and the Rating Agency Condition has been
satisfied.
SECTION 4.02. Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.01 hereof shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
SECTION 4.04. Release of Trust Estate. The Trustee shall, on or after
the Termination Date, release any remaining portion of the Trust Estate from the
lien created by this Indenture and deposit in the Collection Account any funds
then on deposit in any other Trust Account. The Trustee shall release property
from the lien created by this Indenture pursuant to this Section 4.04 only upon
receipt of an Issuer Request accompanied by an Officer's Certificate, an Opinion
of Counsel and (if required by the TIA) Independent Certificates in accordance
with TIA ss.ss. 314(c) and 314(d)(1) meeting the applicable requirements of
Section 11.01.
4-2
<PAGE>
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 the Notes when
the same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) default in the payment of the principal of any Note on
the Final Scheduled Distribution Date for the Notes of such Class; or
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proving to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer by the Trustee or to the Issuer and the
Trustee by the Holders of at least 25% of the Outstanding Amount of the
Notes, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(iv) the commencement of an involuntary case against the
Issuer under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, and such case is not
dismissed within 60 days; or
(v) the commencement by the Issuer of a voluntary case under
any applicable Federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, the entry of an order for relief in an
involuntary case against the Issuer under any such law, the consent by
the Issuer to the entry of any such order for relief, the consent by
the Issuer to the appointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial part of the Trust Estate,
the making by the Issuer of any general assignment for the benefit of
creditors, the failure by the Issuer generally to pay its debts as such
debts become due, or the taking of action by the Issuer in furtherance
of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after
obtaining knowledge of the occurrence thereof, written notice in the form of an
Officers' Certificate of any event which with
5-1
<PAGE>
the giving of notice and the lapse of time would become an Event of Default
under clause (iii), its status and what action the Issuer is taking or proposes
to take with respect thereto.
SECTION 5.02. Rights upon Event of Default. If an Event of Default
shall have occurred and be continuing, the Trustee in its discretion may, or if
so requested in writing by Holders holding Notes representing at least 66-2/3%
of the Outstanding Amount of the Notes shall, upon prior written notice to the
Rating Agencies, declare by written notice to the Issuer that the Notes become,
whereupon they shall become, immediately due and payable at par, together with
accrued interest thereon. For the avoidance of doubt, an Event of Default in
Section 5.01(iii) shall be deemed to relate to and affect each Class of Notes.
Notwithstanding anything to the contrary in this Section, if an Event of Default
specified in Section 5.01(iv) or (v) shall occur and be continuing the Notes
shall become immediately due and payable at par, together with accrued interest
thereon. If an Event of Default shall have occurred and be continuing, the
Trustee may exercise any of the remedies specified in Section 5.04(a).
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Trustee.
(a) The Issuer covenants that if any Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of such Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel.
(b) If an Event of Default occurs and is continuing, the Trustee may,
in its discretion, proceed to protect and enforce its rights and the rights of
the Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
5-2
<PAGE>
(i) to file and prove a claim or claims for the whole amount
of principal, interest and premium, if any, owing and unpaid in respect
of the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for reasonable compensation to the Trustee and
each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee or the Holders of Notes allowed in any judicial
proceedings relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Trustee,
each predecessor Trustee and their respective agents, attorneys and counsel, and
all other expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of negligence or bad
faith.
(d) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(e) All rights of action and of asserting claims under this Indenture
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(f) In any Proceedings brought by the Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Trustee shall be held to represent all the
5-3
<PAGE>
Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such Proceedings.
SECTION 5.04. Remedies.
(a) If an Event of Default shall have occurred and be continuing, the
Trustee may (subject to Section 5.05):
(i) institute Proceedings in its own name and as or on behalf
of a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes moneys
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and any other remedy available to the Trustee and take any other
appropriate action to protect and enforce the rights and remedies of
the Trustee on behalf of the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law; provided, however, that the
Trustee may not sell or otherwise liquidate the Trust Estate following
an Event of Default unless (A) such Event of Default is of the type
described in Section 5.01(i) or (ii), or (B) either (I) the Holders of
100% of the Outstanding Amount of the Notes consent thereto, (II) the
proceeds of such sale or liquidation distributable to the Noteholders
will be sufficient to discharge in full all amounts then due and unpaid
upon such Notes for principal and interest, or (III) the Trustee
determines that the Trust Estate will not continue to provide
sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared
due and payable, and in each case the Trustee provides prior written
notice to the Rating Agencies and obtains the consent of Holders of
66-2/3% of the Outstanding Amount of each Class of Notes. In
determining such sufficiency or insufficiency with respect to clause
(II) or (III), the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and
as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.05. Optional Preservation of the Contracts. If any Notes have
been declared to be due and payable under Section 5.02 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent
5-4
<PAGE>
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Trust
Estate for such purpose.
SECTION 5.06. Priorities.
If the Trustee collects any money or property pursuant to this Article
V, including any money or property in respect of liquidation of the Trust Estate
pursuant to Section 5.04(a)(iv), the Trustee shall pay out the money or property
as promptly as practicable in the following order:
(i) amounts due and owing and required to be distributed to
the Servicer, pursuant to priorities (i) and (ii) of Section 6.04(a) of
the Sale and Servicing Agreement and not previously distributed, in the
order of such priorities and without preference or priority of any kind
within such priorities;
(ii) interest due under the Class A Notes, to the Holders
thereof, ratably, without preference or priority of any kind;
(iii) for interest due under the Class M Notes, to the Holders
thereof, ratably, without preference or priority of any kind;
(iv) for principal outstanding under the Class A Notes, to the
Holders thereof, ratably, without preference or priority of any kind;
(v) for principal outstanding under the Class M Notes, to the
Holders thereof, notably, without preference or priority of any kind;
(vi) for any Class A LIBOR Carryforward Amount, to the Class A
Noteholders, ratably, without preference or priority of any kind;
(vii) for any Class M LIBOR Carryforward Amount, to the Class
M Noteholders, ratably, without preference or priority of any kind;
and the excess shall be deposited in the Certificate Distribution Account for
payment to the Class B Certificateholder.
SECTION 5.07. Limitation of Suits. No Holder of any Class M 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 any Senior Notes are then outstanding and unpaid. No
Holder of any Note shall have any right to institute any Proceeding, judicial or
otherwise, with respect to this Indenture, or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
5-5
<PAGE>
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Trustee to
institute such Proceeding in respect of such Event of Default in its
own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
Proceedings; and
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.08. Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or any
Noteholder has instituted any Proceeding to enforce any right or remedy under
this Indenture and such Proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
5-6
<PAGE>
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Noteholders, as the case may be.
SECTION 5.12. Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any Proceeding for any remedy available to the Trustee
with respect to the Notes or exercising any trust or power conferred on the
Trustee; provided that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any
direction to the Trustee to sell or liquidate all or any portion of the
Trust Estate shall be by the Holders of Notes representing not less
than 100% of the Outstanding Amount of the Notes;
(iii) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction; provided,
however, that, subject to Section 6.01, the Trustee need not take any
action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not
consenting to such action.
SECTION 5.13. Waiver of Past Defaults. The Holders of Notes of not less
than a majority of the Outstanding Amount of (i) the Class A Notes, or (ii) the
Class M Notes if all Class A Notes have been paid in full, may waive any past
Default or Event of Default and its consequences except a Default (a) in payment
of principal of or interest on any of the Notes or (b) in respect of a covenant
or provision hereof which cannot be modified or amended without the consent of
the Holder of each Note. In the case of any such waiver, the Issuer, the Trustee
and the Holders of the Notes shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto. Upon any
such waiver, such Default shall cease to exist and be deemed to have been cured
and not to have occurred, and any Event of Default arising therefrom shall be
deemed to have been cured and not to have occurred, for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit
5-7
<PAGE>
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any suit
instituted by the Trustee, (b) any suit instituted by any Noteholder, or group
of Noteholders, in each case holding in the aggregate more than 10% of the
Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder for
the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.16. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
SECTION 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so and at the
Administrator's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Originator or the Servicer, as applicable, of each of their obligations to the
Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Trustee, including the transmission of notices of default on the part of
the Seller, the Originator or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Seller, the Originator or the Servicer of each of their obligations under
the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the Trustee
may, and at the direction (which direction shall be in writing, including
facsimile) of the Holders of 66-2/3% of the Outstanding Amount of (i) the Class
A Notes or (ii) the Class M Notes if all Class A Notes have been paid in full,
shall exercise all rights, remedies, powers, privileges and claims of the Issuer
against the Seller, the Originator 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 Seller, the
Originator or the Servicer of each of their
5-8
<PAGE>
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.
5-9
<PAGE>
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture with the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture and, if applicable, the Trustee's other Related
Documents.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Issuer.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
6-1
<PAGE>
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) In no event shall the Trustee be required to perform, or be
responsible for the manner of performance of, any of the obligations of the
Servicer, or any other party, under the Sale and Servicing Agreement unless and
until appointed successor Servicer in accordance with Section 7.03 thereof.
(j) The Trustee shall, and hereby agrees that it will, perform all of
the obligations and duties required of it under the Sale and Servicing
Agreement.
(k) Without limiting the generality of this Section 6.01, the Trustee
shall have no duty (i) to see to any recording, filing or depositing of this
Indenture or any agreement referred to herein or any financing statement
evidencing a security interest in the Products, or to see to the maintenance of
any such recording or filing or depositing or to any recording, refiling or
redepositing of any thereof, (ii) to see to any insurance of the Products or
Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust, (iv) to confirm or verify the contents of any
reports or certificates delivered to the Trustee pursuant to this Indenture or
the Sale and Servicing Agreement believed by the Trustee to be genuine and to
have been signed or presented by the proper party or parties, or (v) to inspect
the Products at any time or ascertain or inquire as to the performance of
observance of any of the Issuer's, the Originator'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.
SECTION 6.02. Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate (with respect to factual matters) or an Opinion of
Counsel, as applicable. The Trustee shall not be liable for any action it takes
or omits to take in good faith in reliance on the Officers' Certificate or
Opinion of Counsel, as applicable, or as directed by the requisite amount of
Note Owners as provided herein.
6-2
<PAGE>
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes, pursuant to the
provisions of this Indenture, unless such Holders of Notes shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; provided, however, that the
Trustee shall, upon the occurrence of an Event of Default (that has not been
cured), exercise the rights and powers vested in it by this Indenture with
reasonable care and skill.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Holders of Notes
evidencing not less than 25% of the Outstanding Amount thereof; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture or the
Sale and Servicing Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding; the
reasonable expense of every such examination shall be paid by the Person making
such request, or, if paid by the Trustee, shall be reimbursed by the Person
making such request upon demand.
SECTION 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee is required to comply with Sections 6.11 and 6.12.
SECTION 6.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Trust Estate or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in the Indenture or in any document issued in
6-3
<PAGE>
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the mandatory redemption provisions of such
Note), the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
SECTION 6.06. Reports by Trustee to Holders. The Trustee shall deliver
to each Noteholder such information as may be required to enable such holder to
prepare its federal and state income tax returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall or shall
cause the Administrator to pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall or
shall cause the Administrator to reimburse the Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including the costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Issuer
shall or shall cause the Administrator to indemnify the Trustee against any and
all loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder. The Trustee shall notify the Issuer and the Administrator
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall or shall cause the
Servicer to defend any such claim, and the Trustee may have separate counsel and
the Issuer shall or shall cause the Administrator to pay the fees and expenses
of such counsel. Neither the Issuer not the Administrator need reimburse any
expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 5.01(iv) or (v)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuer. The Issuer may remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
6-4
<PAGE>
(ii) a court having jurisdiction in the premises in respect of
the Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the Trustee or for
any substantial part of the Trustee's property, or ordering the
winding-up or liquidation of the Trustee's affairs;
(iii) an involuntary case under the federal bankruptcy laws,
as now or hereafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law is commenced with respect
to the Trustee and such case is not dismissed within 60 days;
(iv) the Trustee commences a voluntary case under any federal
or state banking or bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or other similar official) for the Trustee
or for any substantial part of the Trustee's property, or makes any
assignment for the benefit of creditors or fails generally to pay its
debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing; or
(v) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Noteholders. The retiring Trustee shall promptly transfer all property held by
it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to this Section and payment of all fees and
6-5
<PAGE>
expenses owed to the outgoing Trustee. Notwithstanding the replacement of the
Trustee pursuant to this Section, the retiring Trustee shall be entitled to
payment or reimbursement of such amounts as such Person is entitled pursuant to
Section 6.07.
SECTION 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided that such corporation or
banking association shall be otherwise qualified and eligible under Section
6.11. The Trustee shall provide the Rating Agencies prompt notice of any such
transaction.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust may at the time be located, the Trustee shall have
the power and may execute and deliver all instruments to appoint one or more
Persons to act as a co-trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, such title to
the Trust Estate, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Trustee
may consider necessary or desirable. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be
6-6
<PAGE>
exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VI. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Indenture.
SECTION 6.11. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and shall not be an Affiliate of the
Company. The Trustee shall comply with TIA 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
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.13. Trustee to Cooperate.
(a) Upon payment in full on any Contract, the Servicer will notify the
Trustee and the Originator (if the Originator 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
6-7
<PAGE>
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 to the Servicer. Upon receipt of such delivery and request, the Trustee
shall promptly release or cause to be released such Contract to the Servicer.
Upon receipt of such Contract, each of the Originator (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 Product. 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.
SECTION 6.14. Sale and Servicing Agreement. Insofar as such provisions
describe rights or duties of the Trustee, the Trustee acknowledges and agrees to
the terms of Sections 3.05, 4.01, 5.17, and 10.03 and Articles VI, VII and VIII
of the Sale and Servicing Agreement. Such provisions are incorporated herein by
reference. U.S. Bank Trust National Association hereby accepts its appointment
as Paying Agent for the Certificates as set forth in Section 3.9 of the Trust
Agreement and agrees to the provisions contained in Section 5.2(f) of the Trust
Agreement.
SECTION 6.15. Trustee Advances.
(a) If the Servicer fails to deposit into the Collection Account
Advances as required by Section 5.13 of the Sale and Servicing Agreement, then
the Trustee shall, subject to the provisions of paragraph (b) below, from its
own funds, deposit into the Collection Account the amount not so deposited by
the Servicer on or before the Business Day preceding the related Distribution
Date (an "Trustee Advance").
(b) The Trustee shall not be required to make any Trustee Advance if
and to the extent that it determines in good faith that the funds, if advanced,
would not be recoverable by it from subsequent amounts available in the
Collection Account in accordance with Section 6.06(a) of the Sale and Servicing
Agreement.
(c) The Trustee shall be entitled to reimbursement of an Trustee
Advance from funds subsequently available therefor in the Collection Account in
accordance with Section 6.06(a) of the Sale and Servicing Agreement.
6-8
<PAGE>
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer To Furnish Trustee Names and Addresses to
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (a)
not more than five days after the earlier of (i) each Record Date and (ii) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date, (b) at such other times as the Trustee may request in writing,
within 30 days after receipt by the Issuer of any such request, a list of
similar form and content as of a date not more than 10 days prior to the time
such list is furnished; provided, however, that so long as the Trustee is the
Note Registrar, no such list shall be required to be furnished.
SECTION 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the 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 Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA ss. 313(c)) such summaries of
any information, documents
7-1
<PAGE>
and reports required to be filed by the Issuer pursuant to clauses (i)
and (ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.04. Reports by Trustee. If required by TIA ss. 313(a), within
60 days after each March 31 beginning with March 31, 2000, the Trustee shall
mail 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 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 Trustee with the Commission and each stock exchange, if any, on
which the Notes are listed. The Issuer shall notify the Trustee if and when the
Notes are listed on any stock exchange.
7-2
<PAGE>
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of this
Indenture or the Notes, the Trustee may take such action as may be appropriate
to enforce such payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Trustee, for the benefit
of the Noteholders and 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.
(c) On each Distribution Date, the Trustee shall distribute all amounts
on deposit in the Note Distribution Account to Noteholders in respect of the
Notes to the extent of amounts due and unpaid on the Notes for principal and
interest, in accordance with the instructions of the Servicer in the following
order of priority:
1. To pay the Holders of the Class A Notes:
(i) the Class A Interest Amount; and
(ii) any Unpaid Class A Interest Shortfall.
2. To pay the Holders of Class M Notes:
(i) the Class M Interest Amount; and
(ii) any Unpaid Class M Interest Shortfall.
3. To pay to that Class of Notes then entitled to principal,
the Total Principal Distribution Amount, plus the Accelerated Principal
Distribution Amount, if applicable.
8-1
<PAGE>
4. To pay the Holders of Class A Notes, the Class A LIBOR
Carryforward Amount.
5. To pay the Holders of Class M Notes, the Class M LIBOR
Carryforward Amount.
(d) If the Trustee shall not have received the applicable Monthly
Report by any Distribution Date, the Trustee shall distribute all funds then in
the Note Distribution Account to Noteholders in accordance with Section 8.02(c),
to the extent of such funds, on such Distribution Date.
(e) The Trustee agrees, to the extent required by the Code, to withhold
from each payment due hereunder or under any Note, United States withholding
taxes at the appropriate rate, and, on a timely basis, to deposit such amounts
with an authorized depository and make such returns, filings and other reports
in connection therewith as are required of it under the Code. Any Noteholder
which is eligible for an exemption from or reduction of withholding of United
States federal income taxes shall, from time to time, provide to the Trustee in
a timely manner all appropriate and properly completed forms indicating such
eligibility, as may be necessary to permit the Trustee not to withhold taxes
from payments due to such Noteholder. In connection with the foregoing, the
Trustee shall promptly furnish to each Noteholder in a timely fashion such U.S.
Treasury forms as are required by the Code to be furnished to such Noteholder
indicating payment of any taxes withheld from any payments by the Trustee to
such Noteholder. The Trustee shall be fully protected in relying upon, and each
Noteholder by its acceptance of a Note hereunder agrees to indemnify and hold
the Trustee harmless against all claims or liability of any kind arising in
connection with or related to the Trustee's reliance upon any documents, forms
or information provided by any Noteholder to the Trustee. In addition, if the
Trustee has not withheld taxes on any payment made to any Noteholder, and the
Trustee is subsequently required to remit to any taxing authority any such
amount not withheld, such Noteholder shall return such amount to the Trustee
upon written demand by the Trustee. In no event shall the Trustee be liable for
consequential damages to any Noteholder.
SECTION 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Trust Accounts shall be
invested and reinvested in Eligible Investments in accordance with the
provisions of Section 6.01(e) of the Sale and Servicing Agreement. All income or
other gain from investments of moneys deposited in such Trust Accounts shall be
deposited by the Trustee in the Collection Account, and any loss resulting from
such investments shall be charged to the related Trust Account. The Issuer will
not direct the Trustee to make any investment of any funds or to sell any
investment held in any of the Trust Accounts unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Issuer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
8-2
<PAGE>
(b) Subject to Section 6.01(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m., New
York City time (or such other time as may be agreed by the Issuer and Trustee),
on any Business Day or (ii) a Default or Event of Default shall have occurred
and be continuing with respect to the Notes but the Notes shall not have been
declared due and payable pursuant to Section 5.02 or (iii) if such Notes shall
have been declared due and payable following an Event of Default, amounts
collected or receivable from the Trust Estate are being applied in accordance
with Section 5.05 as if there had not been such a declaration, then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments.
SECTION 8.04. Determination of LIBOR.
(a) On each LIBOR Determination Date, the Trustee shall determine LIBOR
on the basis of the rate for deposits in United States dollars for a period
equal to the relevant Interest Accrual Period which appears on Telerate Page
3750 as of 11:00 a.m., London time, on such date. If such rate does not appear
on Telerate Page 3750, the rate for the LIBOR Determination Date shall be
determined on the basis of the rates at which deposits in United States dollars
are offered by the Reference Banks at approximately 11:00 a.m., London time, on
that day to prime banks in the London interbank market for a period equal to the
relevant Interest Accrual Period. The Trustee shall request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that LIBOR Determination
Date shall be the arithmetic mean of the quotations (rounded upward to the
nearest 0.015625%). If fewer than two quotations are provided as requested, the
rate for that LIBOR Determination Date will be the arithmetic mean (rounded
upward to the nearest 0.015625%) of the rates quoted by major banks in New York
City, selected by the Servicer, at approximately 11:00 a.m., New York City time,
on that day for loans in United States dollars to leading European banks for a
period equal to the relevant Interest Accrual Period; provided, however, that if
the Trustee is unable to determine a rate in accordance with one of the
procedures described above, LIBOR shall be LIBOR as determined on the most
recent LIBOR Determination Date.
(b) The Class A Interest Rate and the Class M Interest Rate applicable
to the then current and the immediately preceding Interest Accrual Periods may
be obtained by any Noteholder by telephoning the Trustee at its Corporate Trust
Office at (651) 244-5000.
(c) On each LIBOR Determination Date, the Trustee shall send to the
Servicer by facsimile notification of LIBOR for the following Interest Accrual
Period.
8-3
<PAGE>
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies, the Issuer and the Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Trustee any property subject or required to
be subjected to the lien created by this Indenture, or to subject to
the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or to make any other provisions with respect to matters or
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not adversely affect the
interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor Trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may be expressly required by the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
9-1
<PAGE>
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
SECTION 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies, and with the consent of the Holders of not less
than a majority of the Outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that, no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provision of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article V, to
the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to direct the Issuer to sell or
liquidate the Trust Estate pursuant to Section 5.04;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the Related Documents cannot be
modified or waived without the consent of the Holder of each
Outstanding Note affected thereby;
9-2
<PAGE>
(vi) modify any of the provisions of this Indenture in such
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Distribution Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of Notes to the
benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
(vii) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part
of the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien created by this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security provided by the lien created by this Indenture.
The Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture, and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Trustee shall not be
liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes and the Rating Agencies to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Trustee to mail
such notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
9-3
<PAGE>
SECTION 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
SECTION 9.07. Changes to Terms of Notes.
(a) If the Note Purchase Agreement Counterparty or its assignee has
become the holder of 100% of the Notes and has notified the Trustee and the
Owner Trustee that CFVSC has defaulted in its obligation to purchase the Notes
under the CFVSC Note Purchase Agreement, then, upon prior written notice to the
Rating Agencies but without further action on the part of the Issuer, the
Noteholders or the Certificateholders,
(i) the Class A Interest Rate shall be changed to LIBOR plus
1.160%;
(ii) the Class M Interest Rate shall be changed to LIBOR plus
2.420%;
and, in addition to the Supplemental Indentures permitted by Section 9.02, the
Issuer and the Trustee, when directed by a written order of 100% of the
Noteholders, with prior written notice to the Rating Agencies, shall enter into
an indenture or indentures supplemental hereto for the purpose of:
(i) changing the Class A Interest Rate and the Class M
Interest Rate to fixed rates, provided that such fixed rates do not
exceed a rate per annum determined by the Noteholders, in light of
current market conditions and the performance of the Contracts, to be
sufficient such that the net proceeds to the Noteholders from a sale of
the Notes with such fixed rates would not be less than the sum of the
amount paid by the Note Purchase Agreement Counterparty under the CSFB
Note Purchase Agreement plus costs and expenses of the Note Purchase
Agreement Counterparty in connection with the purchase and holding of
the Notes;
(ii) extending the Class A Final Scheduled Distribution Date
and the Class M Final Scheduled Distribution Date to the Distribution
Date in the month that is six months after the maturity date of the
then-outstanding Contract with the latest maturity date; and
9-4
<PAGE>
(iii) making such other changes as are necessary to obtain or
maintain a desired rating of the Notes.
(b) If the Note Purchase Agreement Counterparty or its assignee has
become the holder of 100% of the Notes and has not notified the Trustee and the
Owner Trustee that CFVSC has defaulted in its obligation to purchase the Notes
under the CFVSC Note Purchase Agreement, then, in addition to the Supplemental
Indentures permitted by Section 9.02, the Issuer and the Trustee, when directed
by a written order of 100% of the Noteholders, with prior notice to the Rating
Agencies but without the consent of the Rating Agencies, shall enter into an
indenture or indentures supplemental hereto for the purpose of:
(i) changing the Class A Interest Rate and the Class M
Interest Rate to fixed rates, provided that such fixed rates do not
exceed 6.5% per annum; and
(ii) extending the Class A Final Scheduled Distribution Date
and the Class M Final Scheduled Distribution Date to the Distribution
Date in the month that is six months after the maturity date of the
then-outstanding Contract with the latest maturity date,
provided that such supplemental indenture also provides for an Eligible Account
to be established in the name of the Trustee for the benefit of the Noteholders,
into which all amounts otherwise distributable on the Class B Certificate shall
be deposited until the aggregate amount so deposited equals $4,639,604, and the
funds on deposit in such account shall be treated as part of the Amount
Available on each Distribution Date thereafter.
9-5
<PAGE>
ARTICLE X
REDEMPTION OF NOTES; MANDATORY TENDER
SECTION 10.01. Redemption.
(a) In the event that (i) the Class B Certificateholder pursuant to
Section 8.01 of the Sale and Servicing Agreement purchases the corpus of the
Trust or (ii) the corpus of the Trust is sold pursuant to Section 10.04 below,
the Notes are subject to redemption in whole, but not in part, on the
Distribution 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 Seller, the Servicer or the
Issuer shall furnish the Rating Agencies notice of such redemption. If the Notes
are to be redeemed pursuant to this Section 10.01(a), the Servicer or the Issuer
shall furnish notice of such election to the Trustee not later than 25 days
prior to the Redemption Date, and the Issuer shall deposit with the Trustee in
the Note Distribution Account the Redemption Price of the Notes to be redeemed,
whereupon all such Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 10.02 to each Holder of the
Notes.
SECTION 10.02. Form of Redemption Notice.
(a) Notice of redemption under Section 10.01(a) shall be given by the
Trustee by first-class mail, postage prepaid, mailed not less than five days
prior to the applicable Redemption Date to each Holder of Notes, as of the close
of business on the Record Date with respect to the Distribution Date immediately
preceding the applicable Redemption Date, at such Holder's address appearing in
the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the
office or agency of the Issuer to be maintained as
provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
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
10-1
<PAGE>
for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
SECTION 10.04. Contract Pool Auction.
If the Class B Certificateholder (or its assignee) has not delivered to
the Trustee the notice of exercise of its purchase option required by Section
8.01(b) of the Sale and Servicing Agreement by the Distribution Date occurring
in the month following the Determination Date specified in Section 8.01(d) of
the Sale and Servicing Agreement, then promptly after the following Distribution
Date the Trustee shall begin a process for soliciting bids in connection with an
auction for the Contracts. The Trustee shall provide the Class B
Certificateholder (or its assignee) written notice of such auction at least 10
Business Days prior to the date bids must be received in such auction (the
"Auction Date"). If the Note Purchase Agreement Counterparty fails to deposit
the entire Class A Note Purchase Price and Class M Note Purchase Price as
required by the Note Purchase Agreement, or if at any time an Insolvency Event
occurs with respect to the Note Purchase Agreement Counterparty or the Note
Purchase Agreement Counterparty disavows its obligation to purchase all of the
Notes on the Mandatory Tender Date, the Trustee shall also begin a process for
soliciting bids in connection with an auction for the Contracts.
If at least two bids are received, the Trustee shall solicit and
resolicit new bids from all participating bidders until only one bid remains or
the remaining bidders decline to resubmit bids. The Trustee shall accept the
highest of such remaining bids if it is equal to or in excess of the greater of
(i) the Minimum Purchase Price and (ii) the fair market value of the Contracts
and related property (such amount being referred to as the "Minimum Auction
Price"). If less than two bids are received or the highest bid after the
resolicitation process is completed is not equal to or in excess of the Minimum
Auction Price, the Indenture Trustee shall not consummate such sale. If a bid
meeting the Minimum Purchase Price is received, then the Indenture Trustee may,
and if so requested by the Class B Certificateholder shall, consult with a
financial advisor, which may be an underwriter of the Note, to determine if the
fair market value of the Contracts and related property has been offered.
If the first auction conducted by the Trustee does not produce any bid
at least equal to the Minimum Auction Price, then the Trustee shall, beginning
on the Distribution Date occurring approximately three months after the Auction
Date for the failed first auction, commence another auction in accordance with
the requirements of this Section 10.04. If such second auction does not produce
any bid at least equal to the Minimum Auction Price, then the Trustee shall,
beginning on the Distribution Date occurring approximately three months after
the Auction Date for the failed second auction, commence another auction in
accordance with the requirements of this Section 10.04, and shall continue to
conduct similar auctions approximately every three months thereafter until the
earliest of (i) delivery by the Class B Certificateholder or its assignee of
notice of exercise of its purchase option under Section 8.01(a) of the Sale and
Servicing Agreement, (ii) receipt by the Trustee of a bid meeting the conditions
specified in the preceding paragraph, or (iii) the Distribution Date on which
the principal balance of all the Contracts is reduced to zero.
10-2
<PAGE>
If the Trustee receives a bid meeting the conditions specified in this
Section 10.04, then the Trustee shall release to the winning bidder, upon
payment of the bid purchase price, the Contract Files pertaining to the
Contracts being purchased.
SECTION 10.05. Mandatory Tender.
(a) The Notes are subject to mandatory tender for purchase at the
Purchase Price on the Mandatory Tender Date. The Holders of the Notes may not
elect to retain their Notes.
(b) Notice of mandatory tender of Notes shall be given by first class
mail, postage prepaid, by the Trustee to the Holders of the Notes not less than
twenty (20) days prior to the Mandatory Tender Date.
(c) On the Mandatory Tender Date, the Trustee shall remit all funds
that it has previously received from the Note Purchase Agreement Counterparty in
respect of the Purchase Price of the Notes to the Holders thereof, at the
Corporate Trust Office or by bank wire transfer to a designated account of the
Holder. Such payments shall be made in immediately available funds.
(d) On the Mandatory Tender Date, so long as the Note Purchase
Agreement Counterparty previously remitted the entire aggregate Purchase Price,
the Trustee shall register and deliver all the Notes in accordance with the
instructions of the Note Purchase Agreement Counterparty by 11:30 a.m. New York
City time. Upon payment of the entire aggregate Purchase Price, the Note
Purchase Agreement Counterparty or its designee shall be the Holder of all the
Notes for all purposes hereunder.
(e) Each Holder must deliver its Notes to the Corporate Trust Office by
11:30 a.m. New York City time on or before December 29, 2000 for purchase on the
Mandatory Tender Date. If the Holder of any Note fails to surrender such Note to
the Trustee on the Mandatory Tender Date, and if the Trustee is in receipt of
the Purchase Price therefor, such Note shall nevertheless be deemed purchased on
the Mandatory Tender Date and ownership of such Note shall be transferred to the
Note Purchase Agreement Counterparty as provided in subsection (d) of this
Section 10.05. Any Holder who fails to deliver a Note for purchase as required
above shall have no further rights thereunder except the right to receive the
Purchase Price thereof upon presentation and surrender of said Note to the
Trustee. The provisions of Section 3.03 shall apply to any such funds.
(f) Notwithstanding anything to the contrary contained in this Section
10.05, for so long as the Depository or its nominee is the sole registered owner
of the Notes, the manner in which any payment of the Purchase Price to such
Depository or its nominee shall be made under the provisions of this Section
10.05 shall be subject to such arrangements among such Depository, the Issuer
and the Trustee as shall be in effect from time to time and all tenders and
deliveries of Notes under the provisions of this Section 10.05 shall be made
pursuant to the Depository's procedures as in effect from time to time and none
of the Issuer, the Owner Trustee or the Trustee shall have any responsibility
for or liability with respect to the implementation of such procedures.
10-3
<PAGE>
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee (i) an 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.
(b)(i) Prior to the deposit of any Indenture Collateral or
other property or securities with the Trustee that is to be made the
basis for the release of any property subject to the lien created by
this Indenture, the Issuer shall, in addition to any obligation imposed
in Section 11.01(a) or elsewhere in this Indenture, furnish to the
Trustee an Officers' Certificate certifying or stating the opinion of
each person signing such certificate as to the fair value (within 90
days of such deposit) to the Issuer of the Indenture Collateral or
other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee
an Officers' Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (i) above, the
Issuer shall also deliver to the Trustee an Independent
11-1
<PAGE>
Certificate as to the same matters, if the fair value to the Issuer of
the property to be so deposited and of all other such property made the
basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the
certificates delivered pursuant to clause (i) above and this clause
(ii), is 10% or more of the Outstanding Amount of the Notes, but such a
certificate need not be furnished with respect to any property so
deposited, if the fair value thereof to the Issuer as set forth in the
related Officers' Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to any release described in
clause (A) or (B) of Section 11.01(b)(v), whenever any property or
securities are to be released from the lien created by this Indenture,
the Issuer shall also furnish to the Trustee an Officers' Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in
the opinion of such person the proposed release will not impair the
security created by this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee
an Officers' Certificate certifying or stating the opinion of any
signer thereof as to the matters described in clause (iii) above, the
Issuer shall also furnish to the Trustee an Independent Certificate as
to the same matters if the fair value of the property or securities and
of all other property or securities (other than property described in
clauses (A) or (B) of Section 11.01(b)(v)) released from the lien
created by this Indenture since the commencement of the then current
fiscal year, as set forth in the certificates required by clause (iii)
above and this clause (iv), equals 10% or more of the Outstanding
Amount of the Notes, but such certificate need not be furnished in the
case of any release of property or securities if the fair value thereof
as set forth in the related Officers' Certificate is less than $25,000
or less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Issuer may, without compliance with the other provisions of this
Section, (A) collect, liquidate, sell or otherwise dispose of Contracts
as and to the extent permitted or required by the Related Documents
(including as provided in Section 5.06 of the Sale and Servicing
Agreement) and (B) make cash payments out of the Trust Accounts as and
to the extent permitted or required by the Related Documents.
SECTION 11.02. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless
11-2
<PAGE>
such officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Company or the Issuer, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Company or the Issuer, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
VI.
SECTION 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted
11-3
<PAGE>
or suffered to be done by the Trustee or the Issuer in reliance thereon, whether
or not notation of such action is made upon such Note.
SECTION 11.04. Notices, etc., to Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
(b) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if made in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: Conseco
Finance Vehicle Trust 1999-B, in care of Wilmington Trust Company, as
Owner Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration or at any other address previously furnished in writing
to the Trustee by Issuer. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Trustee, or
(c) the Rating Agencies by the Issuer, the Trustee or the
Owner Trustee shall be sufficient for every purpose hereunder if made
in writing, personally delivered or mailed by certified mail, return
receipt requested to (i) in the case of Fitch IBCA, Inc., at the
following address: One State Street Plaza, New York, New York 10004,
Attention: ABS Surveillance Group and (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's Ratings Service, 55
Wall Street, New York, New York 10041; or as to each of the foregoing,
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 shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
11-4
<PAGE>
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices. The Issuer will furnish to the Trustee a copy of each such agreement
and the Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA 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 Trustee in this Indenture shall bind its
successors.
SECTION 11.10. Severability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other Person with an ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
11-5
<PAGE>
SECTION 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14. Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee,) to the effect that such recording is necessary either for the
protection of the Noteholders or any other Person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
SECTION 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Trustee or of any successor or assign of the Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles VI, VII and VIII of the
Trust Agreement.
SECTION 11.17. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Company, the Issuer or any
General Partner, or join in any institution against the Company, the Issuer or
any General Partner of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any United States federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, this Indenture or any of the Related Documents.
11-6
<PAGE>
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
SECTION 11.19. 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 Conseco Finance Vehicle Trust 1999-B, 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 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.
CONSECO FINANCE VEHICLE TRUST 1999-B
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 Trustee
By __________________________________
Name:
Title:
11-8
<PAGE>
EXHIBIT A
Schedule of Contracts
A-1
<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.
CONSECO FINANCE VEHICLE TRUST 1999-B
CLASS A ASSET-BACKED NOTE
REGISTERED $________
NO. R-________ CUSIP NO.________
Conseco Finance Vehicle Trust 1999-B, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of [ ] payable on each Distribution Date
in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $__________ 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 Notes pursuant to Section 3.01 of the
Indenture; provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of January 10, 2001 (the "Class A
Final Scheduled Distribution 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 Interest Rate
on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date). Interest on this Note will accrue for
each Distribution Date from the most recent Distribution Date on which interest
has been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from December 16, 1999. Interest will be computed on the basis of
actual days elapsed and a year of 360 days. Such principal of and interest on
this Note, together with any Class A LIBOR Carryforward Amount, shall be paid in
the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to
C-1-1
<PAGE>
interest due and payable on this Note as provided above and then to the unpaid
principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
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: December ____, 1999
CONSECO FINANCE VEHICLE TRUST 1999-B
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 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 Asset-Backed Notes (herein called the "Class A
Notes"), all issued under an Indenture dated as of December 1, 1999 (such
indenture, as supplemented or amended, herein called the "Indenture"), between
the Issuer and U.S. Bank Trust National Association, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture) to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Trustee and the Holders of the Class A Notes. The Class A 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 Notes are and will be senior in payment prior and
collateral rights to the Class M Asset-Backed Notes (the "Class M Notes"),
together with the Class A Notes, the "Notes").
Principal of the Class A Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing January 18, 2000.
Interest on the Class A Notes will be payable on each Distribution Date
in an amount equal to the lesser of (i) interest at the rate of 0.160% per annum
above LIBOR determined on determined on the related LIBOR Determination Date for
each Interest Accrual Period or (ii) 9.96% (such rate, as in effect from time to
time, the "Class A Interest Rate"). Interest on the Class A Notes will accrue
from the Closing Date and will be distributed on January 18, 2000, and on the
15th day of each month thereafter, or if such day is not a Business Day, on the
next succeeding Business Day (each, a "Distribution Date"), in an amount equal
to the product of (a) the actual number of days in the related Interest Accrual
Period divided by 360, (b) the Class A Interest Rate and (c) the Class A
Principal Balance for such Distribution Date.
The Issuer shall pay interest on overdue installments of interest at
the Class A Interest Rate to the extent lawful.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class A Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.01 of
the Indenture. All principal payments on the Class A Notes shall be made pro
rata to the Class A Noteholders entitled thereto.
After payment of all interest and principal then due on the Class A and
Class M Notes for any Distribution Date, the Amount Available for that
Distribution Date will be available to pay any Class A LIBOR Carryforward Amount
(as defined in the Indenture).
The Class A Notes will be subject to mandatory tender, with no right to
retain, on January 5, 2001, to Credit Suisse First Boston, New York Branch (the
"Note Purchase
C-1-5
<PAGE>
Agreement Counterparty") at a price equal to the Class A Principal Balance, plus
all accrued and unpaid interest on the Class A Notes, plus any unpaid Class A
LIBOR Carryforward Amount. The obligations of the Note Purchase Agreement
Counterparty to accept and pay for the Class A Notes on the Mandatory Tender
Date are subject to the conditions specified in the Note Purchase Agreement,
dated as of December 16, 1999, among the Issuer, the Trustee and the Note
Purchase Agreement Counterparty.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee; provided further, that any holder of 5% or
more of a Class of a Note may request payment of interest and principal by wire
transfer in immediately available funds to the account of such holder. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment. Any
reduction in the principal amount of this Note (or any one or more Predecessor
Notes) affected by any payments made on any Distribution Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as of
the Record Date with respect to the Distribution Date immediately preceding such
Redemption Date by notice mailed within five days of such Redemption Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in The
City of New York.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(a) of the Indenture, in whole, but not in part, at the option of
the Class B Certificateholder on any Distribution Date on or after the date on
which the Pool Scheduled Principal Balance is less than or equal to 20% of the
Cutoff Date Pool Principal Balance. If such redemption option is not exercised,
then bids will be solicited by the Trustee for the purchase of the Contracts
remaining in the Trust. If a bid is received and the amount of such bid is at
least equal to the greater of the fair market value of the Contracts or the
amount equal to all unpaid fees and advances of the Servicer plus all unpaid
interest and principal on the Notes, the Contracts will be sold and the net sale
proceeds distributed to effect early retirement of the Notes.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by the Holder hereof or his attorney duly authorized in
writing, with such
C-1-6
<PAGE>
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the city in which the Corporate Trust Office is
located, or a member firm of a national securities exchange, and such other
documents as the Trustee may require, and thereupon one or more new Notes of
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Trustee or the Owner Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Trustee or of any
successor or assign of the Seller, the Servicer, the Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed and except that any such partner, owner or beneficiary shall be fully
liable, to the extent provided by applicable law, for any unpaid consideration
for stock, unpaid capital contribution or failure to pay any installment or call
owing to such entity.
Each Noteholder will be deemed to represent that either (1) it is not
acquiring the note with the assets of a pension, profit sharing or other
employee benefit plan, or an individual retirement account or Keogh Plan,
subject to Title I of ERISA or Section 4975 of the Internal Revenue Code; or (2)
the acquisition and holding of the note will not give rise to a nonexempt
prohibited transaction exemption under Section 406(e) of ERISA or Section 4975
or the Internal Revenue 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 Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
C-1-7
<PAGE>
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note shall be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. 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
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
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.
CONSECO FINANCE VEHICLE TRUST 1999-B
CLASS M ASSET-BACKED NOTE
REGISTERED $________
NO. R-________ CUSIP NO.________
Conseco Finance Vehicle Trust 1999-B, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of [ ] payable on each Distribution Date
in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $___________ 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 Notes pursuant to Section 3.01 of the
Indenture; provided, however, that the entire unpaid principal amount of this
Note shall be due and payable on the earlier of January 10, 2001 (the "Class M
Final Scheduled Distribution 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 Interest Rate
on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date). Interest on this Note will accrue for
each Distribution Date from the most recent Distribution Date on which interest
has been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from December 16, 1999. 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, together with any Class A LIBOR Carryforward Amount, shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to
C-2-1
<PAGE>
interest due and payable on this Note as provided above and then to the unpaid
principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
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: December 16, 1999
CONSECO FINANCE VEHICLE TRUST 1999-B
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 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 Asset-Backed Notes (herein called the "Class M
Notes"), all issued under an Indenture dated as of December 1, 1999 (such
indenture, as supplemented or amended, herein called the "Indenture"), between
the Issuer and U.S. Bank Trust National Association, as trustee (the "Trustee,"
which term includes any successor Trustee under the Indenture) to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Trustee and the Holders of the Class A-2 Notes. The Class M 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 M Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture, and are
and will be subordinate in payment priority and collateral rights to the Class A
Notes (together with the Senior Notes, the "Notes").
Principal of the Class M Notes will be payable on each Distribution
Date in an amount described on the face hereof. "Distribution Date" means the
fifteenth day of each month, or, if any such date is not a Business Day, the
next succeeding Business Day, commencing January 15, 2000.
Interest on the Class M Notes will be payable on each Distribution Date
in an amount equal to the lesser of (i) interest at the rate of 0.420% per annum
above LIBOR determined on determined on the related LIBOR Determination Date for
each Interest Accrual Period or (ii) 9.96% (such rate, as in effect from time to
time, the "Class M Interest Rate"). Interest on the Class M Notes will accrue
from the Closing Date and will be distributed on January 18, 2000, and on the
15th day of each month thereafter, or if such day is not a Business Day, on the
next succeeding Business Day (each, a "Distribution Date"), in an amount equal
to the product of (a) the actual number of days in the related Interest Accrual
Period divided by 360, (b) the Class M Interest Rate and (c) the Class M
Principal Balance for such Distribution Date.
The Issuer shall pay interest on overdue installments of interest at
the Class M Interest Rate to the extent lawful.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Class M Final Scheduled
Distribution Date and the Redemption Date, if any, pursuant to Section 10.01 of
the Indenture. All principal payments on the Class M Notes shall be made pro
rata to the Class M Noteholders entitled thereto.
After payment of all interest and principal then due on the Class A and
Class M Notes for any Distribution Date, the Amount Available for that
Distribution Date will be available to pay any Class M LIBOR Carryforward Amount
(as defined in the Indenture).
The Class M Notes will be subject to mandatory tender, with no right to
retain, on January 5, 2001, to Credit Suisse First Boston, New York Branch (the
"Note Purchase
C-2-5
<PAGE>
Agreement Counterparty") at a price equal to the Class M Principal Balance, plus
all accrued and unpaid interest on the Class M Notes, plus any unpaid Class M
LIBOR Carryforward Amount. The obligations of the Note Purchase Agreement
Counterparty to accept and pay for the Class M Notes on the Mandatory Tender
Date are subject to the conditions specified in the Note Purchase Agreement,
dated as of December 16, 1999, among the Issuer, the Trustee and the Note
Purchase Agreement Counterparty.
Payments of interest on this Note due and payable on each Distribution
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person whose
name appears as the Registered Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Depository (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee; provided further, that any holder of 5% or
more of a Class of a Note may request payment of interest and principal by wire
transfer in immediately available funds to the account of such holder. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment. Any
reduction in the principal amount of this Note (or any one or more Predecessor
Notes) affected by any payments made on any Distribution Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Note on a Distribution Date, then the Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Registered Holder hereof as of
the Record Date with respect to the Distribution Date immediately preceding such
Redemption Date by notice mailed within five days of such Redemption Date and
the amount then due and payable shall be payable only upon presentation and
surrender of this Note at the Trustee's principal Corporate Trust Office or at
the office of the Trustee's agent appointed for such purposes located in The
City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Class M Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed pursuant to
Section 10.01(a) of the Indenture, in whole, but not in part, at the option of
the Class B Certificateholder on any Distribution Date on or after the date on
which the Pool Scheduled Principal Balance is less than or equal to 20% of the
Cutoff Date Pool Principal Balance. If such redemption option is not exercised,
then bids will be solicited by the Trustee for the purchase of the Contracts
remaining in the Trust. If a bid is received and the amount of such bid is at
least equal to the greater of the fair market value of the Contracts or the
amount equal to all unpaid fees and advances of the Servicer plus all unpaid
interest and principal on the Notes, the Contracts will be sold and the net sale
proceeds distributed to effect early retirement of the Notes.
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
C-2-6
<PAGE>
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the city in which the Corporate Trust Office is
located, or a member firm of a national securities exchange, and such other
documents as the Trustee may require, and thereupon one or more new Notes of
authorized denominations and in the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Servicer, the Trustee or the Owner Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Seller, the Servicer, the Trustee or the Owner Trustee in its individual
capacity, any holder of a beneficial interest in the Issuer, the Owner Trustee
or the Trustee or of any successor or assign of the Trustee or the Owner Trustee
in its individual capacity, except as any such Person may have expressly agreed
and except that any such partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid consideration for stock,
unpaid capital contribution or failure to pay any installment or call owing to
such entity.
Each Noteholder will be deemed to represent that either (1) it is not
acquiring the note with the assets of a pension, profit sharing or other
employee benefit plan, or an individual retirement account or Keogh Plan,
subject to Title I of ERISA or Section 4975 of the Internal Revenue Code; or (2)
the acquisition and holding of the note will not give rise to a nonexempt
prohibited transaction exemption under Section 406(e) of ERISA or Section 4975
or the Internal Revenue 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 Seller, the Issuer or any
General Partner, or join in any institution against the Seller, the Issuer or
any General Partner of, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Related Documents.
It is the intent and agreement of the Issuer, the Trustee, the
Noteholders and Note Owners that, for purposes of federal income, state and
local income and franchise and any other income taxes, the Notes will be treated
as indebtedness of the Issuer. Each Noteholder and Note Owner, by acceptance of
this Note or, in the case of a Note Owner, a beneficial interest in this Note,
C-2-7
<PAGE>
covenants and agrees to treat this Note as indebtedness for such tax purposes
and to take no action inconsistent with such treatment.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and any agent of the Issuer or the Trustee may treat the
Person in whose name this Note (as of the day of determination or as of such
other date as may be specified in the Indenture) is registered as the owner
hereof for all purposes, whether or not this Note shall be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Holders of Notes representing a
majority of the Outstanding Amount of each Class of Notes. 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
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances,
to merge or consolidate, subject to the rights of the Trustee and the Holder of
Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
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 4.4
TRANSFER AGREEMENT
between
CONSECO FINANCE SECURITIZATIONS CORP.
Purchaser
and
CONSECO FINANCE CORP.
Seller
dated as of
December 1, 1999
CONSECO FINANCE VEHICLE TRUST 1999-B
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS........................................................1
SECTION 1.1. General....................................................1
SECTION 1.2. Specific Terms.............................................1
SECTION 1.3. Usage of Terms.............................................3
SECTION 1.4. No Recourse................................................3
ARTICLE II CONVEYANCE OF THE INITIAL CONTRACTS AND THE INITIAL
COLLATERAL SECURITY...............................................3
SECTION 2.1. Conveyance of the Initial Contracts and the Initial
Collateral Security........................................3
SECTION 2.2. Purchase Price of Initial Contracts........................4
SECTION 2.3. Conveyance of Subsequent Contracts and Subsequent
Collateral Security........................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES...................................5
SECTION 3.1. Representations and Warranties of Seller...................5
SECTION 3.2. Representations and Warranties of CFSC.....................7
ARTICLE IV COVENANTS OF THE SELLER...........................................9
SECTION 4.1. Transfer of Contracts......................................9
SECTION 4.2. Costs and Expenses.........................................9
SECTION 4.3. Indemnification............................................9
SECTION 4.4. Financial Statement Disclosure............................10
ARTICLE V REPURCHASES.......................................................10
SECTION 5.1. Repurchase of Contracts Upon Breach of Warranty...........10
SECTION 5.2. Reassignment of Purchased Contracts.......................10
SECTION 5.3. Waivers...................................................11
ARTICLE VI MISCELLANEOUS....................................................11
SECTION 6.1. Liability of Seller.......................................11
SECTION 6.2. Merger or Consolidation of Seller or CFSC.................11
SECTION 6.3. Limitation on Liability of Seller and Others..............12
SECTION 6.4. Amendment.................................................12
SECTION 6.5. Notices...................................................13
SECTION 6.6. Merger and Integration....................................13
SECTION 6.7. Severability of Provisions................................13
SECTION 6.8. Intention of the Parties..................................13
SECTION 6.9. Governing Law.............................................14
SECTION 6.10. Counterparts..............................................14
SECTION 6.11. Conveyance of the Initial Contracts and the Initial
Collateral Security to the Trust..........................14
-i-
<PAGE>
SECTION 6.12. Nonpetition Covenant......................................14
-ii-
<PAGE>
SCHEDULES
Schedule A -- Schedule of Initial Contracts
EXHIBITS
Exhibit A -- Form of Subsequent Transfer Agreement
-iii-
<PAGE>
TRANSFER AGREEMENT
------------------
THIS TRANSFER AGREEMENT, dated as of December 1, 1999, executed between
Conseco Finance Securitizations Corp., a Minnesota corporation, as purchaser
("CFSC"), and Conseco Finance Corp., a Delaware corporation, as seller
("Seller").
W I T N E S S E T H:
WHEREAS, CFSC has agreed to purchase from Seller and Seller, pursuant
to this Agreement, is transferring to CFSC the certain retail installment sales
contracts and promissory notes for the purchase of commercial trucks and
trailers (collectively, the "Products") specified in the Schedule of Initial
Contracts attached hereto as Schedule A (the "Initial Contracts") and the
Initial Collateral Security; and
WHEREAS, CFSC has agreed to purchase from Seller and Seller has agreed
to transfer to CFSC the Subsequent Contracts and Subsequent Collateral Security
in an amount set forth herein, prior to February 1, 2000.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, CFSC and Seller, intending to be legally
bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. General. The specific 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 Article,
Section, Schedule and Exhibit references, unless otherwise specified, refer to
Articles and Sections of and Schedules and Exhibits to this Agreement.
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms in the Sale and Servicing Agreement, dated as of
December 1, 1999, by and among Conseco Finance Securitizations Corp. (as
Seller), Conseco Finance Corp. (as Originator and Servicer), and Conseco Finance
Vehicle Trust 1999-B (as Issuer) (the "Trust").
SECTION 1.2. Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Agreement" shall mean this Transfer Agreement and all amendments
hereof and supplements hereto.
"Closing Date" means December 16, 1999.
"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 the
-1-
<PAGE>
Indenture and not in its individual capacity, or any successor Indenture Trustee
under the Indenture.
"Initial Collateral Security" means, with respect to any
Initial Contract, (i) the security interests, if any, granted by or on behalf of
the related Obligor with respect thereto, including a first priority perfected
security interest in the related Product, (ii) all other security interests or
liens and property subject thereto from time to time purporting to secure
payment of such Contract, whether pursuant to the agreement giving rise to such
Contract or otherwise, together with all financing statements signed by the
Obligor describing any collateral securing such Contract, (iii) all security
agreements granting a security interest in the related Product and all
guarantees, insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Contract whether
pursuant to the agreement giving rise to such Contract or otherwise, and (iv)
all records in respect of such Contract.
"Initial Contracts" means the Contracts listed on the Schedule
of Initial Contracts attached hereto as Schedule A.
"Collateral Security" means the Initial Collateral Security
conveyed by Seller to CFSC pursuant to this Agreement together with any and all
Subsequent Collateral Security conveyed by Seller to CFSC pursuant to each
Subsequent Transfer Agreement.
"Owner Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as trustee of the
Trust, and any successor trustee appointed and acting pursuant to the Trust
Agreement.
"Related Documents" means the Notes, the Certificates, the
Sale and Servicing Agreement, the Trust Agreement, the Indenture, each
Subsequent Transfer Agreement, the Note Purchase Agreements and the Underwriting
Agreement among Seller, CFSC and the underwriter of the Notes. The Related
Documents to be executed by any party are referred to herein as "such party's
Related Documents," "its Related Documents" or by a similar expression.
"Repurchase Event" means the occurrence of a breach of any of
Seller's representations and warranties hereunder or under any Subsequent
Transfer Agreement or any other event which requires the repurchase of a
Contract by Seller under the Sale and Servicing Agreement.
"Sale and Servicing Agreement" means the Sale and Servicing
Agreement, dated as of December 1, 1999, executed and delivered by Conseco
Finance Corp., as Originator and Servicer, Conseco Finance Securitizations
Corp., as Seller, and the Trust.
"Schedule of Initial Contracts" means the schedule of all
Contracts sold and transferred pursuant to this Agreement which is attached
hereto as Schedule A.
"Schedule of Contracts" means the Schedule of Initial
Contracts attached hereto as Schedule A as supplemented by each Schedule of
Subsequent Contracts attached to each Subsequent Transfer Agreement as Schedule
A.
-2-
<PAGE>
"Schedule of Subsequent Contracts" means the schedule of all
Contracts sold and transferred pursuant to a Subsequent Transfer Agreement which
is attached to such Subsequent Transfer Agreement as Schedule A, which Schedule
of Subsequent Contracts shall supplement the Schedule of Initial Contracts.
"Subsequent Contracts" means the Contracts specified in the
Schedule of Subsequent Contracts attached as Schedule A to each Subsequent
Transfer Agreement.
"Subsequent Collateral Security" means the Subsequent
Collateral Security conveyed by Seller to CFSC pursuant to each Subsequent
Transfer Agreement.
"Subsequent Transfer Agreement" has the meaning assigned in
Section 2.3(b)(iii).
"Trust" means the trust created by the Trust Agreement, the
estate of which consists of the Trust Property.
"Trust Property" means the property and proceeds of every
description conveyed by CFSC to the Trust pursuant to the Sale and Servicing
Agreement and pursuant to any Subsequent Transfer Agreement, together with the
Trust Accounts (including all Eligible Investments therein and all proceeds
therefrom).
SECTION 1.3. 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 gender; 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, or the Sale
and Servicing Agreement, the Trust Agreement or the Indenture; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
SECTION 1.4. No Recourse. Without limiting the obligations of
Seller hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer or director, as such, of Seller,
or of any predecessor or successor of Seller.
ARTICLE II
CONVEYANCE OF THE INITIAL CONTRACTS
AND THE INITIAL COLLATERAL SECURITY
SECTION 2.1. Conveyance of the Initial Contracts and the
Initial Collateral Security. Subject to the terms and conditions of this
Agreement, Seller hereby sells, transfers, assigns, and otherwise conveys to
CFSC without recourse (but without limitation of its obligations in this
Agreement or in the Sale and Servicing Agreement), and CFSC hereby purchases,
all right, title and interest of Seller in and to the Initial Contracts and the
Initial Collateral Security. It is the intention of Seller and CFSC that the
transfer and assignment
-3-
<PAGE>
contemplated by this Agreement shall constitute a sale of the Initial Contracts
and the Initial Collateral Security from Seller to CFSC, conveying good title
thereto free and clear of any Liens, and the Initial Contracts and the Initial
Collateral Security shall not be part of Seller's estate in the event of the
filing of a bankruptcy petition by or against Seller under any bankruptcy or
similar law.
SECTION 2.2. Purchase Price of Initial Contracts.
Simultaneously with the conveyance of the Initial Contracts and the Initial
Collateral Security to CFSC, CFSC has paid or caused to be paid to or upon the
order of Seller approximately $573,792,500.00 by wire transfer of immediately
available funds (representing the proceeds to CFSC from the sale of the Initial
Contracts after (i) deducting expenses of $725,000 incurred by CFSC in
connection with such sale and (ii) depositing the Pre-Funded Amount in the
Pre-Funding Account).
SECTION 2.3. Conveyance of Subsequent Contracts and
Subsequent Collateral Security.
(a) Subject to the conditions set forth in paragraph (b) below
and the terms and conditions in the related Subsequent Transfer Agreement, in
consideration of CFSC's delivery on the related Subsequent Transfer Date to or
upon the order of Seller of an amount equal to the purchase price of the
Subsequent Contracts (as set forth in the related Subsequent Transfer
Agreement), Seller hereby agrees to sell, transfer, assign, and otherwise convey
to CFSC without recourse (but without limitation of its obligations in this
Agreement and the related Subsequent Transfer Agreement), and CFSC hereby agrees
to purchase all right, title and interest of Seller in and to the Subsequent
Contracts and the Subsequent Collateral Security described in the related
Subsequent Transfer Agreement.
(b) the Seller shall transfer to CFSC, and CFSC shall acquire,
the Subsequent Contracts and the Subsequent Collateral Security to be
transferred on any Subsequent Transfer Date only upon the satisfaction of each
of the following conditions on or prior to such Subsequent Transfer Date:
(i) the Seller shall have provided the Owner Trustee and the
Indenture Trustee with an Addition Notice at least five Business Days
prior to the Subsequent Transfer Date and shall have provided any
information reasonably requested by the Indenture Trustee or the Owner
Trustee with respect to the Subsequent Contracts;
(ii) the Seller shall have delivered to CFSC a duly executed
Subsequent Transfer Agreement substantially in the form of Exhibit A
hereto (the "Subsequent Transfer Agreement"), which shall include a
List of Contracts identifying the related Subsequent Contracts;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Agreement, neither the Seller nor
CFSC shall be insolvent nor shall they have been made insolvent by such
transfer nor shall they be aware of any pending insolvency;
-4-
<PAGE>
(iv) such transfer shall not result in a material adverse tax
consequence to the Trust, the Noteholders or the Certificateholders;
(v) the Pre-Funding Period shall not have ended;
(vi) the Seller shall have delivered to CFSC an Officer's
Certificate, substantially in the form attached to the Sale and
Servicing Agreement as Exhibit F, confirming the satisfaction of each
condition precedent and the representations specified in this Section
2.3 and in Sections 3.01, 3.02, 3.03 and 3.06 of the Sale and Servicing
Agreement;
(vii) the Seller and CFSC shall have delivered to the Trustee
Opinions of Counsel addressed to S&P, Fitch, the Owner Trustee and the
Indenture Trustee with respect to the transfer of the Subsequent
Contracts substantially in the form of the Opinions of Counsel
delivered on the Closing Date regarding certain bankruptcy, corporate
and tax matters;
(viii) each of the representations and warranties contained in
Section 3.03 of the Sale and Servicing Agreement shall be true and
correct.
(c) Seller covenants to transfer to CFSC pursuant to paragraph
(a) above Subsequent Contracts with an aggregate Principal Balance approximately
equal to $573,792,500.00; provided, however, that the sole remedy of CFSC with
respect to a failure of such covenant shall be to enforce the provisions of
Section 6.06 of the Sale and Servicing Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of Seller. Seller
makes the following representations and warranties, on which CFSC relies in
purchasing the Initial Contracts and the Initial Collateral Security and in
transferring the Initial Contracts and the Initial Collateral Security to the
Trust under the Sale and Servicing Agreement. Such representations are made as
of the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Initial Contracts and the Initial Collateral
Security hereunder and the sale, transfer and assignment thereof by CFSC to the
Trust under the Sale and Servicing Agreement and the pledge thereof by the Trust
to the Indenture Trustee under the Indenture. Seller and CFSC agree that CFSC
will assign to the Trust all of CFSC's rights under this Agreement and that the
Trust will thereafter be entitled to enforce this Agreement against Seller in
the Trust's own name.
(a) Representations Regarding Contracts. The representations
and warranties set forth in Sections 3.02, 3.03 and 3.04 of the Sale
and Servicing Agreement are true and correct.
-5-
<PAGE>
(b) Organization and Good Standing. The Seller 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 such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Initial Contracts and the Initial Collateral
Security transferred to CFSC.
(c) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business
requires such qualification.
(d) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and its Related
Documents and to carry out its terms and their terms, respectively;
Seller has full power and authority to sell and assign the Initial
Contracts and the Initial Collateral Security to be sold and assigned
to and deposited with CFSC hereunder and has duly authorized such sale
and assignment to CFSC by all necessary corporate action; and the
execution, delivery and performance of this Agreement and Seller's
Related Documents have been duly authorized by Seller by all necessary
corporate action.
(e) Valid Sale; Binding Obligations. This Agreement and
Seller's Related Documents have been duly executed and delivered, shall
effect a valid sale, transfer and assignment of the Initial Contracts
and the Initial Collateral Security, enforceable against Seller and
creditors of and purchasers from Seller; and this Agreement and
Seller's Related Documents constitute legal, valid and binding
obligations of Seller enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations
on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the 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, the certificate of incorporation or bylaws of
Seller, or any indenture, agreement, mortgage, deed of trust or other
instrument to which Seller 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, other than this Agreement
and the Sale and Servicing Agreement and the Indenture, or violate any
law, order, rule or regulation applicable to Seller of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Seller or any of
its properties.
-6-
<PAGE>
(g) No Proceedings. There are no proceedings or investigations
pending or, to Seller's knowledge, threatened against Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the issuance of the Notes or
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Related Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or
other federal, state or local tax attributes of, or seeking to impose
any excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Contracts and the Initial Collateral
Security hereunder or under the Sale and Servicing Agreement or pledged
under the Indenture.
(h) Chief Executive Office. The chief executive office of
Seller is located at 1100 Landmark Towers, 345 St. Peter Street, Saint
Paul, Minnesota 55102-1639.
SECTION 3.2. Representations and Warranties of CFSC. CFSC
makes the following representations and warranties, on which Seller relies in
selling, assigning, transferring and conveying the Initial Contracts and the
Initial Collateral Security to CFSC hereunder. Such representations are made as
of the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Initial Contracts and the Initial Collateral
Security hereunder and the sale, transfer and assignment thereof by CFSC to the
Trust under the Sale and Servicing Agreement and the pledge thereof under the
Indenture.
(a) Organization and Good Standing. CFSC has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Minnesota, with the power and authority
to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted, and had
at all relevant times, and has, full power, authority and legal right
to acquire and own the Initial Contracts and the Initial Collateral
Security and to transfer the Initial Contracts and the Initial
Collateral Security to the Trust pursuant to the Sale and Servicing
Agreement.
(b) Due Qualification. CFSC is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure
to do so would materially and adversely affect (i) CFSC's ability to
acquire the Initial Contracts or the Initial Collateral Security, (ii)
the validity or enforceability of the Initial Contracts and the Initial
Collateral Security or (iii) CFSC's ability to perform its obligations
hereunder and under the Related Documents.
(c) Power and Authority. CFSC has the power, authority and
legal right to execute and deliver this Agreement and its Related
Documents and to carry out the terms hereof and thereof and to acquire
the Initial Contracts and the Initial Collateral Security hereunder;
and the execution, delivery and performance of this Agreement and its
Related
-7-
<PAGE>
Documents and all of the documents required pursuant hereto or thereto
have been duly authorized by CFSC by all necessary action.
(d) No Consent Required. CFSC is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency 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) Binding Obligation. This Agreement and each of its Related
Documents constitutes a legal, valid and binding obligation of CFSC,
enforceable against CFSC in accordance with its terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and
to general equitable principles.
(f) No Violation. The execution, delivery and performance by
CFSC of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents do
not and will not conflict with, result in any breach of any of the
terms and provisions of or constitute (with or without notice or lapse
of time) a default under the articles of incorporation or bylaws of
CFSC, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument
to which CFSC is a party or by which CFSC is bound or to which any of
its properties are subject, 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
(other than the Sale and Servicing Agreement and the Indenture), or
violate any law, order, rule or regulation, applicable to CFSC or its
properties, of any federal or state regulatory body or any court,
administrative agency, or other governmental instrumentality having
jurisdiction over CFSC or any of its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of CFSC, threatened against CFSC, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over CFSC or its
properties: (i) asserting the invalidity of this Agreement or any of
the Related Documents, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any of the
Related Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by CFSC of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents or (iv) that may adversely affect the
federal or state income tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Contracts and the Initial Collateral
Security hereunder or the transfer of the Initial Contracts and the
Initial Collateral Security to the Trust pursuant to the Sale and
Servicing Agreement or pledged under the Indenture.
-8-
<PAGE>
In the event of any breach of a representation and warranty made by CFSC
hereunder, Seller covenants and agrees that it will not take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all Notes,
Certificates or other similar securities issued by the Trust, or a trust or
similar vehicle formed by CFSC, have been paid in full. Seller and CFSC agree
that damages will not be an adequate remedy for such breach and that this
covenant may be specifically enforced by CFSC or by the Owner Trustee on behalf
of the Trust.
ARTICLE IV
COVENANTS OF THE SELLER
SECTION 4.1. Transfer of Contracts.
Seller has filed a form UCC-1 financing statement regarding
the sale of the Contracts to CFSC, and shall file continuation statements in
respect of such UCC-1 financing statement as if such financing statement were
necessary to perfect such sale. Seller shall take any other actions necessary to
maintain the perfection of the sale of the Contracts to CFSC.
SECTION 4.2. Costs and Expenses. The Seller shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under each Subsequent Transfer Agreement and its
Related Documents.
SECTION 4.3. Indemnification.
(a) Seller will defend and indemnify CFSC against any and all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation arising out of or
resulting from the use or ownership of any Product related to a Contract by
Seller or the Servicer or any Affiliate of either. Notwithstanding any other
provision of this Agreement, the obligation of Seller under this Section shall
not terminate upon a Service Transfer pursuant to Article VII of the Sale and
Servicing Agreement, except that the obligation of Seller under this Section 4.3
shall not relate to the actions of any subsequent Servicer after a Service
Transfer.
(b) No obligation or liability to any Obligor under any of the
Contracts is intended to be assumed by CFSC 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, CFSC expressly disclaims
such assumption.
(c) Seller agrees to pay, and to indemnify, defend and hold
harmless CFSC from, any taxes which may at any time be asserted with respect to,
and as of the date of, the transfer of the Contracts to CFSC, including, without
limitation, any sales, gross receipts, general corporation, personal property,
privilege or license taxes and costs, expenses and reasonable counsel fees in
defending against the same, whether arising by reason of the acts to be
performed by Seller under this Agreement or imposed against CFSC.
-9-
<PAGE>
(d) Indemnification under this Section 4.3 shall include,
without limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Originator has made any indemnity payments to CFSC pursuant
to this Section 4.3 and CFSC thereafter collects any of such amounts from
others, CFSC will repay such amounts collected to Seller, as the case may be,
without interest.
SECTION 4.4. Financial Statement Disclosure. Conseco Finance's
financial statements will disclose that the Subsequent Contracts have been
transferred by Conseco Finance to Conseco Securitizations, and by Conseco
Securitizations to the Trust, and are not available to satisfy claims of Conseco
Finance's creditors.
ARTICLE V
REPURCHASES
SECTION 5.1. Repurchase of Contracts Upon Breach of Warranty.
(a) Upon the occurrence of a Repurchase Event, Seller shall,
unless such breach shall have been cured in all material respects, repurchase
such Contract from the Trust pursuant to Section 3.05 of the Sale and Servicing
Agreement. It is understood and agreed that the obligation of Seller to
repurchase any Contract as to which a breach has occurred and is continuing and
the indemnity obligations relating thereto shall, if such obligation is
fulfilled, constitute the only remedies against Seller for such breach available
to CFSC, the Noteholders, the Indenture Trustee on behalf of the Noteholders,
the Certificateholders or the Owner Trustee on behalf of the Certificateholders.
The provisions of this Section 5.1 are intended to grant the Owner Trustee and
the Indenture Trustee a direct right against Seller to demand performance
hereunder, and in connection therewith, Seller waives any requirement of prior
demand against CFSC with respect to such repurchase obligation. Any such
purchase shall take place in the manner specified in Section 3.06 of the Sale
and Servicing Agreement. Notwithstanding any other provision of this Agreement,
any Subsequent Transfer Agreement or the Sale and Servicing Agreement or any
Subsequent Transfer Agreement to the contrary, the obligation of Seller under
this Section shall not terminate upon a termination of Seller as Servicer under
the Sale and Servicing Agreement and shall be performed in accordance with the
terms hereof notwithstanding the failure of the Servicer or CFSC to perform any
of their respective obligations with respect to such Loan under the Sale and
Servicing Agreement.
(b) In addition to the foregoing and notwithstanding whether
the related Contract shall have been purchased by Seller, Seller shall indemnify
the Owner Trustee, the Trust, the Indenture Trustee, the Noteholders and the
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such Repurchase Events.
SECTION 5.2. Reassignment of Purchased Contracts. Upon deposit
of the Repurchase Price of any Contract repurchased or replaced by Seller under
Section 5.1, CFSC shall cause the Owner Trustee and the Indenture Trustee to
take such steps as may be reasonably requested by Seller in order to assign to
Seller all of CFSC's and the Trust's right, title and
-10-
<PAGE>
interest in and to such Contract and all security and documents and all
Collateral Security conveyed to CFSC and the Trust directly relating thereto,
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 CFSC,
the Owner Trustee or the Indenture Trustee. Such assignment shall be a sale and
assignment outright, and not for security. If, following the reassignment of a
Contract, in any enforcement suit or legal proceeding, it is held that Seller
may not enforce any such Contract on the ground that it shall not be a real
party in interest or a holder entitled to enforce the Contract, CFSC and the
Owner Trustee shall, at the expense of Seller, take such steps as Seller deems
reasonably necessary to enforce the Contract, including bringing suit in CFSC's
or the Owner Trustee's name.
SECTION 5.3. Waivers. No failure or delay on the part of CFSC,
or the Owner Trustee as assignee of CFSC, in exercising any power, right or
remedy under this Agreement or under any Subsequent Transfer Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or remedy preclude any other or future exercise thereof or the
exercise of any other power, right or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Liability of Seller. Seller shall be liable in
accordance herewith only to the extent of the obligations in this Agreement or
in any Subsequent Transfer Agreement specifically undertaken by Seller and the
representations and warranties of Seller.
SECTION 6.2. Merger or Consolidation of Seller or CFSC. Any
corporation or other entity (i) into which Seller or CFSC may be merged or
consolidated, (ii) resulting from any merger or consolidation to which Seller or
CFSC is a party or (iii) succeeding to the business of Seller or CFSC, in the
case of CFSC, which corporation has articles of incorporation containing
provisions relating to limitations on business and other matters substantively
identical to those contained in CFSC's articles of incorporation, provided that
in any of the foregoing cases such corporation shall execute an agreement of
assumption to perform every obligation of Seller or CFSC, as the case may be,
under this Agreement and each Subsequent Transfer Agreement and, whether or not
such assumption agreement is executed, shall be the successor to Seller or CFSC,
as the case may be, hereunder and under each such Subsequent Transfer Agreement
(without relieving Seller or CFSC of its responsibilities hereunder, if it
survives such merger or consolidation) without the execution or filing of any
document or any further act by any of the parties to this Agreement or each
Subsequent Transfer Agreement. Seller or CFSC shall promptly inform the other
party and the Owner Trustee and the Indenture Trustee of such merger,
consolidation or purchase and assumption. Notwithstanding the foregoing, as a
condition to the consummation of the transactions referred to in clauses (i),
(ii) and (iii) above, (x) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Sections 3.1 and 3.2 and this
Agreement, or similar representation or warranty made in any Subsequent Transfer
Agreement, shall have been breached (for purposes hereof, such representations
and warranties shall speak as of the date of the consummation of such
transaction), (y) Seller or CFSC, as applicable, shall have delivered written
notice of such consolidation, merger or purchase and assumption to the Rating
Agencies prior to the consummation of such transaction
-11-
<PAGE>
and shall have delivered to the Owner Trustee and the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.3 and that all conditions precedent, if any, provided for in this
Agreement, or in each Subsequent Transfer Agreement, relating to such
transaction have been complied with, and (z) Seller or CFSC, as applicable,
shall have delivered to the Owner Trustee and the Indenture Trustee an Opinion
of Counsel, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Owner Trustee and the Indenture Trustee in the Trust Property and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
SECTION 6.3. Limitation on Liability of Seller and Others.
Seller shall not be under any obligation to appear in, prosecute or defend any
legal action that is not incidental to its obligations under this Agreement, any
Subsequent Transfer Agreement or its Related Documents and that in its opinion
may involve it in any expense or liability.
SECTION 6.4. Amendment.
(a) This Agreement and any Subsequent Transfer Agreement may
be amended by Seller and CFSC and without the consent of the Owner Trustee, the
Indenture Trustee, or any of the Noteholders or Certificateholders (A) to cure
any ambiguity or (B) to correct any provisions in this Agreement or any such
Subsequent Transfer Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by
Seller and CFSC, with the prior written consent of the Owner Trustee, the
Indenture Trustee, a Certificate Majority and the Holders of Notes representing,
in the aggregate, 66 2/3% or more of the Aggregate Securities Principal Balance,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Noteholders or Certificateholders; provided, however,
that no such amendment shall (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on the Contracts
or, distributions that are required to be made on any Note or Certificate or
(ii) reduce the aforesaid percentage required to consent to any such amendment
or any waiver hereunder, without the consent of the Holders of all Notes and
Certificates then outstanding.
(c) Concurrently with the solicitation of any consent pursuant
to this Section 6.4, CFSC shall furnish written notification to S&P and Fitch.
Promptly after the execution of any amendment or consent pursuant to this
Section 6.4, CFSC shall furnish written notification of the substance of such
amendment to S&P, Fitch, each Noteholder and Certificateholder.
(d) It shall not be necessary for the consent of Noteholders
and Certificateholders pursuant to this Section to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance
-12-
<PAGE>
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Noteholders and Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee or
Indenture Trustee, as applicable, may prescribe, including the establishment of
record dates. The consent of any Holder of a Note or a Certificate 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 or Certificate and of any Note or Certificate 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 or Certificate.
SECTION 6.5. Notices. All demands, notices and communications
to the Seller or CFSC hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt (a) in the case of Seller, to Conseco
Finance Corp., 1100 Landmark Towers, 345 St. Peter Street, Saint Paul, Minnesota
55102-1639, Attention: Chief Financial Officer, or such other address as shall
be designated by Seller in a written notice delivered to the other party or to
the Owner Trustee or Indenture Trustee, as applicable, or (b) in case of CFSC,
to Conseco Finance Securitizations Corp., 300 Landmark Towers, 345 St. Peter
Street, Saint Paul, Minnesota 55102-1639, Attention: Chief Financial Officer.
SECTION 6.6. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement and the Related Documents set 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 and
the Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 6.7. Severability of Provisions. If any one or more of
the covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 6.8. Intention of the Parties. The execution and
delivery of this Agreement and of each Subsequent Transfer Agreement shall
constitute an acknowledgment by Seller and CFSC that they intend that each
assignment and transfer herein and therein contemplated constitute a sale and
assignment outright, and not for security, of the Initial Contracts and the
Initial Collateral Security and the Subsequent Contracts and Subsequent
Collateral Security, as the case may be, conveying good title thereto free and
clear of any Liens, from Seller to CFSC, and that the Initial Contracts and the
Initial Collateral Security and the Subsequent Contracts and Subsequent
Collateral Security shall not be a part of Seller's estate in the event of the
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, or the
occurrence of another similar event, of, or with respect to, Seller. In the
event that such conveyance is determined to be made as security for a loan made
by CFSC, the Trust or the Certificateholders to Seller, the parties intend that
Seller shall have granted to CFSC a security interest in all of Seller's right,
title and interest in and to the Initial Contracts and the Initial Collateral
Security
-13-
<PAGE>
and the Subsequent Contracts and Subsequent Collateral Security, as the case may
be, conveyed pursuant to Section 2.1 hereof or pursuant to any Subsequent
Transfer Agreement, and that this Agreement and each Subsequent Transfer
Agreement shall constitute a security agreement under applicable law.
SECTION 6.9. Governing Law. This Agreement shall be construed
in accordance with, the laws of the State of Minnesota 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 6.10. Counterparts. For the purpose of facilitating
the execution of this Agreement 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 6.11. Conveyance of the Initial Contracts and the
Initial Collateral Security to the Trust. Seller acknowledges that CFSC intends,
pursuant to the Sale and Servicing Agreement, to convey the Initial Contracts
and the Initial Collateral Security, together with its rights under this
Agreement, to the Trust on the date hereof. Seller acknowledges and consents to
such conveyance and waives any further notice thereof and covenants and agrees
that the representations and warranties of Seller contained in this Agreement
and the rights of CFSC hereunder are intended to benefit the Owner Trustee, the
Trust, the Indenture Trustee and the Noteholders and Certificateholders. In
furtherance of the foregoing, Seller covenants and agrees to perform its duties
and obligations hereunder, in accordance with the terms hereof for the benefit
of the Owner Trustee, the Trust, the Indenture Trustee and the Noteholders and
Certificateholders and that, notwithstanding anything to the contrary in this
Agreement, Seller shall be directly liable to the Indenture Trustee, Owner
Trustee and the Trust (notwithstanding any failure by the Servicer or CFSC to
perform its duties and obligations hereunder or under the Sale and Servicing
Agreement) and that the Owner Trustee or the Indenture Trustee may enforce the
duties and obligations of Seller under this Agreement against Seller for the
benefit of the Trust, the Noteholders and the Certificateholders.
SECTION 6.12. Nonpetition Covenant. Neither CFSC nor Seller
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Trust
(or, in the case of Seller, against CFSC) under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust (or
CFSC) or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust (or CFSC).
-14-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Transfer Agreement to
be duly executed by their respective officers as of the day and year first above
written.
CONSECO FINANCE SECURITIZATIONS CORP.,
as Purchaser
By _______________________________
Name: Phyllis A. Knight
Title: Senior Vice President and
Treasurer
CONSECO FINANCE CORP., as Seller
By _______________________________
Name: Phyllis A. Knight
Title: Senior Vice President and
Treasurer
<PAGE>
SCHEDULE A
SCHEDULE OF INITIAL CONTRACTS
[Delivered pursuant to Section 2.02(c) of the Sale and Servicing Agreement]
A-1
<PAGE>
EXHIBIT A
FORM OF
SUBSEQUENT TRANSFER AGREEMENT
between
CONSECO FINANCE SECURITIZATIONS CORP.
Purchaser
and
CONSECO FINANCE CORP.
Seller
dated as of
--------, -----
<PAGE>
SUBSEQUENT TRANSFER AGREEMENT, dated as of ________, _______, between
Conseco Finance Securitizations Corp., a Minnesota corporation, as purchaser
("CFSC"), and Conseco Finance Corp., a Delaware corporation, as seller
("Seller").
W I T N E S S E T H:
WHEREAS, Seller and CFSC are parties to a Transfer Agreement, dated as
of December 1, 1999 (as amended or supplemented, the "Transfer Agreement");
WHEREAS, pursuant to the Transfer Agreement and this Agreement, CFSC
has agreed to purchase from Seller and Seller is transferring to CFSC the
Subsequent Contracts and the Subsequent Collateral Security.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter contained, and for other good and valuable consideration,
the receipt of which is acknowledged, CFSC and Seller, intending to be legally
bound, hereby agree as follows:
1. Defined Terms. Capitalized terms used but not otherwise defined
herein shall have the respective meanings assigned to such terms in the Transfer
Agreement.
"Schedule of Subsequent Contracts" means the schedule of all home
improvement and home equity contracts sold and transferred pursuant to this
Agreement attached hereto as Schedule A, which Schedule of Subsequent Contracts
shall supplement the Schedule of Initial Contracts attached to the Transfer
Agreement.
"Subsequent Cutoff Date" shall mean, with respect to the Subsequent
Contracts conveyed hereby, ________________, _____.
"Subsequent Collateral Security" means, with respect to any Subsequent
Contract, (i) the security interests, if any, granted by or on behalf of the
related Obligor with respect thereto, including a first priority perfected
security interest in the related Product, (ii) all other security interests or
liens and property subject thereto from time to time purporting to secure
payment of such Contract, whether pursuant to the agreement giving rise to such
Contract or otherwise, together with all financing statements signed by the
Obligor describing any collateral securing such Contract, (iii) all security
agreements granting a security interest in the related Product and all
guarantees, insurance and other agreements or arrangements of whatever character
from time to time supporting or securing payment of such Contract whether
pursuant to the agreement giving rise to such Contract or otherwise, and (iv)
all records in respect of such Contract.
"Subsequent Contracts" means, for purposes of this Agreement, the
Contracts listed in the Schedule of Subsequent Contracts.
2. Conveyance of the Subsequent Contracts and the Subsequent Collateral
Security. Subject to the terms and conditions of this Agreement and the Transfer
Agreement, Seller hereby sells, transfer, assigns, and otherwise conveys to CFSC
without recourse (but
Ex. A-1
<PAGE>
without limitation of its repurchase, indemnity and other obligations in this
Agreement and the Transfer Agreement), and CFSC hereby purchases, all right,
title and interest of Seller in and to the Subsequent Contracts and the
Subsequent Collateral Security. It is the intention of Seller and CFSC that the
transfer and assignment contemplated by this Agreement shall constitute a sale
of the Subsequent Contracts and the Subsequent Collateral Security from Seller
to CFSC, conveying good title thereto free and clear of any Liens, and the
Subsequent Contracts and the Subsequent Collateral Security shall not be part of
Seller's estate in the event of the filing of a bankruptcy petition by or
against Seller under any bankruptcy or similar law. Conseco Finance's financial
statements will disclose that the Subsequent Contracts have been transferred by
Conseco Finance to Conseco Securitizations, and by Conseco Securitizations to
the Trust, and are not available to satisfy claims of Conseco Finance's
creditors.
3. Purchase Price. Simultaneously with the conveyance of the Subsequent
Contracts and the Subsequent Collateral Security to CFSC, CFSC has paid or
caused to be paid to or upon the order of Seller, by wire transfer of
immediately available funds (representing certain proceeds to CFSC from the sale
of the Notes on deposit in the Pre-Funding Account), the amount of funds as
specified below:
(i) Principal Balance of Subsequent Contracts: $__________
(ii) Proceeds to Seller: $_____________
4. Representations of Warranties of Seller. Seller makes the following
representations and warranties, on which CFSC relies in purchasing the
Subsequent Contracts and the Subsequent Collateral Security and in transferring
the Subsequent Contracts and the Subsequent Collateral Security to the Trust
under the Subsequent Transfer Agreement. Such representations are made as of the
execution and delivery of this Agreement, but shall survive the sale, transfer
and assignment of the Subsequent Contracts and the Subsequent Collateral
Security hereunder, and the sale, transfer and assignment thereof by CFSC to the
Trust under the Subsequent Transfer Agreement and the pledge thereof pursuant to
the Indenture. Seller and CFSC agree that CFSC will assign to the Trust all of
CFSC's rights under this Agreement and the Transfer Agreements, and that the
Trust will thereafter be entitled to enforce this Agreement and the Transfer
Agreements against Seller in the Trust's own name.
(a) Schedule of Representations. The representations and
warranties set forth in Sections 3.02, 3.03 and 3.04 of the Sale and
Servicing Agreement are true and correct.
(b) Organization and Good Standing. Seller 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 such business is currently conducted, and had at
all relevant times, and now has, power, authority and legal right to
acquire, own and sell the Subsequent Contracts and the Subsequent
Collateral Security transferred to CFSC.
(c) Due Qualification. Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all
Ex. A-2
<PAGE>
jurisdictions in which the ownership or lease of its property or the
conduct of its business requires such qualification.
(d) Power and Authority. Seller has the power and authority to
execute and deliver this Agreement and the Transfer Agreement and to
carry out its terms and their terms, respectively; Seller has full
power and authority to sell and assign the Subsequent Contracts and the
Subsequent Collateral Security to be sold and assigned to and deposited
with CFSC hereunder and has duly authorized such sale and assignment to
CFSC by all necessary corporate action; and the execution, delivery and
performance of this Agreement and the Transfer Agreement have been duly
authorized by Seller by all necessary corporate action.
(e) Valid Sale; Binding Obligations. This Agreement and the
Transfer Agreement have been duly executed and delivered, shall effect
a valid sale, transfer and assignment of the Subsequent Contracts and
the Subsequent Collateral Security, enforceable against Seller and
creditors of and purchasers from Seller; and this Agreement and the
Transfer Agreement constitute legal, valid and binding obligations of
Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) No Violation. The consummation of the transactions
contemplated by this Agreement and the Transfer Agreement and the
fulfillment of the terms of this Agreement and the Transfer Agreement
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, the certificate of incorporation or bylaws of
Seller, or any indenture, agreement, mortgage, deed of trust or other
instrument to which Seller 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, other than this Agreement
and the Transfer Agreement, or violate any law, order, rule or
regulation applicable to Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over Seller or any of its
properties.
(g) No Proceedings. There are no proceedings or investigations
pending or, to Seller's knowledge, threatened against Seller, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Seller or its
properties (i) asserting the invalidity of this Agreement or the
Transfer Agreement, (ii) seeking to prevent or the consummation of any
of the transactions contemplated by this Agreement or the Transfer
Agreement, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by Seller of its
obligations under, or the validity or enforceability of, this Agreement
or the Subsequent Transfer Agreement, or (iv) seeking to affect
adversely the federal income tax or other federal, state or local tax
attributes of, or seeking to impose any excise, franchise,
Ex. A-3
<PAGE>
transfer or similar tax upon, the transfer and acquisition of the
Subsequent Contracts and the Subsequent Collateral Security hereunder
or under the Transfer Agreement.
(h) Insolvency. As of the Subsequent Cutoff Date and the
Subsequent Transfer Date, neither Seller nor CFSC is insolvent nor will
either of them have been made insolvent after giving effect to the
conveyance set forth in Section 2 of this Agreement, nor are any of
them aware of any pending insolvency.
(i) Chief Executive Office. The chief executive office of
Seller is located at 1100 Landmark Towers, 345 St. Peter Street, Saint
Paul, Minnesota 55102-1639.
5. Representations and Warranties of CFSC. CFSC makes the
following representations and warranties, on which Seller relies in selling,
assigning, transferring and conveying the Subsequent Contracts and the
Subsequent Collateral Security to CFSC hereunder. Such representations are made
as of the execution and delivery of this Agreement, but shall survive the sale,
transfer and assignment of the Subsequent Contracts and the Subsequent
Collateral Security hereunder and the sale, transfer and assignment thereof by
CFSC to the Trust under the Subsequent Transfer Agreement and the pledge thereof
under the Indenture.
(a) Organization and Good Standing. CFSC has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Minnesota, with the power and authority
to own its properties and to conduct its business as such properties
are currently owned and such business is currently conducted, and had
at all relevant times, and has, full power, authority and legal right
to acquire and own the Subsequent Contracts and the Subsequent
Collateral Security, and to transfer the Subsequent Contracts and the
Subsequent Collateral Security to the Trust pursuant to this Transfer
Agreement and the pledge thereof under the Indenture.
(b) Due Qualification. CFSC is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure
to do so would materially and adversely affect CFSC's ability to
acquire the Subsequent Contracts or the Subsequent Collateral Security
or the validity or enforceability of the Subsequent Contracts and the
Subsequent Collateral Security or to perform CFSC's obligations
hereunder and under the Transfer Agreement.
(c) Power and Authority. CFSC has the power, authority and
legal right to execute and deliver this Agreement and to carry out the
terms hereof and to acquire the Subsequent Contracts and the Subsequent
Collateral Security hereunder; and the execution, delivery and
performance of this Agreement and all of the documents required
pursuant hereto have been duly authorized by CFSC by all necessary
action.
(d) No Consent Required. CFSC is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery
or performance of this Agreement and the Transfer Agreement, except for
such as have been obtained, effected or made.
Ex. A-4
<PAGE>
(e) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of CFSC, enforceable against CFSC in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation and other similar laws and to general equitable principles.
(f) No Violation. The execution, delivery and performance by
CFSC of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Transfer Agreement and the
fulfillment of the terms of this Agreement and the Transfer Agreement
do not and will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or lapse
of time) a default under, the articles of incorporation or bylaws of
CFSC, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument
to which CFSC is a party or by which CFSC is bound or to which any of
its properties are subject, 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
(other than the Sale and Servicing Agreement, this Agreement, the
Transfer Agreement and the Indenture), or violate any law, order, rule
or regulation, applicable to CFSC or its properties, of any federal or
state regulatory body, any court, administrative agency, or other
governmental instrumentality having jurisdiction over CFSC or any of
its properties.
(g) No Proceedings. There are no proceedings or investigations
pending, or, to the knowledge of CFSC, threatened against CFSC, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over CFSC or its
properties: (i) asserting the invalidity of this Agreement or the
Transfer Agreement, (ii) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or the Transfer
Agreement, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by CFSC of its
obligations under, or the validity or enforceability of, this Agreement
or the Transfer Agreement, or (iv) that may adversely affect the
federal or state income tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Subsequent Contracts and the Subsequent Collateral
Security hereunder or the transfer of the Contracts and the Subsequent
Collateral Security to the Trust pursuant to the Transfer Agreement.
In the event of any breach of a representation and warranty made by CFSC
hereunder, Seller covenants and agrees that it will not take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the date on which all pass-through
certificates or other similar securities issued by the Trust, or a trust or
similar vehicle formed by CFSC, have been paid in full. Seller and CFSC agree
that damages will not be an adequate remedy for such breach and that this
covenant may be specifically enforced by CFSC or by the Owner Trustee on behalf
of the Trust.
Ex. A-5
<PAGE>
6. Conditions Precedent. The obligation of CFSC to acquire the
Subsequent Contracts and the Subsequent Collateral Security hereunder is subject
to the satisfaction, on or prior to the Subsequent Transfer Date, of the
following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Section 4 of this
Agreement and in Section 3.1 of the Transfer Agreement shall be true
and correct as of the date of this Agreement and as of the Subsequent
Transfer Date.
(b) Transfer Agreement Conditions. Each of the conditions set
forth in Section 2.3(b) of the Transfer Agreement applicable to the
conveyance of Subsequent Contracts and the Subsequent Collateral
Security shall have been satisfied.
(c) Sale and Servicing Agreement Representations and
Warranties. Each of the representations and warranties contained in
Section 3.03 of the Sale and Servicing Agreement shall be true and
correct.
(d) Additional Information. Seller shall have delivered to
CFSC such information as was reasonably requested by CFSC to satisfy
itself as to (i) the accuracy of the representations and warranties set
forth in Section 4 of this Agreement and in Section 3.1 of the Transfer
Agreement and (ii) the satisfaction of the conditions set forth in this
Section 6.
7. Ratification of Transfer Agreement. As supplemented by this
Agreement, the Transfer Agreement is in all respects ratified and confirmed and
the Transfer Agreement as so supplemented by this Agreement shall be read, taken
and construed as one and the same instrument.
8. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Minnesota 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.
9. Counterparts. For the purposes of facilitating the
execution of this Agreement 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.
10. Conveyance of the Subsequent Contracts and the Subsequent
Collateral Security to the Trust. Seller acknowledges that CFSC intends,
pursuant to a Subsequent Transfer Instrument, to convey the Subsequent Contracts
and the Subsequent Collateral Security, together with its rights under this
Agreement and under the Transfer Agreement, to the Trust on the date hereof, and
the Owner Trust intends to pledge the same to the Indenture Trustee for the
benefit of the Noteholders pursuant to the Indenture. Seller acknowledges and
consents to such conveyance and waives any further notice thereof and covenants
and agrees that the representations and warranties of Seller contained in this
Agreement and the rights of CFSC hereunder and
Ex. A-6
<PAGE>
thereunder are intended to benefit the Owner Trustee, the Trust, the Indenture
Trustee and the Noteholders and Certificateholders. In furtherance of the
foregoing, Seller covenants and agrees to perform its duties and obligations
hereunder and under the Transfer Agreement, in accordance with the terms hereof
and thereof for the benefit of the Owner Trustee, the Trust, the Indenture
Trustee and the Noteholders and Certificateholders and that, notwithstanding
anything to the contrary in this Agreement or in the Transfer Agreement, Seller
shall be directly liable to the Indenture Trustee, the Owner Trustee and the
Trust (notwithstanding any failure by CFSC to perform its duties and obligations
hereunder or under the Sale and Servicing Agreement or the Subsequent Transfer
Agreement) and that the Indenture Trustee, or the Owner Trustee may enforce the
duties and obligations of Seller under this Agreement and the Transfer Agreement
against Seller for the benefit of the Trust, the Noteholders and the
Certificateholders.
Ex. A-7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
CONSECO FINANCE SECURITIZATIONS CORP.,
as Purchaser
By _______________________________
Phyllis A. Knight
Senior Vice President and Treasurer
CONSECO FINANCE CORP., as Seller
By _______________________________
Phyllis A. Knight
Senior Vice President and Treasurer
Ex. A-8
<PAGE>
================================================================================
CONSECO FINANCE VEHICLE TRUST 1999-B
ADMINISTRATION AGREEMENT
among
CONSECO FINANCE VEHICLE TRUST 1999-B
as Issuer
and
CONSECO FINANCE SERVICING CORP.
as Administrator
and
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Indenture Trustee
Dated as of December 1, 1999
================================================================================
<PAGE>
This ADMINISTRATION AGREEMENT dated as of December 1, 1999 (this
"Agreement"), among Conseco Finance Vehicle Trust 1998-B, a Delaware business
trust (the "Issuer"), Conseco Finance Securitizations Corp., 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 two classes of Asset-Backed Notes
(collectively, the "Notes"), pursuant to the Indenture dated as of December 1,
1999 (as amended and supplemented from time to time, the "Indenture"), between
the Issuer and the Indenture Trustee, and the Issuer is issuing a single class
of Asset-Backed Certificates (the "Certificates") pursuant to the Trust
Agreement, dated as of December 1, 1999 (as amended and supplemented from time
to time, the "Trust Agreement"), among Wilmington Trust Company, as owner
trustee (the "Owner Trustee"), Conseco Finance Securitizations Corp., 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, 1999 (as
amended and supplemented from time to time, the "Sale and Servicing Agreement"),
among the Issuer, Conseco Finance Corp., a Delaware corporation, as Originator
(in such capacity, the "Originator") and Servicer (in such capacity, the
"Servicer") and Conseco Finance Securitizations Corp., as Seller (in such
capacity, the "Seller"), (iii) a Letter of Representations dated December 1,
1999 (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; (iv) a Note Purchase
Agreement, dated as of October 16, 1999 (as amended and supplemented from time
to time, the "CFSB Note Purchase Agreement") among the Issuer, the Indenture
Trustee and Credit Suisse First Boston, New York Branch; and (v) the Indenture
(the Trust Agreement, the Sale and Servicing Agreement, the Note Depository
Agreement, the CFSB Note Purchase 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
- 2 -
<PAGE>
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;
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 it 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);
- 3 -
<PAGE>
(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
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);
- 4 -
<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));
- 5 -
<PAGE>
(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
- 6 -
<PAGE>
by 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.
- 7 -
<PAGE>
(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 (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.
- 8 -
<PAGE>
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 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:
- 9 -
<PAGE>
(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 fall 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
- 10 -
<PAGE>
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:
Conseco Finance Servicing Corp.
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
- 11 -
<PAGE>
or Certificateholder. This Agreement may also be amended by the Issuer, the
Administrator and the Indenture Trustee with the written consent of the Owner
Trustee and the holders of Notes evidencing a Note Majority and 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
- 12 -
<PAGE>
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.
17. Not Applicable to Conseco Finance Servicing Corp. in Other
Capacities. Nothing in this Agreement shall affect any obligation Conseco
Finance Servicing Corp. 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 Conseco Finance Vehicle Trust 1999-B, 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.
- 13 -
<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.
CONSECO FINANCE VEHICLE TRUST 1999-B
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:
CONSECO FINANCE SERVICING CORP., as
Administrator
By: _________________________________
Name:
Title:
- 14 -
<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 Conseco Finance Vehicle Trust 1999-B (the
"Trust"), does hereby make, constitute and appoint Conseco Finance Servicing
Corp., as administrator under the Administration Agreement dated as of December
1, 1999 (the "Administration Agreement"), among the Trust, Conseco Finance
Servicing Corp. 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.
- 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 __________, 1999.
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 ________________, 1999.
Notary Public - State of
- 2 -
<PAGE>
EXHIBIT 5.1
Conseco Finance Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Conseco Finance Securitizations Corp.
300 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-3
Conseco Finance Vehicle Trust 1999-B
File No. 333-91557 and 333-91557-01
Ladies and Gentlemen:
We have acted as counsel to Conseco Finance Corporation, a Delaware
corporation (the "Company") and Conseco Finance Securitizations Corp., a
Minnesota corporation (the "Seller") in connection with the registration under
the Securities Act of 1933, as amended, of $2,747,078,710 of Asset-Backed Notes
(the "Notes") to be issued by Conseco Finance Vehicle Trusts to be form from
time to time, the related preparation and filing of the Registration Statements
on Form S-3 filed by the Company with the Securities and Exchange Commission
(the "Commission") (File Nos. 333- 91557 and 333-91557-01) (together, the
"Registration Statement"), and the preparation of a Prospectus Supplement dated
December 10, 1999, and the related Prospectus dated December 10, 1999 (together,
the "Prospectus") relating to the offer and sale by the Seller of $575,000,000
(approximate) aggregate principal amount of Floating Rate Asset-Backed Notes
(the "Notes") to be issued by Conseco Finance Vehicle Trust 1999-B (the
"Trust"). The corpus of the Trust will consist of the Notes, the related
Collateral Security and certain other property. The Trust was established
pursuant to a Trust Agreement dated as of December 1, 1999, among the Company,
as Servicer, and
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
December 16, 1999
Page 2
Wilmington Trust Company, as Owner Trustee (the "Trust Agreement"). The Notes
are to be issued pursuant to an Indenture dated December 1, 1999 by and between
Trust and U.S. Bank Trust National Association, as Trustee (the "Indenture").
The Loans are described in the Prospectus forming part of the Registration
Statement.
We have examined the Registration Statement, the Prospectus, the Trust
Agreement, the Sale and Servicing Agreement and Indenture, and such other
related documents, and have reviewed such questions of law, as we have
considered necessary and appropriate for the purposes of this opinion. Based on
the foregoing, we are of the opinion that:
1. The Sale and Servicing Agreement has been duly authorized by the Board
of Directors of the Company and the Board of Directors of CFSC and duly executed
and delivered by the Company, CFSC and the Trustee and constitutes the valid and
binding obligation of the Company and CFSC, The Trust Agreement has been duly
authorized by the Board of Directors of the Company and the Board of Directors
of CFSC and duly executed and delivered by the Company, CFSC and the Trustee and
constitutes the valid and binding obligation of the Company and CFSC. The
Indenture has been duly authorized by the Trust and duly executed and delivered
by the Trust and by the applicable Indenture Trustee constitutes the valid and
binding obligation of the Trust.
2. The Notes have been duly executed and delivered by the Owner Trustee,
authenticated by the Indenture Trustee, and delivered and paid for pursuant to
the Underwriting Agreement, the Notes have been duly issued and constitute valid
and binding obligations of the Trust.
The opinions set forth above are subject to the following qualifications
and exceptions:
(a) Our opinions above are subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar law of
general application affecting creditors' rights.
(b) Our opinions above are subject to the effect of general principles
of equity, including (without limitation) concepts of materiality,
reasonableness, good faith and fair dealing, and other similar doctrines
affecting the enforceability of agreements generally (regardless of whether
considered in a proceeding in equity or at law).
<PAGE>
Conseco Finance Corp.
Conseco Finance Securitizations Corp.
December 16, 1999
Page 3
(c) Minnesota Statutes ss. 290.371, Subd. 4, provides that any
corporation required to file a Notice of Business Activities Report does
not have a cause of action upon which it may bring suit under Minnesota law
unless the corporation has filed a Notice of Business Activities Report and
provides that the use of the courts of the State of Minnesota for all
contracts executed and all causes of action that arose before the end of
any period for which a corporation failed to file a required report is
precluded. Insofar as our opinion may relate to the valid, binding and
enforceable character of any agreement under Minnesota law or in a
Minnesota court, we have assumed that any party seeking to enforce such
agreement has at all times been, and will continue at all times to be,
exempt from the requirement of filing a Notice of Business Activities
Report or, if not exempt, has duly filed, and will continue to duly file,
all Notice of Business Activities Reports.
Our opinions expressed above are limited to the laws of the State of
Minnesota and the Delaware General Corporation Law.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus comprising part of the Registration Statement.
Dated: December 16, 1999
Very truly yours,
CFS
<PAGE>
EXHIBIT 8.1
Conseco Finance Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Conseco Finance Securitizations Corp.
300 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-3
Conseco Finance Vehicle Trust 1999-B
File No. 333-91557 and 333-91557-01
Ladies and Gentlemen:
We have acted as counsel for Conseco Finance Corp., Delaware corporation
("Conseco Finance"), and Conseco Finance Securitizations Corp., a Minnesota
corporation ("Conseco Securitizations"), in connection with the establishment by
Conseco Securitizations of Conseco Finance Vehicle Trust 1999-B (the "Trust"),
pursuant to a Trust Agreement, dated as of December 1, 1999 (the "Trust
Agreement"), between Conseco Securitizations and Wilmington Trust Company, as
Owner Trustee (the "Owner Trustee"), and Conseco Finance's and Conseco
Securitization's execution of a Sale and Servicing Agreement (the "Sale and
Servicing Agreement"), dated as of December 1, 1999, among Conseco Finance,
Conseco Securitizations and the Trust. The Trust will issue $575,000,000
aggregate principal amount of Asset-Backed Notes (the "Notes") pursuant to an
Indenture, dated as of December 1, 1999 (the "Indenture"), between the Trust and
U.S. Bank Trust National Association, as Trustee (the "Indenture Trustee"), and
a single class of Certificates (the "Certificates") pursuant to the Trust
Agreement. The issuance of the securities is also described in a registration
statement on Form S-3 (File Nos.
<PAGE>
December 16, 1999
Page 2
333-91557 and 333-91557-01) (together, the "Registration Statement"), and in the
related Prospectus Supplement dated December 10, 1999 (the "Prospectus
Supplement") and Prospectus dated December 10, 1999 (the "Base Prospectus" and,
together with the Prospectus Supplement,
the "Prospectus").
For purposes of rendering our opinion we have examined the Registration
Statement, the Trust Agreement, the Sale and Servicing Agreement, the Indenture,
the Note Purchase Agreements and the related documents and agreements
contemplated therein (collectively, the "Transaction Documents"), and we have
reviewed such questions of law as we have considered necessary and appropriate.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Prospectus.
Our opinion is based upon the existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), currently applicable Treasury Department
regulations issued thereunder, current published administrative positions of the
Internal Revenue Service (the "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. Any change in such authorities may affect the opinions rendered
herein. Our opinion is also based on the representations set forth in the
certificate dated the date hereof delivered to us by Conseco Finance, the
representations and warranties set forth in the Transaction Documents and the
assumptions that Conseco Finance, as Servicer, Conseco Securitizations, as
Seller, the Noteholders, the Certificateholders, the Owner Trustee and the
Indenture Trustee will at all times comply with the requirements of the
Transaction Documents.
An opinion of counsel is predicated on all the facts and conditions set
forth in the opinion and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of the opinion.
It is not a guarantee of the current status of the law and should not be
accepted as a guarantee that a court of law or an administrative agency will
concur in the opinion.
1. Federal Tax Characterization of the Trust. The Trust is a business
entity whose federal tax characterization will be determined under Treasury
Regulations ss.ss. 301.7701-2 and 301.7701-3. Treasury Regulations ss.
301.7701-2 provides that "a business entity is any entity recognized for federal
tax purposes . . . that is not properly classified as a trust under ss.
301.7701-4 or otherwise subject to special treatment under the Internal Revenue
Code." Because the Trust will be recognized as an entity for federal tax
purposes and will not be properly classified as a trust under ss. 301.7701-4,
the Trust will be a "business entity" within ss. 301.7701-2.
Treasury Regulations ss. 301.7701-2 also provides that certain types of
entities are treated as corporations for federal tax purposes, including
entities formed under a state statute which refers to the entity as
"incorporated or as a corporation, body corporate or body politic," or as a
"joint-stock company or joint-stock association." The definition of corporation
also includes
<PAGE>
December 16, 1999
Page 3
insurance companies, certain banking entities, foreign entities and other
entities specified in ss. 301.7701-2. The Trust is not an entity which is
treated as a corporation under ss. 301.7701-2.
Treasury Regulations ss. 301.7701-3 refers to a business entity that is not
classified as a corporation as an "eligible entity." That section provides that
an eligible entity with at least two members can elect to be classified as
either an association or a partnership. Treasury Regulations ss. 301.7701-3
further provides certain default rules pursuant to which, unless the entity
affirmatively elects to be classified as an association, an eligible entity is
treated as a partnership if it has two or more members.
Under Sections 2.6 and 5.5 of the Trust Agreement, Conseco Securitizations,
the Certificateholder and the Owner Trustee have agreed not to file any election
to treat the Trust as an association taxable as a corporation.
Based on the foregoing, it is our opinion that the Trust will not be
treated as an association taxable as a corporation for federal tax purposes.
Under Section 7704 of the Code, certain publicly traded partnerships are
treated as corporations for federal income tax purposes. This treatment does not
apply, however, to any publicly traded partnership if 90% or more of the gross
income of the partnership constitutes "qualifying income." For purposes of
Section 7704, "qualifying income" generally includes interest, dividends and
certain other types of passive income. Based on the representations made in the
Transaction Documents, we conclude that if the Trust is treated as a partnership
for federal income tax purposes, 90% or more of the Trust's gross income will
constitute "qualifying income" within the meaning of Section 7704 of the Code.
Therefore, it is our opinion that the Trust will not be taxed as a corporation
under the publicly traded partnership rules of Section 7704 of the Code.
2. Federal Tax Characterization of the Notes. The characterization of an
instrument as debt or equity for federal income tax purposes depends on all of
the facts and circumstances in each case. In any such determination, several
factors must be considered, including, among other things, the independence of
the debt holder and equity holders, the intention of the parties to create a
debt, the creation of a formal debt instrument, the safety of the principal
amount, and the debt to equity ratio of the issuer. In this regard, we note that
the Owner Trustee, on behalf of the Trust, and each Noteholder will agree to
treat the Notes as debt for federal income tax purposes. Based on such
agreement, the factors listed above and other considerations, although there is
no authority on transactions which resemble the issuance of the Notes by the
Trust, it is our opinion that the Notes will be treated as debt for federal
income tax purposes.
We hereby confirm that, insofar as they constitute statements of law or
legal conclusions as to the likely outcome of material issues under the federal
income tax laws, the discussion under the headings "Federal Income Tax
Consequences" in the Base Prospectus and
<PAGE>
December 16, 1999
Page 4
"Summary of the Terms of the Notes -- Tax Status" and "Federal and State Income
Tax Consequences" in the Prospectus Supplement accurately sets forth our advice.
3. Minnesota State Income Tax Consequences. Based on the discussion of 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, the Trust will
not be classified as an association taxable as a corporation and that the Notes
will be treated as debt. It is also our opinion that for Noteholders 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 Noteholder is subject to
Minnesota income, franchise or excise taxes.
We hereby confirm that, insofar as they constitute statements of law or
legal conclusions as to the likely outcome of material issues under the
Minnesota income tax laws, the discussion under the headings "State Income Tax
Consequences" in the Base Prospectus and "Summary of the Terms of the Notes --
Tax Status" and "Federal and State Income Tax Consequences" in the Prospectus
Supplement accurately sets forth our advice.
We express no opinion about the tax treatment of any features of the
Trust's activities or an investment therein other than those expressly set forth
above.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Federal Income Tax Consequences" in the Prospectus comprising part of the
Registration Statement.
Dated: December 16, 1999
Very truly yours,
CFS
