<PAGE>
Exhibit 4.1
Certificates for Home Improvement Loans
Series 2000-E
POOLING AND SERVICING AGREEMENT
among
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller
and
CONSECO FINANCE CORP.
as Originator and Servicer
and
U.S. BANK TRUST NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
of
CONSECO FINANCE HOME IMPROVEMENT LOAN TRUST 2000-E
Dated as of September 1, 2000
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.................................................................... 1-1
SECTION 1.01. General............................................................... 1-1
SECTION 1.02. Specific Terms........................................................ 1-1
SECTION 1.03. Calculations.......................................................... 1-26
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF LOANS...................................... 2-1
SECTION 2.01. Closing............................................................... 2-1
SECTION 2.02. Conditions to the Closing............................................. 2-1
SECTION 2.03. Conveyance of the Subsequent Loans.................................... 2-3
SECTION 2.04. Acceptance by Trustee................................................. 2-5
SECTION 2.05. REMIC Provisions...................................................... 2-5
SECTION 2.06. Seller Option to Substitute for Prepaid Loans......................... 2-7
ARTICLE III REPRESENTATIONS AND WARRANTIES................................................. 3-1
SECTION 3.01. Representations and Warranties Regarding the Seller................... 3-1
SECTION 3.02. Representations and Warranties Regarding Each Loan.................... 3-2
SECTION 3.03. Additional Representations and Warranties............................. 3-5
SECTION 3.04. Representations and Warranties Regarding the Loans in the Aggregate... 3-5
SECTION 3.05. Representations and Warranties Regarding the Loan Files............... 3-7
SECTION 3.06. Repurchases of Loans for Breach of Representations and Warranties..... 3-7
SECTION 3.07. No Repurchase Under Certain Circumstances............................. 3-9
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS.................... 4-1
SECTION 4.01. Transfer of Loans..................................................... 4-1
SECTION 4.02. Costs and Expenses.................................................... 4-1
ARTICLE V SERVICING OF LOANS............................................................. 5-1
SECTION 5.01. Responsibility for Loan Administration................................ 5-1
SECTION 5.02. Standard of Care...................................................... 5-1
SECTION 5.03. Records............................................................... 5-1
SECTION 5.04. Inspection............................................................ 5-1
SECTION 5.05. Certificate Account................................................... 5-2
SECTION 5.06. Enforcement........................................................... 5-4
SECTION 5.07. Trustee to Cooperate.................................................. 5-5
SECTION 5.08. Costs and Expenses.................................................... 5-6
SECTION 5.09. Maintenance of Insurance.............................................. 5-6
SECTION 5.10. Merger or Consolidation of Servicer................................... 5-6
ARTICLE VI REPORTS AND TAX MATTERS........................................................ 6-1
SECTION 6.01. Monthly Reports....................................................... 6-1
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SECTION 6.02. Officer's Certificate......................................................................... 6-1
SECTION 6.03. Other Data.................................................................................... 6-1
SECTION 6.04. Annual Report of Accountants.................................................................. 6-1
SECTION 6.05. Statements to Certificateholders and the Class C Certificateholder............................ 6-1
SECTION 6.06. Payment of Taxes.............................................................................. 6-6
ARTICLE VII SERVICE TRANSFER...................................................................................... 7-1
SECTION 7.01. Events of Termination......................................................................... 7-1
SECTION 7.02. Transfer...................................................................................... 7-1
SECTION 7.03. Trustee to Act; Appointment of Successor...................................................... 7-2
SECTION 7.04. Notification to Certificateholders and Class C Certificateholder.............................. 7-2
SECTION 7.05. Effect of Transfer............................................................................ 7-3
SECTION 7.06. Transfer of Certificate Account............................................................... 7-3
ARTICLE VIII PAYMENTS.............................................................................................. 8-1
SECTION 8.01. Monthly Payments.............................................................................. 8-1
SECTION 8.02. Advances...................................................................................... 8-2
SECTION 8.03. [RESERVED].................................................................................... 8-2
SECTION 8.04. Permitted Withdrawals from the Certificate Account; Payments.................................. 8-2
SECTION 8.05. Reassignment of Repurchased and Replaced Loans................................................ 8-5
SECTION 8.06. Class C Certificateholder's Purchase Option................................................... 8-5
SECTION 8.07. Pre-Funding Account........................................................................... 8-7
ARTICLE IX THE CERTIFICATES AND THE CLASS C CERTIFICATE.......................................................... 9-1
SECTION 9.01. The Certificates and the Class C Certificate.................................................. 9-1
SECTION 9.02. Registration of Transfer and Exchange of Certificates and the Class C Certificate............. 9-2
SECTION 9.03. No Charge; Disposition of Void Certificates or Class C Certificate............................ 9-6
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or Class C Certificate...................... 9-6
SECTION 9.05. Persons Deemed Owners......................................................................... 9-6
SECTION 9.06. Access to List of Certificateholders' and Class C Certificateholder's Names and Addresses..... 9-6
SECTION 9.07. Authenticating Agents......................................................................... 9-7
ARTICLE X INDEMNITIES........................................................................................... 10-1
SECTION 10.01. Real Estate................................................................................... 10-1
SECTION 10.02. Liabilities to Obligors....................................................................... 10-1
SECTION 10.03. Tax Indemnification........................................................................... 10-1
SECTION 10.04. Servicer's Indemnities........................................................................ 10-1
SECTION 10.05. Operation of Indemnities...................................................................... 10-1
SECTION 10.06. REMIC Tax Matters............................................................................. 10-2
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ARTICLE XI THE TRUSTEE................................................................................................... 11-1
SECTION 11.01. Duties of Trustee.................................................................................... 11-1
SECTION 11.02. Certain Matters Affecting the Trustee................................................................ 11-2
SECTION 11.03. Trustee Not Liable for Certificates, Class C Certificate or Loans.................................... 11-3
SECTION 11.04. Trustee May Own Certificates......................................................................... 11-3
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive Events of Termination.................... 11-3
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses...................................................... 11-4
SECTION 11.07. Eligibility Requirements for Trustee................................................................. 11-4
SECTION 11.08. Resignation or Removal of Trustee.................................................................... 11-4
SECTION 11.09. Successor Trustee.................................................................................... 11-5
SECTION 11.10. Merger or Consolidation of Trustee................................................................... 11-6
SECTION 11.11. Tax Returns.......................................................................................... 11-6
SECTION 11.12. Obligor Claims....................................................................................... 11-6
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee........................................................ 11-7
SECTION 11.14. Trustee and U.S. Bancorp............................................................................. 11-8
SECTION 11.15. Trustee Advances..................................................................................... 11-8
ARTICLE XII MISCELLANEOUS................................................................................................. 12-1
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties............................................... 12-1
SECTION 12.02. Conseco Finance Corp. and Seller Not to Engage in Certain Transactions with Respect to the Trust..... 12-1
SECTION 12.03. Maintenance of Office or Agency...................................................................... 12-1
SECTION 12.04. Termination.......................................................................................... 12-1
SECTION 12.05. Acts of Certificateholders and Class C Certificateholder............................................. 12-3
SECTION 12.06. Assignment or Delegation by Originator............................................................... 12-4
SECTION 12.07. Amendment............................................................................................ 12-4
SECTION 12.08. Notices.............................................................................................. 12-6
SECTION 12.09. Merger and Integration............................................................................... 12-7
SECTION 12.10. Headings............................................................................................. 12-7
SECTION 12.11. Governing Law........................................................................................ 12-7
SECTION 12.12. Covenants re Bankruptcy, etc......................................................................... 12-8
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Exhibit A - Form of Class A-[1][2][3][4][5] Certificate
Exhibit B - Form of Class M-[1][2] Certificate
Exhibit C - Form of Class B-[1][2] Certificate
Exhibit D - Form of Assignment
Exhibit E - Form of Certificate of Officer
Exhibit F - Form of Opinion of Counsel for the Originator
Exhibit G - Form of Trustee's Acknowledgment
Exhibit H - Form of Certificate of Servicing Officer
Exhibit I - Form of Class C Certificate
Exhibit J-1 - Form of Certificate Regarding Repurchased Loans
Exhibit J-2 - Form of Certificate Regarding Repurchased Loans
Exhibit J-3 - Form of Certificate Regarding Substitution for Prepaid Loans
Exhibit K - Form of Representation Letter
Exhibit L - List of Initial and Additional Loans
Exhibit M - Form of Monthly Report
Exhibit N - Form of Addition Notice
Exhibit O - Form of Subsequent Transfer Instrument
Exhibit P - Form of Officer's Certificate (Subsequent Transfer)
Exhibit Q - List of FHA Insured Loans
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<PAGE>
AGREEMENT, dated as of September 1, 2000, among Conseco Finance
Securitizations Corp., a corporation organized and existing under the laws of
the State of Minnesota, as Seller (the "Seller"), Conseco Finance Corp., a
corporation organized and existing under the laws of the State of Delaware, as
originator of the home improvement loans described herein (the "Originator") and
as Servicer (the "Servicer"), and U.S. Bank Trust National Association, a
national banking association organized and existing under the laws of the United
States, not in its individual capacity but solely as Trustee (the "Trustee") of
Conseco Finance Home Improvement Loan Trust 2000-E (the "Trust").
WHEREAS, in the regular course of its business, Conseco Finance Corp.
purchases, originates and services home improvement loans, which loans provide
for installment payments by or on behalf of the borrowers and grant mortgages,
deeds of trust or security deeds on certain real estate securing such loans;
WHEREAS, the Seller, in the ordinary course of its business, acquires pools
of home improvement loans and other receivables from Conseco Finance Corp. and
arranges the securitization of those receivables;
WHEREAS, the Seller intends to sell the Certificates (as defined herein),
to be issued hereunder in nine classes (each, a "Class"), which, together with
the Class C Certificate (as defined herein), in the aggregate will evidence the
entire beneficial ownership interest in the Trust Fund (as defined herein),
consisting primarily of the Loans (as defined herein);
WHEREAS, the Seller, the Originator, the Servicer and the Trustee wish to
set forth the terms and conditions on which the Trustee, on behalf of the
Certificateholders (as defined herein) and Class C Certificateholder (as defined
herein) will acquire the Loans and the Servicer will service the Loans;
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. For the purpose of this Agreement, except as
-------
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
--------------
"Addition Notice" means, with respect to the transfer of Subsequent Loans
---------------
to the Trust pursuant to Section 2.03 of this Agreement, a notice, substantially
in the form of Exhibit N, which shall be given not later than five Business Days
prior to the related Subsequent Transfer Date, of the Seller's designation of
Subsequent Loans, as applicable, to be sold to the Trust and the aggregate Cut-
off Date Principal Balances of such Subsequent Loans.
"Additional Loan" means a Loan identified as such on the List of Loans
---------------
attached hereto as Exhibit L.
"Advance" means, with respect to any Payment Date, the amounts, if any,
-------
deposited by the Servicer or the Trustee, as applicable, in the Certificate
Account for such Payment Date pursuant to Section 8.02.
"Advance Payment" means any payment by an Obligor in advance of the Due
---------------
Period in which it would be due under such Loan and which payment is not a
Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling or
---------
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificate Principal Balance" means the sum of the Class A-1,
---------------------------------------
Class A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2, Class B-1 and
Class B-2 Principal Balances.
"Aggregate Liquidation Loss Principal Amount" means, for any Payment Date,
-------------------------------------------
the excess, if any, of (a) the Aggregate Certificate Principal Balance minus all
distributions of principal on the Certificates on such Payment Date over (b) the
sum of the Pool Scheduled Principal Balance plus the Pre-Funded Amount.
"Agreement" means this Pooling and Servicing Agreement, as it may be
---------
amended from time to time.
1-1
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"Amount Available" means, for any Payment Date, an amount equal to:
----------------
(a) the sum of
(i) the amount on deposit in the Certificate Account as of the
close of business on the last day of the related Due Period,
(ii) any Advances deposited in the Certificate Account with
respect to such Payment Date, and
(iii) any amount withdrawn from the Pre-Funding Account pursuant
to Section 8.07 and deposited in the Certificate Account, minus
(b) the sum of
(i) the Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee from the
Certificate Account pursuant to clauses (ii) through (v) of Section
8.04(a), and
(iii) any amounts on deposit in the Certificate Account as of
the close of business on the last day of the related Due Period
representing collections in respect of Principal Prepayments in Full
(other than any amounts referred to in Section 2.06(vii)) on Loans for
which a substitution has been made in accordance with Section 2.06.
"Amount Held for Future Distribution" means, for any Payment Date, the
-----------------------------------
total of the amounts held in the Certificate Account in respect of the Loans on
the last day of the preceding Due Period on account of Advance Payments in
respect of such Due Period.
"Applicants" has the meaning assigned in Section 9.06.
----------
"Authenticating Agent" means any authenticating agent appointed pursuant to
--------------------
Section 9.07.
"Average Sixty-Day Delinquency Ratio Test" means, to be considered
----------------------------------------
"satisfied" for any Payment Date, that the arithmetic average of the Sixty-Day
Delinquency Ratio for the Loans for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 12.00% of the
Senior Enhancement Percentage.
"Book-Entry Certificate" means any Certificate registered in the name of
----------------------
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
1-2
<PAGE>
"Business Day" means any day other than (a) a Saturday or a Sunday, or (b)
------------
another day on which banking institutions in the city in which the Person taking
action hereunder are authorized or obligated by law, executive order, or
governmental decree to be closed.
"Certificate" means a Certificate for Home Improvement Loans, Series 2000-
-----------
E, Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2,
Class B-1 or Class B-2, executed and delivered by the Trustee substantially in
the form of Exhibit A, B or C, as applicable, but does not include the Class C
Certificate.
"Certificate Account" means a separate trust account created and maintained
-------------------
pursuant to Section 5.05 in the name of the Trust in an Eligible Institution.
"Certificate Owner" means the person who is the beneficial owner of a Book-
-----------------
Entry Certificate or, if Definitive Certificates have been issued,
Certificateholders.
"Certificate Register" means the register maintained pursuant to Section
--------------------
9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
--------------------- ---------
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
----------------- ------
Certificate or Class C Certificate is registered on the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request or
demand pursuant to this Agreement, any Certificate or Class C Certificate
registered in the name of the Originator or the Seller or any of their
Affiliates shall be deemed not to be outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite Percentage Interest necessary to effect any such consent, request,
waiver or demand has been obtained; provided, however, that, solely for the
purpose of determining whether the Trustee is entitled to rely upon any such
consent, waiver, request or demand, only Certificates or a Class C Certificate
which the Trustee knows to be so owned shall be so disregarded.
"Class A," "Class M," "Class B" or "Class C" means pertaining to Class A
------------------------------------------
Certificates, Class M Certificates, Class B Certificates and/or the Class C
Certificate, as the case may be.
"Class A Certificate" means the Class A-1, Class A-2, Class A-3, Class A-4,
-------------------
and Class A-5 Certificates, collectively, each of which shall be executed and
delivered by the Trustee, authenticated by the Certificate Registrar,
substantially in the form set forth in Exhibit A and evidencing an interest
designated as a "regular interest" in the REMIC for purposes of the REMIC
Provisions.
"Class A Distribution Amount" means, for any Payment Date, the lesser of
---------------------------
(a) the Class A Formula Distribution Amount and (b) that portion of the Amount
Available eligible for distribution in respect of such amount in accordance with
the priorities set forth in Section 8.04(b).
1-3
<PAGE>
"Class A Formula Distribution Amount" means, for any Payment Date, an
-----------------------------------
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 16,
2000) at (i) the Class A-1 Pass-Through Rate on the Class A-1 Principal Balance,
(ii) the Class A-2 Pass-Through Rate on the Class A-2 Principal Balance, (iii)
the Class A-3 Pass-Through Rate on the Class A-3 Principal Balance, (iv) the
Class A-4 Pass-Through Rate on the Class A-4 Principal Balance, and (v) the
Class A-5 Pass-Through Rate on the Class A-5 Principal Balance, in each case to
be calculated immediately prior to such Payment Date, (b) the aggregate of the
Unpaid Class A Interest Shortfalls, if any, with respect to each Class of Class
A Certificates and (c)(i) if there is no Class A Principal Deficiency Amount for
such Payment Date, the Class A Formula Principal Distribution Amount, or (ii) if
there is a Class A Principal Deficiency Amount for such Payment Date, the amount
determined in accordance with Section 8.04(b)(7)(i).
"Class A Formula Interest Distribution Amount" means, as to each Class of
--------------------------------------------
Class A Certificates and any Payment Date, the sum of (1) the amount specified
in clause (a)(i), (ii), (iii), (iv) or (v) as appropriate of the definition of
the term "Class A Formula Distribution Amount" and (2) the Unpaid Class A
Interest Shortfall, if any, with respect to such Class.
"Class A Formula Principal Distribution Amount" means, for any Payment
---------------------------------------------
Date:
(i) if the Payment Date is (A) before the Stepdown Date or (B) on or
after the Stepdown Date and a Trigger Event exists, the Formula Principal
Distribution Amount (but in no event more than the Class A Principal
Balance); or
(ii) if the Payment Date is on or after the Stepdown Date and no
Trigger Event exists, the excess of (A) the Class A Principal Balance over
(B) the lesser of (x) 65.50% of the Pool Scheduled Principal Balance or (y)
the Pool Scheduled Principal Balance minus $1,500,000.
"Class A Interest Shortfall" means, as to each Class of Class A
--------------------------
Certificates and any Payment Date, the amount, if any, by which the Class A
Formula Interest Distribution Amount for such Class exceeds the amount
distributed to Holders of such Class on such Payment Date pursuant to Section
8.04(b)(2).
"Class A Principal Balance" means, for any Payment Date, the Original Class
-------------------------
A Principal Balance less all amounts previously distributed to Holders of Class
A Certificates in respect of principal.
"Class A Principal Deficiency Amount" means, for any Payment Date, the
-----------------------------------
excess, if any, of (a) the Class A Principal Balance for such Payment Date over
(b) the sum of the Pool Scheduled Principal Balance plus the Pre-Funded Amount
for the immediately preceding Payment Date.
"Class A-1 Distribution Amount" means, for any Payment Date, that portion
-----------------------------
of the Class A Distribution Amount to be distributed to the Class A-1
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
1-4
<PAGE>
"Class A-1 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class A-1 Principal Balance less all amounts previously distributed to Holders
of Class A-1 Certificates in respect of principal.
"Class A-2 Distribution Amount" means, for any Payment Date, that portion
-----------------------------
of the Class A Distribution Amount to be distributed to the Class A-2
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-2 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class A-2 Principal Balance less all amounts previously distributed to Holders
of Class A-2 Certificates in respect of principal.
"Class A-3 Distribution Amount" means, for any Payment Date, that portion
-----------------------------
of the Class A Distribution Amount to be distributed to the Class A-3
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-3 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class A-3 Principal Balance less all amounts previously distributed to Holders
of Class A-3 Certificates in respect of principal.
"Class A-4 Distribution Amount" means, for any Payment Date, that portion
-----------------------------
of the Class A Distribution Amount to be distributed to the Class A-4
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-4 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class A-4 Principal Balance less all amounts previously distributed to Holders
of Class A-4 Certificates in respect of principal.
"Class A-5 Distribution Amount" means, for any Payment Date, that portion
-----------------------------
of the Class A Distribution Amount to be distributed to the Class A-5
Certificateholders pursuant to Section 8.04(b) on such Payment Date.
"Class A-5 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class A-5 Principal Balance less all amounts previously distributed to Holders
of Class A-5 Certificates in respect of principal.
"Class B Certificates" means the Class B-1 and Class B-2 Certificates,
--------------------
collectively.
"Class B Principal Balance" means, for any Payment Date, the sum of the
-------------------------
Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B-1 Adjusted Principal Balance" means, for any Payment Date, the
------------------------------------
Class B-1 Principal Balance minus the Class B-1 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
1-5
<PAGE>
"Class B-1 Certificate" means any one of the Class B-1 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the REMIC for purposes of the
REMIC Provisions.
"Class B-1 Distribution Amount" means, for any Payment Date, the lesser of
-----------------------------
(a) the Class B-1 Formula Distribution Amount and (b) that portion of the Amount
Available eligible for distribution in respect of such amount in accordance with
the priorities set forth in Section 8.04(b).
"Class B-1 Formula Distribution Amount" means, for any Payment Date, an
-------------------------------------
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 16,
2000) at the Class B-1 Pass-Through Rate on the Class B-1 Adjusted Principal
Balance, (b) the Unpaid Class B-1 Interest Shortfall, if any, (c) the Class B-1
Formula Principal Distribution Amount and (d) the Class B-1 Formula Liquidation
Loss Interest Distribution Amount, if any, with respect to the Class B-1
Certificates.
"Class B-1 Formula Interest Distribution Amount" means the sum of the
----------------------------------------------
amounts specified in clauses (a) and (b) of the definition of the term "Class
B-1 Formula Distribution Amount."
"Class B-1 Formula Liquidation Loss Interest Distribution Amount" means,
---------------------------------------------------------------
for any Payment Date, the sum of (a) the Class B-1 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class B-1 Liquidation Loss Interest
Shortfall, if any.
"Class B-1 Formula Principal Distribution Amount" means, for any Payment
-----------------------------------------------
Date:
(i) if the Payment Date is (A) before the Stepdown Date or (B) on or
after the Stepdown Date and a Trigger Event exists, the Formula Principal
Distribution Amount less the sum of the Class A Formula Principal
Distribution Amount, the Class M-1 Formula Principal Distribution Amount
and the Class M-2 Formula Principal Distribution Amount (but in no event
more than the Class B-1 Principal Balance); or
(ii) if the Payment Date is on or after the Stepdown Date and no
Trigger Event exists, the excess (but in no event more than the Class B-1
Principal Balance) of
(A) (1) the sum of the Class A Principal Balance, the Class M-1
Adjusted Principal Balance, the Class M-2 Adjusted Principal Balance
and the Class B-1 Adjusted Principal Balance, minus (2) the amount
actually distributed on such Payment Date in respect of principal on
the Class A, Class M-1 and Class M-2 Certificates, over
(B) the lesser of (x) 88.00% of the Pool Scheduled Principal
Balance or (y) the Pool Scheduled Principal Balance minus $1,500,000.
1-6
<PAGE>
"Class B-1 Interest Shortfall" means, for any Payment Date, the amount, if
----------------------------
any, by which (a) the Class B-1 Formula Interest Distribution Amount exceeds (b)
the amount distributed to Holders of such Class on such Payment Date pursuant to
Section 8.04(b)(5).
"Class B-1 Liquidation Loss Interest Amount" means, for any Payment Date,
------------------------------------------
an amount equal to one month's interest at the Class B-1 Pass-Through Rate on
the Class B-1 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class B-1 Liquidation Loss Interest Shortfall" means, for any Payment
---------------------------------------------
Date, the amount, if any, by which (a) the Class B-1 Formula Liquidation Loss
Interest Distribution Amount exceeds (b) any amount distributed to Holders of
such Class on such Payment Date pursuant to Section 8.04(b)(14).
"Class B-1 Liquidation Loss Principal Amount" means, for any Payment Date,
-------------------------------------------
the lesser of (a) the Class B-1 Principal Balance minus all distributions of
principal on the Class B-1 Certificates on such Payment Date and (b) the
Aggregate Liquidation Loss Principal Amount (if any) minus the Class B-2
Liquidation Loss Principal Amount (if any) for such Payment Date.
"Class B-1 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class B-1 Principal Balance less all amounts previously distributed to Holders
of Class B-1 Certificates in respect of principal.
"Class B-2 Adjusted Principal Balance" means, for any Payment Date, the
------------------------------------
Class B-2 Principal Balance minus the Class B-2 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class B-2 Certificate" means any one of the Class B-2 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the REMIC for purposes of the
REMIC Provisions.
"Class B-2 Distribution Amount" means, for any Payment Date, the lesser of
-----------------------------
(a) the Class B-2 Formula Distribution Amount and (b) that portion of the Amount
Available eligible for distribution in respect of such amount in accordance with
the priorities set forth in Section 8.04(b).
"Class B-2 Formula Distribution Amount" means, for any Payment Date, an
-------------------------------------
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 16,
2000) at the Class B-2 Pass-Through Rate on the Class B-2 Principal Balance, (b)
the Unpaid Class B-2 Interest Shortfall, if any, (c) the Class B-2 Formula
Principal Distribution Amount, and (d) the Class B-2 Formula Liquidation Loss
Interest Distribution Amount, if any.
"Class B-2 Formula Interest Distribution Amount" means the sum of the
----------------------------------------------
amounts specified in clauses (a) and (b) of the definition of the term "Class
B-2 Formula Distribution Amount."
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<PAGE>
"Class B-2 Formula Liquidation Loss Interest Distribution Amount" means,
---------------------------------------------------------------
for any Payment Date, the sum of (a) the Class B-2 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class B-2 Liquidation Loss Interest
Shortfall, if any.
"Class B-2 Formula Principal Distribution Amount" means, for any Payment
-----------------------------------------------
Date:
(i) if the Payment Date is (A) before the Stepdown Date or (B) on or
after the Stepdown Date and a Trigger Event exists, the Formula Principal
Distribution Amount less the sum of the Class A Formula Principal
Distribution Amount, the Class M-1 Formula Principal Distribution Amount,
the Class M-2 Formula Principal Distribution Amount and the Class B-1
Formula Principal Distribution Amount (but in no event more than the Class
B-2 Principal Balance); or
(ii) if the Payment Date is on or after the Stepdown Date and no
Trigger Event exists, the excess (but in no event more than the Class B-2
Principal Balance) of
(A) (1) the sum of the Class A Principal Balance, the Class M-1
Adjusted Principal Balance, the Class M-2 Adjusted Principal Balance,
the Class B-1 Adjusted Principal Balance and the Class B-2 Adjusted
Principal Balance, minus (2) the amount actually distributed on such
Payment Date in respect of principal on the Class A, Class M-1, Class
M-2 and Class B-1 Certificates, over
(B) the lesser of (x) 95.00% of the Pool Scheduled Principal
Balance or (y) the Pool Scheduled Principal Balance minus $1,500,000.
"Class B-2 Interest Shortfall" means, for any Payment Date, the amount, if
----------------------------
any, by which (a) the Class B-2 Formula Interest Distribution Amount exceeds (b)
the amount distributed to Holders of such Class on such Payment Date pursuant to
Section 8.04(b)(6).
"Class B-2 Liquidation Loss Interest Amount" means, for any Payment Date,
------------------------------------------
an amount equal to one month's interest at the Class B-2 Pass-Through Rate on
the Class B-2 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class B-2 Liquidation Loss Interest Shortfall" means, for any Payment
---------------------------------------------
Date, the amount, if any, by which (a) the Class B-2 Formula Liquidation Loss
Interest Distribution Amount exceeds (b) any amount distributed to Holders of
such Class on such Payment Date pursuant to Section 8.04(b)(15).
"Class B-2 Liquidation Loss Principal Amount" means, for any Payment Date,
-------------------------------------------
the lesser of (a) the Class B-2 Principal Balance minus all distributions of
principal on the Class B-2 Certificates on such Payment Date and (b) the
Aggregate Liquidation Loss Principal Amount for such Payment Date.
1-8
<PAGE>
"Class B-2 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class B-2 Principal Balance less all amounts previously distributed to Holders
of Class B-2 Certificates in respect of principal.
"Class C Certificate" means a Certificate for Home Improvement Loans,
-------------------
Series 2000-E, bearing the designation "Class C," executed and delivered by the
Trustee substantially in the form of Exhibit I, and evidencing an interest
designated as the "residual interest" in the REMIC for purposes of the REMIC
Provisions.
"Class C Certificateholder" means the person in whose name a Class C
-------------------------
Certificate is registered on the Certificate Register.
"Class C Distribution Amount" means, for any Payment Date, the amount, if
---------------------------
any, distributable in respect of the Class C Certificate pursuant to Section
8.04(b)(18).
"Class M Certificates" means the Class M-1 and Class M-2 Certificates,
--------------------
collectively.
"Class M-1 Adjusted Principal Balance" means, for any Payment Date, the
------------------------------------
Class M-1 Principal Balance minus the Class M-1 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class M-1 Certificate" means any one of the Class M-1 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the REMIC for purposes of the
REMIC Provisions.
"Class M-1 Distribution Amount" means, for any Payment Date, the lesser of
-----------------------------
(a) the Class M-1 Formula Distribution Amount and (b) that portion of the Amount
Available eligible for distribution in respect of such amount in accordance with
the priorities set forth in Section 8.04(b).
"Class M-1 Formula Distribution Amount" means, for any Payment Date, an
-------------------------------------
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 16,
2000) at the Class M-1 Pass-Through Rate on the Class M-1 Adjusted Principal
Balance, (b) the Unpaid Class M-1 Interest Shortfall, if any, (c) the Class M-1
Formula Principal Distribution Amount and (d) the Class M-1 Formula Liquidation
Loss Interest Distribution Amount, if any.
"Class M-1 Formula Interest Distribution Amount" means, for any Payment
----------------------------------------------
Date, the sum of the amounts specified in clauses (a) and (b) of the definition
of the term "Class M-1 Formula Distribution Amount."
"Class M-1 Formula Liquidation Loss Interest Distribution Amount" means,
---------------------------------------------------------------
for any Payment Date, the sum of (a) the Class M-1 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class M-1 Liquidation Loss Interest
Shortfall, if any.
1-9
<PAGE>
"Class M-1 Formula Principal Distribution Amount" means, for any Payment
-----------------------------------------------
Date:
(i) if the Payment Date is (A) before the Stepdown Date or (B) on or
after the Stepdown Date and a Trigger Event exists, the Formula Principal
Distribution Amount less the Class A Formula Principal Distribution Amount
(but in no event more than the Class M-1 Principal Balance); or
(ii) if the Payment Date is on or after the Stepdown Date and no
Trigger Event exists, the excess (but in no event more than the Class M-1
Principal Balance) of
(A) (1) the sum of the Class A Principal Balance and the Class
M-1 Adjusted Principal Balance, minus (2) the amount actually
distributed on such Payment Date in respect of principal on the Class
A Certificates, over
(B) the lesser of (x) 77.90% of the Pool Scheduled Principal
Balance or (y) the Pool Scheduled Principal Balance minus $1,500,000.
"Class M-1 Interest Shortfall" means, for any Payment Date, the amount, if
----------------------------
any, by which (a) the Class M-1 Formula Interest Distribution Amount exceeds (b)
the amount distributed to Holders of such Class on such Payment Date pursuant to
Section 8.04(b)(3).
"Class M-1 Liquidation Loss Interest Amount" means, for any Payment Date,
------------------------------------------
an amount equal to one month's interest at the Class M-1 Pass-Through Rate on
the Class M-1 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class M-1 Liquidation Loss Interest Shortfall" means, for any Payment
---------------------------------------------
Date, the amount, if any, by which (a) the Class M-1 Formula Liquidation Loss
Interest Distribution Amount exceeds (b) any amount distributed to the Holders
of such Class on such Payment Date pursuant to Section 8.04(b)(12).
"Class M-1 Liquidation Loss Principal Amount" means, for any Payment Date,
-------------------------------------------
the lesser of (A) the Class M-1 Principal Balance minus all distributions of
principal on the Class M-1 Certificates on such Payment Date and (B) the excess,
if any, of the Aggregate Liquidation Loss Principal Amount over the aggregate of
the Class B-2 Liquidation Loss Principal Amount, the Class B-1 Liquidation Loss
Principal Amount and the Class M-2 Liquidation Loss Principal Amount for such
Payment Date.
"Class M-1 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class M-1 Principal Balance less all amounts previously distributed to Holders
of Class M-1 Certificates in respect of principal.
"Class M-2 Adjusted Principal Balance" means, for any Payment Date, the
------------------------------------
Class M-2 Principal Balance minus the Class M-2 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
1-10
<PAGE>
"Class M-2 Certificate" means any one of the Class M-2 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the REMIC for purposes of the
REMIC Provisions.
"Class M-2 Distribution Amount" means, for any Payment Date, the lesser of
-----------------------------
(a) the Class M-2 Formula Distribution Amount and (b) that portion of the Amount
Available eligible for distribution in respect of such amount in accordance with
the priorities set forth in Section 8.04(b).
"Class M-2 Formula Distribution Amount" means, for any Payment Date, an
-------------------------------------
amount equal to the sum of (a) one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding October 16,
2000) at the Class M-2 Pass-Through Rate on the Class M-2 Adjusted Principal
Balance, (b) the Unpaid Class M-2 Interest Shortfall, if any, (c) the Class M-2
Formula Principal Distribution Amount and (d) the Class M-2 Formula Liquidation
Loss Interest Distribution Amount, if any.
"Class M-2 Formula Interest Distribution Amount" means, for any Payment
----------------------------------------------
Date, the sum of the amounts specified in clauses (a) and (b) of the definition
of the term "Class M-2 Formula Distribution Amount."
"Class M-2 Formula Liquidation Loss Interest Distribution Amount" means,
---------------------------------------------------------------
for any Payment Date, the sum of (a) the Class M-2 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class M-2 Liquidation Loss Interest
Shortfall, if any.
"Class M-2 Formula Principal Distribution Amount" means, for any Payment
-----------------------------------------------
Date:
(i) if the Payment Date is (A) before the Stepdown Date or (B) on or
after the Stepdown Date and a Trigger Event exists, the Formula Principal
Distribution Amount less the sum of the Class A Formula Principal
Distribution Amount and the Class M-1 Formula Principal Distribution Amount
(but in no event more than the Class M-2 Principal Balance); or
(ii) if the Payment Date is on or after the Stepdown Date and no
Trigger Event exists, the excess (but in no event more than the Class M-2
Principal Balance) of
(A) (1) the sum of the Class A Principal Balance, the Class M-1
Adjusted Principal Balance and the Class M-2 Adjusted Principal
Balance, minus (2) the amount actually distributed on such Payment
Date in respect of principal on the Class A and Class M-1
Certificates, over
(B) the lesser of (x) 83.10% of the Pool Scheduled Principal
Balance or (y) the Pool Scheduled Principal Balance minus $1,500,000.
1-11
<PAGE>
"Class M-2 Interest Shortfall" means, for any Payment Date, the amount, if
----------------------------
any, by which (a) the Class M-2 Formula Interest Distribution Amount exceeds (b)
the amount distributed to Holders of such Class on such Payment Date pursuant to
Section 8.04(b)(4).
"Class M-2 Liquidation Loss Interest Amount" means, for any Payment Date,
------------------------------------------
an amount equal to one month's interest at the Class M-2 Pass-Through Rate on
the Class M-2 Liquidation Loss Principal Amount (if any) for the immediately
preceding Payment Date.
"Class M-2 Liquidation Loss Interest Shortfall" means, for any Payment
---------------------------------------------
Date, the amount, if any, by which (a) the Class M-2 Formula Liquidation Loss
Interest Distribution Amount for such Class exceeds (b) any amount distributed
to Holders of such Class on such Payment Date pursuant to Section 8.04(b)(13).
"Class M-2 Liquidation Loss Principal Amount" means, for any Payment Date,
-------------------------------------------
the lesser of (a) the Class M-2 Principal Balance minus all distributions of
principal on the Class M-2 Certificates on such Payment Date and (b) the excess,
if any, of the Aggregate Liquidation Loss Principal Amount over the aggregate of
the Class B-2 Liquidation Loss Principal Amount and the Class B-1 Liquidation
Loss Principal Amount for such Payment Date.
"Class M-2 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class M-2 Principal Balance less all amounts previously distributed to Holders
of Class M-2 Certificates in respect of principal.
"Class Principal Balance" means any of the Class A-1, Class A-2, Class A-3,
-----------------------
Class A-4, Class A-5, Class M-1, Class M-2, Class B-1 or Class B-2 Principal
Balances.
"Closing Date" means September 28, 2000.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Combined LTV" means, with respect to any Loan, the percentage obtained by
------------
dividing (i) the sum of (a) the current principal balance of such Loan, plus (b)
the outstanding principal balance, as of the date of origination of such Loan,
of any loan secured by a prior lien on the property which secures the Loan (the
"Collateral"), by (ii) the lesser of (a) the appraised value of the Collateral
based on an appraisal made for the originator of the Loan by an independent fee
appraiser (or by an employee of the Originator who is a licensed appraiser) at
the time of origination of the Loan, and (b) the sales price of the Collateral
at the time of origination of the Loan; provided that, in the case of a Loan the
proceeds of which were used to refinance an existing mortgage loan, the amount
described in clause (ii)(a) shall be the amount to be used for purposes of
clause (ii).
"Computer Tape" means the computer tape generated by the Originator which
-------------
provides information relating to the Loans and which was used by the Originator
in selecting the Loans, and includes the master file and the history file.
1-12
<PAGE>
"Corporate Trust Office" means the office of the Trustee at which at any
----------------------
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.08.
"Counsel for the Originator" means Dorsey & Whitney LLP, or other legal
--------------------------
counsel for the Originator.
"Counsel for the Seller" means Dorsey & Whitney LLP, or other legal counsel
----------------------
for the Seller.
"Cumulative Realized Loss Ratio" means, for any Payment Date, a fraction,
------------------------------
expressed as a percentage, the numerator of which is the Cumulative Realized
Losses for the Loans for that Payment Date and the denominator of which is the
sum of the Cut-off Date Principal Balances of all the Loans plus the amount on
deposit in the Pre-Funding Account immediately prior to the Post-Funding Payment
Date.
"Cumulative Realized Losses" means, for any Payment Date, the sum of the
--------------------------
Realized Losses for the Loans for that Payment Date and each preceding Payment
Date since the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied" for
-------------------------------
any Payment Date, that the Cumulative Realized Loss Ratio for the Loans, as
applicable, for such Payment Date is less than or equal to the percentage set
forth below:
Payment Date Percentage
------------ ----------
October 2003 - September 2004 6.00%
October 2004 - September 2005 7.13%
October 2005 - September 2007 7.50%
October 2007 and thereafter 8.00%
"Custodian" means at any time an Eligible Institution, or a financial
---------
institution organized under the laws of the United States or any State, which is
not an Affiliate of the Originator, which is subject to supervision and
examination by Federal or State authorities and whose commercial paper or
unsecured long-term debt (or, in the case of a member of a bank holding company
system, the commercial paper or unsecured long-term debt of such bank holding
company) has been rated A-1+ by S&P, P-1 by Moody's and F1 by Fitch in the case
of commercial paper, or BBB+ or higher by S&P, Baa1 or higher by Moody's and
BBB+ or higher by Fitch in the case of unsecured long-term debt, as is acting at
such time as Custodian of the Loan Files pursuant to Section 4.01.
"Cut-off Date" means, with respect to each Initial Loan, July 31, 2000 (or
------------
the date of origination, if later); with respect to each Additional Loan, August
31, 2000; and with respect to each Subsequent Loan, the applicable Subsequent
Cut-off Date.
1-13
<PAGE>
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
-----------------------------------
Date Principal Balances of all Loans.
"Cut-off Date Principal Balance" means, (i) as to any Initial or Additional
------------------------------
Loan, the unpaid principal balance thereof at the applicable Cut-off Date after
giving effect to all installments of principal due on or prior thereto, and (ii)
as to any Subsequent Loan, the unpaid principal balance thereof at the related
Subsequent Cut-off Date, after giving effect to all installments of principal
due on or prior thereto.
"Defaulted Loan" means a Loan with respect to which the Servicer commenced
--------------
foreclosure proceedings, made a sale of such Loan to a third party for
foreclosure or enforcement, or as to which there was a Delinquent Payment 180 or
more days past due.
"Definitive Certificates" has the meaning assigned in Section 9.02(e).
-----------------------
"Delinquent Payment" means, as to any Loan, with respect to any Due Period,
------------------
any payment or portion of a payment that was originally scheduled to be made
during such Due Period under such Loan (after giving effect to any reduction in
the principal amount deemed owed on such Loan by the Obligor) and was not
received or applied during such Due Period and deposited in the Certificate
Account, whether or not any payment extension has been granted by the Servicer;
provided, however, that with respect to any Liquidated Loan, the payment
scheduled to be made in the Due Period in which such Loan became a Liquidated
Loan shall not be deemed a Delinquent Payment.
"Depository" means the initial Depository, The Depository Trust Company,
----------
the nominee of which is Cede & Co., as the registered Holder of (i) one Class
A-1 Certificate evidencing $114,800,000 in Original Class A-1 Principal Balance,
(ii) one Class A-2 Certificate evidencing $31,500,000 in Original Class A-2
Principal Balance, (iii) one Class A-3 Certificate evidencing $43,000,000 in
Original Class A-3 Principal Balance, (iv) one Class A-4 Certificate evidencing
$33,400,000 in Original Class A-4 Principal Balance, (v) one Class A-5
Certificate evidencing $33,050,000 in Original Class A-5 Principal Balance, (vi)
one Class M-1 Certificate evidencing $18,600,000 in Original Class M-1 Principal
Balance, (vii) one Class M-2 Certificate evidencing $7,800,000 in Original Class
M-2 Principal Balance, (viii) one Class B-1 Certificate evidencing $7,350,000 in
Original Class B-1 Principal Balance, and (ix) one Class B-2 Certificate
evidencing $10,500,000 in Original Class B-2 Principal Balance, and any
permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(5) of the Uniform Commercial
Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the second Business Day preceding each Payment
------------------
Date during the term of this Agreement.
"Disqualified Organization" has the meaning assigned in Section 9.02(b)(3).
-------------------------
1-14
<PAGE>
"Due Period" means, for any Payment Date after the first Payment Date, a
----------
calendar month during the term of this Agreement and, for the first Payment
Date, the calendar months of August and September.
"Electronic Ledger" means the electronic master record of promissory notes
-----------------
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) an
account or accounts the deposits in which are fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation; (iii) a trust account (which shall be a "segregated trust
account") maintained with the corporate trust department of a federal or state
chartered depository institution or trust company with trust powers and acting
in its fiduciary capacity for the benefit of the Trustee hereunder, which
depository institution or trust company shall have capital and surplus of not
less than $50,000,000; or (iv) an account that will not cause any of the Rating
Agencies to downgrade or withdraw its then-current rating assigned to the
Certificates, as evidenced in writing by each of the Rating Agencies.
"Eligible Institution" means any depository institution (which may be the
--------------------
Trustee or an Affiliate of the Trustee) organized under the laws of the United
States or any State, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or State authorities and whose short-
term deposits have been rated A-1+ by S&P, P-1 by Moody's (if rated by Moody's),
and F1 by Fitch (if rated by Fitch) or whose unsecured long-term debt has been
rated in one of the two highest rating categories by S&P, Fitch and Moody's (if
rated by Moody's).
"Eligible Investments" has the meaning assigned in Section 5.05(b).
--------------------
"Eligible Servicer" means the Originator or any Person (i) which is
-----------------
qualified to act as Servicer of the Loans under applicable federal and state
laws and regulations, and (ii) which Person is a Title I approved lender under
FHA Regulations and services not less than an aggregate of $100,000,000 in
outstanding principal amount of FHA-insured home improvement contracts and
promissory notes, manufactured housing conditional sales contracts and
installment loan agreements and home improvement loans.
"Eligible Substitute Loan" means, as to (1) any Replaced Loan for which an
------------------------
Eligible Substitute Loan is being substituted pursuant to Section 3.06(b), and
(2) any Prepaid Loan for which an Eligible Substitute Loan is being substituted
pursuant to Section 2.06, a Loan that (a) as of the date of its substitution,
satisfies all of the representations and warranties (which, except when
expressly stated to be as of origination, shall be deemed to be made as of the
date of its substitution rather than as of the applicable Cut-off Date or the
Closing Date) in Sections 3.02 and 3.03 and does not cause any of the
representations and warranties in Sections 3.03, 3.04 and 3.05, after giving
effect to such substitution, to be incorrect, (b) after giving effect to the
scheduled payment due in the month of such substitution, has a Scheduled
Principal Balance that is not greater than the Scheduled Principal Balance of
such Replaced Loan or, but for such Principal Prepayment in Full, the Scheduled
Principal Balance of such Prepaid Loan, as the case
1-15
<PAGE>
may be, (c) has a Loan Interest Rate that is at least equal to the Loan Interest
Rate of such Replaced Loan or Prepaid Loan, as the case may be, (d) has a
remaining term to scheduled maturity that is not greater than the remaining term
to scheduled maturity of the Replaced Loan or Prepaid Loan, as the case may be,
(e) as of the date of its origination, was identified by the Originator under
its standard underwriting criteria as the same credit grade as the Replaced Loan
or Prepaid Loan, as the case may be, (f) the mortgage securing such Loan is in a
lien position that is the same or better than the mortgage securing the Replaced
Loan or Prepaid Loan, as the case may be, and (g) the related Obligor's FICO
Score is not more than 20 points lower than the FICO Score of the Obligor on the
Replaced Loan or Prepaid Loan, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Errors and Omissions Protection Policy" means the employee errors and
--------------------------------------
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Loans comprising a
portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
--------------------
"Excess Amount Available" means, for any Payment Date, the excess of the
-----------------------
Amount Available over the sum of (a) the amounts to be distributed on such
Payment Date pursuant to Sections 8.04(b)(1) - (6), and (b) the sum of items (a)
through (e) of the definition of the Formula Principal Distribution Amount.
"Expense Adjusted Weighted Average Loan Rate" means, for any Payment Date,
-------------------------------------------
the Weighted Average Loan Rate minus 0.50%.
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
-----------------------
"FHA" means the Federal Housing Administration, or any successor thereto.
---
"FHA Insurance" means the credit insurance provided by FHA pursuant to
-------------
Title I of the National Housing Act, as evidenced by the Originator's Contract
of Insurance.
"FHA-Insured Loan" means a home improvement loan that has been or is being
----------------
reported to the FHA as eligible for credit insurance provided by FHA pursuant to
Title I of the National Housing Act.
"FHA Regulations" means the regulations promulgated by HUD relating to
---------------
Title I home improvement loans, currently found at 24 C.F.R. (S) 201.
"FICO Score" means a credit score derived on the basis of a methodology
----------
developed by Fair Isaac and Company, a consulting firm specializing in creating
default predictive models through scoring mechanisms. The credit scores, which
are based on information obtained from national credit reporting organizations,
are numerical representations of borrowers' estimated default probability, and
can range from a low of 250 to a high of 900.
1-16
<PAGE>
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
-------------
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Loans comprising a portion of the corpus of the Trust.
"Final Payment Date" means the Payment Date on which the final distribution
------------------
in respect of the Certificates will be made pursuant to Section 12.04.
"Fitch" means Fitch, Inc., or any successor thereto; provided that, if
-----
Fitch no longer has a rating outstanding on any Class of the Certificates, then
references herein to "Fitch" shall be deemed to refer to the NRSRO then rating
any Class of the Certificates (or, if more than one such NRSRO is then rating
any Class of the Certificates, to such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Fitch shall be
deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Formula Principal Distribution Amount" means, for any Payment Date, the
-------------------------------------
sum of:
(a) all scheduled payments of principal due on each outstanding Loan
during the prior Due Period as specified in the amortization schedule at
the time applicable thereto (after adjustments for previous Partial
Principal Prepayments and after any adjustment to such amortization
schedule by reason of any bankruptcy of an Obligor or similar proceeding or
any moratorium or similar waiver or grace period); plus
(b) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior Due Period with respect to
the Loans; plus
(c) the aggregate Scheduled Principal Balance of all Loans that became
Liquidated Loans during the prior Due Period plus the amount of any
reduction in principal balance of any Loan during the prior Due Period
pursuant to bankruptcy proceedings involving the related Obligor; plus
(d) the aggregate Scheduled Principal Balance of all Loans
repurchased, and all amounts deposited in lieu of the repurchase of any
Loan, during the prior Due Period pursuant to Section 3.06(a) or, in the
event of a substitution of a Loan in accordance with Section 3.06(b), any
amount required to be deposited by the Servicer in the Certificate Account
during the prior Due Period pursuant to Section 2.06(vii) or Section
3.06(b)(vi); plus
(e) any amount described in clauses (a) through (d) above that was not
previously distributed because of an insufficient amount of funds available
in the Certificate Account; plus
(f) on the Post-Funding Payment Date, any amount withdrawn from the
Pre-Funding Account and deposited in the Certificate Account; plus
(g) the Overcollateralization Increase Amount, if any; minus
1-17
<PAGE>
(h) the Overcollateralization Decrease Amount, if any.
"HUD" means the United States Department of Housing and Urban Development,
---
or any successor thereto.
"Initial Loan" means a Loan identified as such on the List of Loans
------------
attached hereto, the aggregate Cut-off Date Principal Balance of which Loans is
$285,393,689.10.
"Liquidated Loan" means, with respect to any Due Period, either
---------------
(1) a Defaulted Loan as to which the Servicer has received from the
Obligor, or a third party purchaser of the Loan, all amounts which the Servicer
reasonably and in good faith expects to recover from or on account of such Loan,
or
(2) a Loan (a) upon which all or a portion of the first payment of interest
due by the Obligor was added to principal, and (b) on which the Obligor failed
to pay the full amount of principal due on the Loan, as computed by the
Servicer;
provided, however, that any Loan which the Originator is obligated to repurchase
pursuant to Section 3.06, and did so repurchase or substitute therefor an
Eligible Substitute Loan in accordance with Section 3.06, shall be deemed not to
be a Liquidated Loan; and provided, further, that with respect to Due Periods
beginning on or after July 2029, a Liquidated Loan also means any Loan as to
which the Servicer has commenced foreclosure proceedings, or made a sale of the
Loan to a third party for foreclosure or enforcement.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
--------------------
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Loan, including, without limitation, legal fees and
expenses, any related and unreimbursed expenditures for property taxes, property
preservation or restoration of the property to marketable condition, and any
unreimbursed Advances with respect to such Loan.
"Liquidation Proceeds" means cash (including insurance proceeds) received
--------------------
in connection with the liquidation of Defaulted Loans, whether through
repossession, foreclosure sale or otherwise.
"List of Loans" means the lists identifying each Loan constituting part of
-------------
the Trust Fund and attached either to this Agreement as Exhibit L or to a
Subsequent Transfer Instrument, as such lists may be amended from time to time
pursuant to Section 2.06 or Section 3.06(b) to add Eligible Substitute Loans and
delete Replaced Loans or Prepaid Loans, as the case may be. Each List of Loans
shall set forth as to each Loan identified on it (i) the Cut-off Date Principal
Balance, (ii) the amount of monthly payments due from the Obligor, (iii) the
Loan Interest Rate and (iv) the maturity date.
"Loan" means each home improvement loan identified as such in the List of
----
Loans, which Loan is to be assigned and conveyed by the Seller to the Trust, and
includes, without
1-18
<PAGE>
limitation, all related mortgages, deeds of trust and security deeds and any and
all rights to receive payments due pursuant thereto after the applicable Cut-off
Date.
"Loan File" means, as to each Loan, (a) the original promissory note duly
---------
endorsed in blank or in the name of the Trustee for the benefit of the
Certificateholders, (b) the original or a copy of the mortgage, deed of trust or
security deed or similar evidence of a lien on the related improved property and
evidence of due recording of such mortgage, deed of trust or security deed, if
available, (c) if such Loan was originated by a lender other than the
Originator, the original or a copy of an assignment of the mortgage, deed of
trust or security deed by such lender to the Originator, (d) an assignment of
the mortgage, deed of trust or security deed in recordable form to the Trustee
or in blank, and (e) any extension, modification or waiver agreements.
"Loan Interest Rate" means, as to any Loan, the annual rate of interest
------------------
specified in the Loan.
"Monthly Report" has the meaning assigned in Section 6.01.
--------------
"Monthly Servicing Fee" means, for any Payment Date, with respect to the
---------------------
Loans, one-twelfth of the product of 0.50% and the Pool Scheduled Principal
Balance for the preceding Payment Date (or, in the case of the first Payment
Date, the Cut-off Date).
"Moody's" means Moody's Investors Service, Inc., or any successor thereto;
-------
provided that, if Moody's no longer has a rating outstanding on any Class of
Certificates, then references herein to "Moody's" shall be deemed to refer to
the NRSRO then rating any Class of the Certificates (or, if more than one such
NRSRO is then rating any Class of the Certificates, to such NRSRO as may be
designated by the Servicer), and references herein to ratings by or requirements
of Moody's shall be deemed to have the equivalent meanings with respect to
ratings by or requirements of such NRSRO.
"Net Liquidation Loss" means, as to a Liquidated Loan, the excess, if any,
--------------------
of (a) the Repurchase Price of such Loan, over (b) the Net Liquidation Proceeds
with respect to such Liquidated Loan.
"Net Liquidation Proceeds" means, as to a Liquidated Loan, the proceeds
------------------------
received, or, for Loans which become Liquidated Loans pursuant to the last
proviso in the definition of "Liquidated Loan," the estimated proceeds to be
received, as of the last day of the Due Period in which such Loan became a
Liquidated Loan, from the Obligor, from a third party purchaser of the Loan,
under insurance, or otherwise, net of Liquidation Expenses.
"NRSRO" means any nationally recognized statistical rating organization.
-----
"Obligor" means the person who owes payments under a Loan.
-------
"Officer's Certificate" means a certificate signed by the Chairman of the
---------------------
Board, President or any Vice President of the Originator or the Seller and
delivered to the Trustee.
1-19
<PAGE>
"Opinion of Counsel" means a written opinion of counsel, who may, except as
------------------
expressly provided herein, be salaried counsel for the Originator, the Seller or
the Servicer, as applicable, acceptable to the Trustee, the Originator and the
Seller.
"Original Aggregate Certificate Principal Balance" means $300,000,000.
------------------------------------------------
"Original Class Principal Balance" means as to each Class of Certificates,
--------------------------------
the amount set forth with respect to such Class in Section 2.05(b).
"Original Pre-Funded Amount" means the amount deposited in the Pre-Funding
--------------------------
Account pursuant to Section 2.02(l).
"Original Principal Balance" means as to each Certificate, the amount set
--------------------------
forth with respect to such interest in Section 2.05(b).
"Overcollateralization Amount" means, as of any Payment Date, the excess
----------------------------
(but not less than zero) of (a) the Pool Scheduled Principal Balance plus the
Pre-Funded Amount over (b) the Aggregate Certificate Principal Balance.
"Overcollateralization Decrease Amount" means, for any Payment Date, the
-------------------------------------
lesser of (A) the sum of items (a) through (e) of the definition of the Formula
Principal Distribution Amount and (B) the excess, if any, of the
Overcollateralization Amount over the Target Overcollateralization Amount.
"Overcollateralization Increase Amount" means, for any Payment Date
-------------------------------------
beginning on the Payment Date in November 2000, the lesser of the Excess Amount
Available and the amount needed to reach the Target Overcollateralization
Amount.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
----------------------------
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Certificate Account pursuant to the proviso in Section 3.06(a) or pursuant to
Section 3.06(b).
"Pass-Through Rate" means, with respect to each Class of Certificates, the
-----------------
rate set forth for such Class in Section 2.05(b).
"Paying Agent" has the meaning assigned in Section 8.01(c).
------------
"Payment Date" means the fifteenth day of each calendar month during the
------------
term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing in October 2000.
"Percentage Interest" means, as to any Certificate or the Class C
-------------------
Certificate, the percentage interest evidenced thereby in distributions made on
the related Class, such percentage interest being equal to: (i) as to any
Certificate, the percentage (carried to eight places) obtained from dividing the
denomination of such Certificate by the Original Principal Balance of the
related Class and (ii) as to any Class C Certificate, the percentage specified
on the face of such
1-20
<PAGE>
Certificate. The aggregate Percentage Interests for each Class of Certificates
and the Class C Certificate shall equal 100%, respectively.
"Permitted Transferee" means, in the case of a transfer of the Class C
--------------------
Certificate, a Person that is not a Plan or a Disqualified Organization, except
as permitted by Sections 9.02(b)(2) and (3), respectively.
"Person" means any individual, corporation, partnership, limited liability
------
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
----
"Pool Factor" means, at any time, the percentage derived from a fraction,
-----------
the numerator of which is the Aggregate Certificate Principal Balance at such
time and the denominator of which is the Original Aggregate Certificate
Principal Balance.
"Pool Scheduled Principal Balance" means, for any Payment Date, the
--------------------------------
aggregate Scheduled Principal Balance for such Payment Date of all Loans that
were outstanding during the immediately preceding Due Period.
"Post-Funding Payment Date" means the Payment Date on, or the first Payment
-------------------------
Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means, with respect to any date of determination, the
-----------------
amount then on deposit in the Pre-Funding Account, after giving effect to any
sale of Subsequent Loans to the Trust on such date.
"Pre-Funding Account" means the account so designated, established and
-------------------
maintained pursuant to Section 8.07.
"Pre-Funding Period" means the period beginning on the Closing Date and
------------------
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000.00, or (b) the close of business on
December 14, 2000, or (c) the date on which an Event of Termination occurs.
"Prepaid Loan" has the meaning assigned in Section 2.06.
------------
"Principal Prepayment" means a payment or other recovery of principal on a
--------------------
Loan (exclusive of Liquidation Proceeds) which is received in advance of its
scheduled due date and applied upon receipt (or, in the case of a partial
prepayment, upon the next scheduled payment date on such Loan) to reduce the
outstanding principal amount due on such Loan prior to the date or dates on
which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the entire
----------------------------
principal balance of a Loan.
1-21
<PAGE>
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
---
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933.
"Rating Agencies" means S&P, Fitch and Moody's.
---------------
"Realized Losses" means, for any Payment Date, the aggregate Net
---------------
Liquidation Losses for all Loans that became Liquidated Loans during the
immediately preceding Due Period.
"Record Date" means, with respect to any Payment Date, the Business Day
-----------
immediately preceding such Payment Date.
"REMIC" means a "real estate mortgage investment conduit" as defined in
-----
Section 860D of the Code.
"REMIC Provisions" means the provisions of the federal income tax law
----------------
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"Replaced Loan" has the meaning assigned in Section 3.06(b).
-------------
"Repurchase Price" means, with respect to a Loan to be repurchased pursuant
----------------
to Section 3.06 or which becomes a Liquidated Loan, an amount equal to (a) the
remaining principal amount outstanding on such Loan (without giving effect to
any Advances paid by the Servicer or the Trustee, as applicable, with respect to
such Loan pursuant to Section 8.02), plus (b) interest at the weighted average
pass-through rate on such Loan from the end of the Due Period with respect to
which the Obligor last made a scheduled payment (without giving effect to any
Advances paid by the Servicer or the Trustee, as applicable, with respect to
such Loan pursuant to Section 8.02) through the date of such repurchase or
liquidation.
"Responsible Officer" means, with respect to the Trustee, the chairman and
-------------------
any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"S&P" means Standard & Poor's Ratings Services, a division of The McGraw-
---
Hill Companies, Inc., or any successor thereto; provided that, if S&P no longer
has a rating outstanding on any Class of the Certificates, then references
herein to "S&P" shall be deemed to refer to the NRSRO then rating any Class of
the Certificates (or, if more than one such NRSRO is then rating any Class of
the Certificates, to such NRSRO as may be designated by the
1-22
<PAGE>
Servicer), and references herein to ratings by or requirements of S&P shall be
deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Scheduled Principal Balance" means, with respect to any Loan and any
---------------------------
Payment Date, the Cut-off Date or any Subsequent Cut-off Date, the principal
balance of such Loan as of the due date in the Due Period immediately preceding
such Payment Date, Cut-off Date or Subsequent Cut-off Date, as the case may be,
as specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any bankruptcy of an
Obligor or similar proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous Partial Principal Prepayments and to
the payment of principal due on such due date and irrespective of any
delinquency in payment by, or extension granted to, the related Obligor. If for
any Loan the Cut-off Date is the date of origination of the Loan, its Scheduled
Principal Balance as of the Cut-off Date is the principal balance of the Loan on
its date of origination.
"Senior Enhancement Percentage" means, for any Payment Date, a fraction,
-----------------------------
expressed as a percentage,
(x) the numerator of which is the excess of (A) the Pool Scheduled
Principal Balance over (B) the Class A Principal Balance or, if all of the
Class A Certificates have been retired, the Adjusted Principal Balance of
the most senior class of Certificates outstanding, and
(y) the denominator of which is the Pool Scheduled Principal Balance.
"Service Transfer" has the meaning assigned in Section 7.02.
----------------
"Servicer" means the Originator until any Service Transfer hereunder and
--------
thereafter means the new servicer appointed pursuant to Article VII.
"Servicing Officer" means any officer of the Servicer involved in, or
-----------------
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Trustee by the Servicer, as the same may be amended from time to time.
"Sixty-Day Delinquency Ratio" means, for any Payment Date, a fraction,
---------------------------
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Loans that were delinquent 60 days or more as of the
end of the prior Due Period (including such Loans in respect of which the
related real estate has been foreclosed upon but is still in inventory), and the
denominator of which is the Pool Scheduled Principal Balance of the Loans for
such Payment Date.
"Stepdown Date" means the later of (A) the Payment Date in October 2003 and
-------------
(B) the first Payment Date on which the Class A Principal Balance is less than
or equal to 65.50% of the Pool Scheduled Principal Balance.
1-23
<PAGE>
"Subsequent Cut-off Date" means, with respect to a Subsequent Loan, the
-----------------------
last day of the month in which the Subsequent Transfer Date occurs.
"Subsequent Loan" means a Loan sold by the Seller to the Trust pursuant to
---------------
Section 2.03, such Loan being identified as such in the Subsequent Transfer
Instrument.
"Subsequent Transfer Date" means, with respect to each Subsequent Transfer
------------------------
Instrument, the date on which the related Subsequent Loans are sold to the
Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer Instrument
------------------------------
dated as of a Subsequent Transfer Date executed by the Seller substantially in
the form of Exhibit O, by which the Seller sells Subsequent Loans to the Trust.
"Target Overcollateralization Amount" means, for any Payment Date:
-----------------------------------
(a) prior to the Payment Date in November 2000, $0.00;
(b) on or after the Payment Date in November 2000 but prior to the
Stepdown Date, $7,500,000;
(c) on or after the Stepdown Date, and as long as no Trigger Event
exists, the lesser of
(i) $7,500,000, or
(ii) the greater of
(A) 5.00% of the Pool Scheduled Principal Balance, or
(B) $1,500,000; and
(d) on or after the Stepdown Date but on which a Trigger Event
exists, the Target Overcollateralization Amount immediately prior to that
Payment Date.
"Transfer Agreement" means that Transfer Agreement between Conseco Finance
------------------
Securitizations Corp., as purchaser, and Conseco Finance Corp., as seller, dated
as of September 1, 2000.
"Trigger Event" exists for any Payment Date if (i) the Average Sixty-Day
-------------
Delinquency Ratio Test is not satisfied or (ii) the Cumulative Realized Losses
Test is not satisfied.
"Trust" means Conseco Finance Home Improvement Loan Trust 2000-E.
-----
"Trust Fund" means the corpus of the Trust created by this Agreement which
----------
consists of (i) all the rights, benefits and obligations arising from and in
connection with the Loans, including without limitation all related mortgages,
deeds of trust and security deeds and any and
1-24
<PAGE>
all rights to receive payments on or with respect to the Loans due after the
applicable Cut-off Date, (ii) all rights under any hazard, flood or other
individual insurance policy on the real estate securing a Loan for the benefit
of the creditor of such Loan, (iii) all rights of the Seller under the Transfer
Agreement, (iv) all rights the Originator may have against the originating
lender with respect to Loans originated by a lender other than the Originator,
(v) all rights under the Errors and Omissions Protection Policy and the Fidelity
Bond as such policy and bond relate to the Loans, (vi) all rights under any
title insurance policies, if applicable, on any of the properties securing
Loans, (vii) all documents contained in the Loan Files, (viii) amounts in the
Certificate Account and the Pre-Funding Account (including all proceeds of
investments of funds in the Certificate Account) and (ix) all proceeds and
products of the foregoing.
"Trustee Advance" has the meaning assigned in Section 11.15.
---------------
"Underwriter" means Credit Suisse First Boston Corporation.
-----------
"Underwriting Agreement" means the Underwriting Agreement and related Terms
----------------------
Agreement, each dated September 22, 2000, among the Originator, the Seller and
the Underwriter.
"Unpaid Class A Interest Shortfall" means, as to each Class of Class A
---------------------------------
Certificates and any Payment Date, the amount, if any, of the Class A Interest
Shortfall applicable to such Class for the prior Payment Date, plus one month's
interest thereon (to the extent payment thereof is legally permissible) at the
Pass-Through Rate for such Class.
"Unpaid Class B-1 Interest Shortfall" means, as to any Payment Date, the
-----------------------------------
amount, if any, of the Class B-1 Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class B-1 Pass-Through Rate.
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, as to any
----------------------------------------------------
Payment Date, the amount, if any, of the Class B-1 Liquidation Loss Interest
Shortfall for the prior Payment Date, plus one month's interest thereon (to the
extent payment thereof is legally permissible) at the Class B-1 Pass-Through
Rate.
"Unpaid Class B-2 Interest Shortfall" means, as to any Payment Date, the
-----------------------------------
amount, if any, of the Class B-2 Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class B-2 Pass-Through Rate.
"Unpaid Class B-2 Liquidation Loss Interest Shortfall" means, as to any
----------------------------------------------------
Payment Date, the amount, if any, of the Class B-2 Liquidation Loss Interest
Shortfall for the prior Payment Date, plus one month's interest thereon (to the
extent payment thereof is legally permissible) at the Class B-2 Pass-Through
Rate.
"Unpaid Class M-1 Interest Shortfall" means, as to any Payment Date, the
-----------------------------------
amount, if any, of the Class M-1 Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class M-1 Pass-Through Rate.
1-25
<PAGE>
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, with respect
----------------------------------------------------
to any Payment Date, the amount, if any, of the Class M-1 Liquidation Loss
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class M-1 Pass-
Through Rate.
"Unpaid Class M-2 Interest Shortfall" means, as to any Payment Date, the
-----------------------------------
amount, if any, of the Class M-2 Interest Shortfall for the prior Payment Date,
plus one month's interest thereon (to the extent payment thereof is legally
permissible) at the Class M-2 Pass-Through Rate.
"Unpaid Class M-2 Liquidation Loss Interest Shortfall" means, with respect
----------------------------------------------------
to any Payment Date, the amount, if any, of the Class M-2 Liquidation Loss
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class M-2 Pass-
Through Rate.
"Weighted Average Loan Rate" means, for any Payment Date, the weighted
--------------------------
average (determined by Scheduled Principal Balance) of the Loan Interest Rates
for all Loans that were outstanding during the immediately preceding month.
"Weighted Average Pass-Through Rate" means, for any Payment Date, with
----------------------------------
respect to any Loan, the sum of (i) the weighted average (expressed as a
percentage and rounded to four decimal places) of the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class M-1, Class M-2, Class B-1 and Class B-2
Pass-Through Rates, weighted on the basis of the respective Class A-1, Class
A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2, Class B-1 and Class
B-2 Principal Balances for such Payment Date.
SECTION 1.03. Calculations. Except as otherwise provided in this
------------
Agreement, all interest rate and basis point calculations under this Agreement
will be made on the basis of a 360-day year and twelve 30-day months and will be
carried out to at least three decimal places.
1-26
<PAGE>
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF LOANS
-----------------------------------------
SECTION 2.01. Closing.
-------
a. There is hereby created, by the Seller as settlor, a separate trust
which shall be known as Conseco Finance Home Improvement Loan Trust 2000-E. The
Trust shall be administered pursuant to the provisions of this Agreement for the
benefit of the Certificateholders and the Class C Certificateholder.
b. The Seller hereby transfers, assigns, sets over and otherwise conveys
to the Trustee on behalf of the Trust, by execution and delivery of an
assignment substantially in the form of Exhibit D hereto, all the right, title
and interest of the Seller in and to the Initial Loans and Additional Loans,
including all rights to receive payments on or with respect to the Initial Loans
and Additional Loans due after the applicable Cut-off Date, all rights of the
Seller under the Transfer Agreement and all other assets now or hereafter
included in the Trust Fund. Each such transfer and assignment is intended by
the Seller to be a sale of such assets for all purposes, including, without
limitation, the Federal Bankruptcy Code, to the end that all such assets will
hereafter cease to be the property of the Seller and would not be includable in
the estate of the Seller or the Originator for purposes of Section 541 of the
Federal Bankruptcy Code.
c. Although the parties intend that each conveyance pursuant to this
Agreement of the Seller's right, title and interest in and to the Loans
(including the Subsequent Loans) shall constitute a purchase and sale and not a
loan, if such conveyances are deemed to be loans, the parties intend that the
rights and obligations of the parties to such loans shall be established
pursuant to the terms of this Agreement. If the conveyances are deemed to be
loans, the parties further intend and agree that the Originator and the Seller
shall be deemed to have granted to the Trustee and the Originator and the Seller
do hereby grant to the Trustee, a perfected first-priority security interest in
the Trust Fund and that this Agreement shall constitute a security agreement
under applicable law. If the trust created by this Agreement terminates prior
to the satisfaction of the claims of any Person under any Certificate or Class C
Certificate, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for the
benefit of such Person.
SECTION 2.02. Conditions to the Closing. On or before the Closing Date,
-------------------------
the Seller shall deliver or cause to be delivered the following documents to the
Trustee:
a. The List of Loans attached to this Agreement as Exhibit L,
certified by the Chairman of the Board, President or any Vice President of
the Seller.
b. A certificate of an officer of the Originator substantially in the
form of Exhibit E hereto on behalf of the Seller and the Originator.
c. An Opinion of Counsel for the Seller substantially in the form of
Exhibit F hereto.
2-1
<PAGE>
d. A letter, acceptable to the Underwriter, from
PricewaterhouseCoopers LLP or another nationally recognized accounting
firm, stating that such firm has reviewed the Initial Loans on a
statistical sampling basis and setting forth the results of such review.
e. Copies of resolutions of the board of directors of the Seller or
of the executive committee of the board of directors of the Seller
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereunder, certified in each case by the
secretary or an assistant secretary of the Seller.
f. Officially certified recent evidence of due incorporation and good
standing of the Seller under the laws of the State of Minnesota.
g. An Officer's Certificate listing the Servicer's Servicing
Officers.
h. Evidence of continued coverage of the Servicer under the Errors
and Omissions Protection Policy.
i. Evidence of deposit in the Certificate Account of all funds
received with respect to the Loans from the Cut-off Date to the Closing
Date, other than principal due on or before the Cut-off Date, together with
an Officer's Certificate to the effect that such amount is correct.
j. The Loan Files for the Initial Loans and Additional Loans and an
Officer's Certificate confirming that the Originator has reviewed the
original or a copy of each related promissory note and each related Loan
File, that each such Loan and Loan File conforms in all material respects
with the List of Loans and that each such Loan File is complete in
accordance with the definition thereof and has been delivered to the
Trustee (or its custodian).
k. Assignments in recordable form to the Trustee of the mortgages,
deeds of trust and security deeds relating to the Initial Loans.
l. Evidence of the deposit of $1,229.85 in the Pre-Funding Account.
2-2
<PAGE>
m. Letters from each of the Rating Agencies evidencing the following
ratings for the Certificates:
Class S&P Rating Fitch Rating Moody's
-------------------------- ------------- ---------------- -------------
A-1....................... AAA AAA ___
A-2....................... AAA AAA ___
A-3....................... AAA AAA ___
A-4....................... AAA AAA ___
A-5....................... AAA AAA ___
M-1....................... AA AA ___
M-2....................... A A ___
B-1....................... BBB BBB Baa2
B-2....................... BB BB Ba2
SECTION 2.03. Conveyance of the Subsequent Loans.
----------------------------------
a. Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Seller of all or a portion of the balance of funds
in the Pre-Funding Account, 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 Loans identified on the List of Loans
attached to the Subsequent Transfer Instrument, including all rights to receive
payments on or with respect to the Subsequent Loans due after the related
Subsequent Cut-off Date, and all items with respect to such Subsequent Loans in
the related Loan Files. The transfer to the Trustee by the Seller of the
Subsequent Loans shall be absolute and is intended by the Seller, the Trustee,
the Certificateholders and the Class C Certificateholder to constitute and to be
treated as a sale of the Subsequent Loans by the Seller or the Originator to the
Trust. Such transfer and assignment is intended by the Seller to be a sale of
such assets for all purposes, including, without limitation, the Federal
Bankruptcy Code, to the end that all such assets will hereafter cease to be the
property of the Seller and would not be includable in the estate of the Seller
for purposes of Section 541 of the Federal Bankruptcy Code.
The purchase price paid by the Trustee shall be one hundred percent (100%)
of the aggregate Cut-off Date Principal Balances of such Subsequent Loans. The
purchase price of Subsequent Loans shall be paid solely with amounts in the Pre-
Funding Account. This Agreement shall constitute a fixed price contract in
accordance with Section 860G(a)(3)(A)(ii) of the Code.
b. The Seller shall transfer to the Trustee the Subsequent Loans, and the
Trustee shall release funds from the Pre-Funding Account only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
2-3
<PAGE>
(i) the Seller shall have provided the Trustee with an Addition
Notice at least five Business Days prior to the Subsequent Transfer Date
and shall have provided any information reasonably requested by the Trustee
with respect to the Subsequent Loans;
(ii) the Seller shall have delivered the related Loan File for each
Subsequent Loan to the Trustee at least two Business Days prior to the
Subsequent Transfer Date;
(iii) the Seller shall have delivered to the Trustee a duly executed
Subsequent Transfer Instrument substantially in the form of Exhibit O,
which shall include a List of Loans identifying the related Subsequent
Loans;
(iv) as of each Subsequent Transfer Date, as evidenced by delivery
of the Subsequent Transfer Instrument, the Seller shall not be insolvent
nor shall it have been made insolvent by such transfer nor shall it be
aware of any pending insolvency;
(v) such sale and transfer shall not result in a material adverse
tax consequence to the Trust (including the REMIC) or the
Certificateholders or Class C Certificateholder;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Seller shall have delivered to the Trustee an Officer's
Certificate, substantially in the form attached hereto as Exhibit P,
confirming the satisfaction of each condition precedent and the
representations specified in this Section 2.03 and in Sections 3.01, 3.02,
3.03, 3.04 and 3.05;
(viii) the Seller and the Originator shall have delivered to the
Trustee Opinions of Counsel addressed to S&P, Fitch, Moody's and the
Trustee with respect to the transfer of the Subsequent Loans substantially
in the form of the Opinions of Counsel delivered to the Trustee on the
Closing Date regarding certain bankruptcy, corporate and tax matters; and
(ix) no Subsequent Loan will be an FHA-Insured Loan;
(x) the remaining stated term to maturity of each Subsequent Loan
will not exceed 360 months; and
(xi) the Seller shall have delivered assignments in recordable form
to the Trustee of the mortgages, deeds of trust and security deeds relating
to the Subsequent Loans.
c. On or before the last day of the Pre-Funding Period, the Seller shall
deliver to the Trustee:
(i) A letter from PricewaterhouseCoopers LLP or another nationally
recognized accounting firm retained by the Seller (with copies provided to
S&P,
2-4
<PAGE>
Moody's, Fitch, the Underwriter and the Trustee) that is in form, substance
and methodology the same as that dated September 28, 2000 and delivered
under Section 2.02(d) of this Agreement, except that it shall address the
Subsequent Loans and their conformity in all material respects to the
characteristics described in Sections 2.03 (b)(ix) and 3.04(b) of this
Agreement.
(ii) Evidence that, as a result of the purchase by the Trust of the
Subsequent Loans, none of the ratings assigned to the Class A Certificates
as of the Closing Date by S&P or Fitch will be reduced, withdrawn or
qualified.
(iii) Evidence that the aggregate Cut-off Date Principal Balances of
the Subsequent Loans, not specifically identified as Subsequent Loans as of
the Closing Date, do not exceed 25% of the Original Aggregate Certificate
Principal Balance.
SECTION 2.04. Acceptance by Trustee.
---------------------
a. On the Closing Date and each Subsequent Transfer Date, if the
conditions set forth in Section 2.02 and 2.03, respectively, have been
satisfied, the Trustee shall deliver a certificate to the Seller substantially
in the form of Exhibit G hereto (an "Acknowledgment") acknowledging conveyance
of the Loans identified on the applicable List of Loans and the related Loan
Files to the Trustee and declaring that the Trustee, directly or through a
Custodian, will hold all Loans that have been delivered in trust, upon the
trusts herein set forth, for the use and benefit of all Certificateholders and
the Class C Certificateholder.
b. The Trustee or a Custodian shall review each Loan File, as described
in Exhibit G, within 60 days of the Closing Date or later receipt by it of the
Loan File. If, in its review of the Loan Files as described in Exhibit G, the
Trustee or a Custodian discovers a breach of the representations or warranties
set forth in Sections 2.03, 3.02, 3.03, 3.04 or 3.05 of this Agreement, or in
the Officer's Certificates delivered pursuant to Section 2.02(j) or 2.03(b)(vii)
of this Agreement, the Trustee or Custodian, as the case may be, shall notify
the Seller and the Originator shall cure such breach or repurchase or replace
such Loan pursuant to Section 3.06.
SECTION 2.05. REMIC Provisions.
----------------
a. The Originator, as Servicer, and the Class C Certificateholder, by
acceptance thereof, each agrees that, in accordance with the requirements of
Section 860D(b)(1) of the Code, the federal tax return of the Trust for its
first taxable year shall provide an election for the Trust (exclusive of the
Prefunding Account) to be treated as a REMIC under the Code for such taxable
year and all subsequent taxable years, and the Trustee shall sign such return.
In furtherance of the foregoing, the Trustee (at the direction of the
Originator, the Seller or the Servicer), the Originator, the Seller and the
Servicer shall take, or refrain from taking, all such action as is necessary to
maintain the status of the Trust as a REMIC under the REMIC Provisions of the
Code, including, but not limited to, the taking of such action as is necessary
to cure any inadvertent termination of REMIC status. For purposes of the REMIC
election (i) the Certificates shall be designated as the "regular interests" in
the REMIC and (ii) the Class C Certificate shall be designated as the sole class
of "residual interests" in the REMIC. The
2-5
<PAGE>
Trustee shall not permit the creation of any "interests" in the REMIC (within
the meaning of the REMIC Provisions) other than the Certificates and the Class C
Certificate.
b. The Certificates are being issued in nine classes. The following terms
of the Certificates are irrevocably established as of the Closing Date:
<TABLE>
<CAPTION>
Original Class
Class Pass-Through Rate Per Annum Principal Balance
------------------------- ------------------------------------------------ -----------------
<S> <C> <C>
Class A-1 6.98% $114,800,000
Class A-2 7.01% $ 31,500,000
Class A-3 7.27% $ 43,000,000
Class A-4 7.57% $ 33,400,000
Class A-5 a floating rate equal to the Expense $ 33,050,000
Adjusted Weighted Average Loan Rate, but in
no event greater than 8.02%, subject to
increase as provided in Section 8.06
Class M-1 a floating rate equal to the Expense $ 18,600,000
Adjusted Weighted Average Loan Rate, but in
no event greater than 8.13%
Class M-2 a floating rate equal to the Expense $ 7,800,000
Adjusted Weighted Average Loan Rate, but in
no event greater than 9.01%
Class B-1 a floating rate equal to the Expense $ 7,350,000
Adjusted Weighted Average Loan Rate, but in
no event greater than 10.26%
Class B-2 a floating rate equal to the Expense $ 10,500,000
Adjusted Weighted Average Loan Rate%, but in
no event greater than 11.50%
</TABLE>
c. The Closing Date, which is the day on which the Trust will issue all
of its regular and residual interests, is hereby designated as the "startup day"
of the REMIC within the meaning of Section 860G(a)(9) of the Code.
d. After the Closing Date, neither the Trustee, the Originator, the
Seller nor any Servicer shall (i) accept any contribution of assets to the
Trust, (ii) dispose of any portion of the Trust other than as provided in
Sections 3.06, 3.07, 8.05 and 8.06, (iii) engage in any transaction that would
result in the imposition of tax on "prohibited transactions," as defined in
Section 860F(a)(1) of the Code, (iv) accept any contribution after the Closing
Date that is subject to the tax imposed by Section 860G(d) of the Code or (v)
engage in any activity or enter into any agreement that would result in the
receipt by the Trust of any "net income from foreclosure property" as defined in
Section 860G(c)(2) of the Code, unless, prior to any such action set forth in
clauses (i), (ii), (iii), (iv) or (v), the Trustee shall have received an
unqualified Opinion of Counsel, which opinion shall not be an expense of the
Trust, stating that such action will not, directly or indirectly, (A) adversely
affect the status of the Trust as a REMIC or the status of the Certificates and
Class C Certificate as "regular interests" and the sole class of "residual
interests," respectively, therein, in each case for federal income tax purposes,
(B) affect the distributions payable hereunder to the Certificateholders or the
Class C Certificateholder or (C) result in the imposition of any lien, charge or
encumbrance upon the Trust.
2-6
<PAGE>
e. Upon the acquisition of any real property (including interests in real
property), or any personal property incident thereto, in connection with the
default of a Loan, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, unless the Servicer and the
Trustee receive an Opinion of Counsel to the effect that the holding by the
Trust of such property subsequent to the period then permitted by the Code will
not result in the imposition of any taxes on "prohibited transactions" of the
Trust, as defined in Section 860F of the Code, or cause the Trust to fail to
qualify as a REMIC at any time that the Certificates or Class C Certificate are
outstanding. The Servicer shall manage, conserve, protect and operate such real
property, or any personal property incident thereto, so that such property will
not fail to qualify as "foreclosure property," as defined in Section 860G(a)(8)
of the Code, and that the management, conservation, protection and operation of
such property will not result in the receipt by the Trust of any income
attributable to any asset which is neither a qualified mortgage nor a permitted
investment within the meaning of the REMIC Provisions.
SECTION 2.06. Seller Option to Substitute for Prepaid Loans. The Seller
---------------------------------------------
may, at its option, substitute new loans for Loans as to which a Principal
Prepayment in Full has been received by the Servicer prior to December 28, 2000
("Prepaid Loans"), up to a maximum of 5% of the Cut-Off Date Pool Principal
Balance, upon satisfaction of the following conditions:
(i) the Seller shall have conveyed to the Trustee the Loan to be
substituted for the Prepaid Loan and the Loan File related to such Loan and
the Seller shall have marked the Electronic Ledger indicating that such
Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute Loan and
the Seller delivers an Officers' Certificate, substantially in the form of
Exhibit J-3 hereto, to the Trustee certifying that such Loan is an Eligible
Substitute Loan;
(iii) the Seller shall have delivered to the Trustee evidence of
filing of a UCC-1 financing statement executed by the Seller as debtor,
naming the Trustee as secured party and filed in Minnesota, listing such
Loan to be substituted as collateral;
(iv) the Seller shall have delivered to the Trustee an executed
assignment to the Trustee on behalf of the Trust in recordable form for the
mortgage securing such Loan to be substituted;
(v) such substitution shall be accomplished prior to the
Determination Date immediately following the calendar month in which the
Principal Prepayment in Full was received by the Servicer, and no such
substitution shall take place after December 28, 2000.
(vi) the Seller shall have delivered to the Trustee an Opinion of
Counsel (a) to the effect that the substitution of such Loan for such
Prepaid Loan will not cause the Trust to fail to qualify as a REMIC at any
time under then applicable REMIC Provisions
2-7
<PAGE>
or cause any "prohibited transaction" that will result in the imposition of
a tax under such REMIC Provisions and (b) to the effect of paragraph 9 of
Exhibit F hereto; and
(vii) if the Principal Prepayment received in respect of such Prepaid
Loan is greater than the Scheduled Principal Balance of the Loan to be
substituted, such excess shall be distributed to Certificateholders on the
related Payment Date as a prepayment of principal.
Upon satisfaction of such conditions, the Trustee shall add such Loan to be
substituted to the List of Loans.
Any substitutions pursuant to this Section 2.06 may be accomplished on a
loan-by-loan basis or on an aggregate basis as to all Prepaid Loans with respect
to a given calendar month.
2-8
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Seller and the Originator make the following representations and
warranties. The Trustee will rely on the representations and warranties in
accepting the Loans in trust and issuing the Certificates and the Class C
Certificate on behalf of the Trust. The repurchase or substitution and
indemnification obligations of the Originator set forth in Section 3.06
constitute the sole remedies available to the Trust, the Certificateholders or
the Class C Certificateholder for a breach of a representation or warranty of
the Originator set forth in Sections 2.03, 3.02, 3.03, 3.04 or 3.05 of this
Agreement, or in the Officer's Certificates delivered pursuant to Sections
2.02(j) or 2.03(b)(vii) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Seller. The
---------------------------------------------------
Seller represents and warrants to the Certificateholders and the Class C
Certificateholder, effective on the Closing Date and each Subsequent Transfer
Date, that:
a. Organization and Good Standing. The Seller is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Seller 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. The Seller has the power and
----------------------------------
authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under this Agreement, and to create the Trust
and cause it to make, execute, deliver and perform its obligations under
this Agreement and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement and to cause the
Trust to be created. When executed and delivered, this Agreement will
constitute the legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as enforcement of such
terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies.
c. No Consent Required. The Seller is not required to obtain the
-------------------
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
d. No Violations. The execution, delivery and performance of this
-------------
Agreement by the Seller will not violate any provision of any existing law
or regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the
3-1
<PAGE>
Seller, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Seller is a party or by which the
Seller 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 threatened, against the Seller or any of its
properties or with respect to this Agreement, the Certificates or the Class
C Certificate which, if adversely determined, would in the opinion of the
Seller have a material adverse effect on the transactions contemplated by
this Agreement.
f. Licensing. The Seller is duly licensed in each state in which
---------
Loans were originated to the extent the Seller is required to be licensed
by applicable law in connection with the origination and servicing of the
Loans.
SECTION 3.02. Representations and Warranties Regarding Each Loan. The
--------------------------------------------------
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 Trustee for the benefit of the Certificateholders and the Class
C Certificateholder, as of the Closing Date with respect to each Loan identified
on the List of Loans attached to this Agreement as Exhibit L and as of each
Subsequent Transfer Date with respect to each Subsequent Loan identified on the
List of Loans attached to the related Subsequent Transfer Instrument:
a. List of Loans. The information set forth in the List of Loans is
-------------
true and correct as of its date.
b. Payments. No scheduled payment due under the Loan was delinquent
--------
over 31 days as of the Cut-off Date if an Initial Loan or 30 days as of the
related Cut-off Date or Subsequent Cut-off Date, if an Additional Loan or a
Subsequent Loan.
c. Costs Paid and No Waivers. The terms of the Loan have not been
-------------------------
waived, altered or modified in any respect, except by instruments or
documents identified in the Loan File. All costs, fees and expenses
incurred in making, closing and perfecting the lien of the Loan have been
paid. The subject real property has not been released from the lien of
such Loan.
d. Binding Obligation. The Loan is the legal, valid and binding
------------------
obligation of the Obligor thereunder and is enforceable in accordance with
its terms, except as such enforceability may be limited by laws affecting
the enforcement of creditors' rights generally.
e. No Defenses. The Loan is not subject to any right of rescission,
-----------
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Loan or the exercise of any right
thereunder will not render the Loan unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
3-2
<PAGE>
f. Insurance Coverage. The Originator has been named as an
------------------
additional insured party under any hazard insurance on the property
described in the Loan, to the extent required by the Originator's
underwriting guidelines. If upon origination of the Loan, the property
securing the Loan was in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and if
flood insurance was required by federal regulation and such flood insurance
has been made available in the locale where the property is located), the
property is covered by a flood insurance policy of the nature and in an
amount which is consistent with the servicing standard set forth in Section
5.02.
g. Combined LTV. The proceeds of the Loan were used solely to
------------
finance an improvement to the related real estate or, if a portion of the
proceeds were used for debt consolidation, the Combined LTV is not greater
than 100%.
h. FHA Insurance. If the Loan is an FHA-Insured Loan, such Loan was
-------------
originated in compliance with FHA Regulations and is insured, without
setoff, surcharge or defense, by FHA Insurance. Following the assignment
of such FHA-Insured Loan to the Trustee, the Trustee on behalf of the Trust
will be entitled to the full benefits of the FHA Insurance.
i. Lawful Assignment. The Loan was not originated in and is not
-----------------
subject to the laws of any jurisdiction whose laws would make the transfer
of the Loan under this Agreement or pursuant to transfers of the
Certificates or Class C Certificate unlawful or render the Loan
unenforceable. The Originator has duly executed a valid blanket assignment
of the Loans transferred to the Seller, and has transferred all its right,
title and interest in such Loans, including all rights the Originator may
have against the originating lender with respect to Loans originated by a
lender other than the Originator, to the Seller. The blanket assignment,
any and all documents executed and delivered by the Originator pursuant to
Sections 2.01(b) and 2.03(b), and this Agreement each constitutes the
legal, valid and binding obligation of the Originator enforceable in
accordance with its respective terms.
j. Compliance with Law. At the date of origination of the Loan, all
-------------------
requirements of any federal and state laws, rules and regulations
applicable to the Loan, including, without limitation, usury and truth in
lending laws and (if such Loan is an FHA-Insured Loan) the FHA Regulations
have been complied with and the Originator shall for at least the period of
this Agreement, maintain in its possession, available for the Trustee's
inspection, and shall deliver to the Trustee upon demand, evidence of
compliance with all such requirements.
k. Loan in Force. The Loan has not been satisfied or subordinated in
-------------
whole or in part or rescinded, and the real estate securing such Loan has
not been released from the lien of such Loan in whole or in part.
l. Valid Lien. The Loan has been duly executed and delivered by the
----------
Obligor, and the lien created thereby has been duly recorded, or has been
delivered to the
3-3
<PAGE>
appropriate governmental authority for recording and will be duly recorded
within 180 days, and constitutes a valid and perfected first, second, third
or fourth priority lien, as the case may be, on the real estate described
in such Loan.
m. Capacity of Parties. The signature(s) of the Obligor(s) on the
-------------------
Loan are genuine and all parties to the Loan had full legal capacity to
execute the Loan.
n. Good Title. The Originator is the sole owner of the Loan and, if
----------
such Loan is an FHA-Insured Loan, because the Trustee is a lender approved
by HUD to originate and purchase Title I loans under a valid Title I
contract of insurance, has the authority to sell, transfer and assign such
Loan to the Seller for immediate transfer to the Trust under the terms of
the Transfer Agreement. There has been no assignment, sale or
hypothecation of the Loan by the Originator except the usual past
hypothecation of the Loan in connection with the Originator's normal
banking transactions in the conduct of its business, which hypothecation
terminates upon sale of the Loan to the Seller. The Originator has good
and marketable title to the Loan, free and clear of any encumbrance,
equity, loan, pledge, charge, claim, lien or encumbrance of any type and
has full right to transfer the Loan to the Seller.
o. No Defaults. As of the applicable Cut-off Date, there was no
-----------
default, breach, violation or event permitting acceleration existing under
the Loan and no event which, with notice and the expiration of any grace or
cure period, would constitute such a default, breach, violation or event
permitting acceleration under such Loan (except payment delinquencies
permitted by clause (b) above). The Originator has not waived any such
default, breach, violation or event permitting acceleration except payment
delinquencies permitted by clause (b) above.
p. Equal Installments. The Loan provides for monthly payments which
------------------
fully amortize the Loan over its term.
q. Enforceability. Each Loan contains customary and enforceable
--------------
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
lien provided thereby.
r. One Original. There is only one original executed promissory
------------
note, which promissory note has been delivered to the Trustee or its
Custodian on or before the Closing Date or Subsequent Transfer Date if a
Subsequent Loan.
s. Genuine Documents. All documents submitted are genuine, and all
-----------------
other representations as to each Loan, including the List of Loans, are
true and correct. Any copies of documents provided by the Originator are
accurate and complete (except that, with respect to each Loan that was
originated by a lender other than the Originator, the Originator makes such
representation and warranty only to the best of the Originator's
knowledge).
3-4
<PAGE>
t. Origination. Each Loan was originated by a home improvement
-----------
contractor in the ordinary course of such contractor's business or was
originated by the Originator directly, except for 555 Loans, with an
aggregate Cut-off Date Principal Balance of $13,145,870.86, which the
Originator purchased from correspondent originators.
u. Underwriting Guidelines. Each Loan was originated or purchased in
-----------------------
accordance with the Originator's then-current underwriting guidelines.
v. Good Repair. The property described in the Loan is, to the best
-----------
of the Originator's knowledge, free of damage and in good repair.
w. Qualified Mortgage. The Loan is a "qualified mortgage" within the
------------------
meaning of the REMIC Provisions. The Originator represents and warrants
that, either as of (i) the date of origination (within the meaning of the
REMIC Provisions) or (ii) the Closing Date or, if a Subsequent Loan, the
Subsequent Transfer Date, the fair market value of the interest in real
property securing each Loan was not less than 80% of the "adjusted issue
price" (in each case within the meaning of the REMIC Provisions) of such
Loan.
SECTION 3.03. Additional Representations and Warranties. The Seller
-----------------------------------------
hereby represents and warrants to the Trustee for the benefit of the
Certificateholders and the Class C Certificateholder, as of the Closing Date
with respect to each Loan identified on the List of Loans attached to this
Agreement as Exhibit L and as of each Subsequent Transfer Date with respect to
each Subsequent Loan identified on the List of Loans attached to the related
Subsequent Transfer Instrument:
a. Lawful Assignment. The Loan was not originated in and is not
-----------------
subject to the laws of any jurisdiction whose laws would make the transfer
of the Loan under this Agreement or pursuant to transfers of the
Certificates or Class C Certificate unlawful or render the Loan
unenforceable. The Seller has duly executed a valid blanket assignment of
the Loans transferred to the Trust, and has transferred all its right,
title and interest in such Loans. The blanket assignment, any and all
documents executed and delivered by the Seller pursuant to Sections 2.01(b)
and 2.03(b), and this Agreement each constitutes the legal, valid and
binding obligation of the Seller enforceable in accordance with its
respective terms.
b. Good Title. The Seller is the sole owner of the Loan and has the
----------
authority to sell, transfer and assign such Loan to the Trust under the
terms of this Agreement. There has been no assignment, sale or
hypothecation of the Loan by the Seller. The Seller has good and marketable
title to the Loan, free and clear of any encumbrance, equity, loan, pledge,
charge, claim, lien or encumbrance of any type and has full right to
transfer the Loan to the Trust.
SECTION 3.04. Representations and Warranties Regarding the Loans in the
---------------------------------------------------------
Aggregate. The Originator has represented and warranted to the Seller in the
---------
Transfer Agreement, which representations and warranties the Seller has assigned
to the Trustee for the benefit of the
3-5
<PAGE>
Certificateholders and the Class C Certificateholder, as of the Closing Date
with respect to the Initial Loans and Additional Loans, and as of each
Subsequent Transfer Date with respect to the related Subsequent Loans, that:
a. Amounts. As of the Closing Date, the sum of the Cut-off Date Pool
-------
Principal Balance, plus the Original Pre-Funded Amount, equals at least the
Original Aggregate Certificate Principal Balance. By Cut-off Date Principal
Balance, the Initial Loans and Additional Loans plus the Subsequent Loans
specifically identified as of the Closing Date represent at least 75% of
the Original Aggregate Certificate Principal Balance.
b. Characteristics. The Loans have the following characteristics:
---------------
(i) 100% are secured by a mortgage, deed of trust or security deed creating
a first, second, third or fourth lien on the related real estate; (ii) none
has a remaining or original maturity of more than 360 months; (iii) no
Initial Loan has a final scheduled payment date later than July 2030, no
Additional Loan has a final scheduled payment date later than September
2030 and no Subsequent Loan has a final scheduled payment date later than
November 2030; (iv) none had a principal balance at origination of more
than $315,000; and (v) none of the Initial or Additional Loans have a Loan
Interest Rate less than 6.00%.
The Loans have the following characteristics as of the Post-Funding
Payment Date:
Loan Interest Rates. The weighted average (by Scheduled Principal
-------------------
Balance) of the Loan Interest Rates of the Loans is not more than 10 basis
points less than the weighted average of the Loan Interest Rates of the
Initial Loans;
FICO Scores. The Additional Loans and Subsequent Loans will not have
-----------
a weighted average (by Scheduled Principal Balance) FICO Score of less than
600; the weighted average (by Scheduled Principal Balance) FICO Score of
the Loans is not less than 650; and the percentage (by Scheduled Principal
Balance) of the Loans with a FICO Score less than 620 is no more than 200
basis points more than such percentage of Initial Loans with a FICO Score
less than 620;
Lien Priority. No more than 70.00% (by Scheduled Principal Balance)
-------------
of the Initial Loans are secured by a second priority lien, no more than
16.00% by a third priority lien, and no more than 0.10% by a fourth
priority lien. As of the Post-Funding Payment Date, the percentage (by
Scheduled Principal Balance) of the Loans secured by a second priority lien
is not more than 70.00%, not more than 16.00% are secured by a third
priority lien, and not more than 0.10% are secured by a fourth priority
lien.
FHA-Insured Loans. The Scheduled Principal Balance of the FHA-Insured
-----------------
Loans is not more than $4,000,000.
Geographic Concentrations. By Cut-off Date Principal Balance, 14.48%
-------------------------
of the Initial and Additional Loans are secured by property located in
California, 9.07% in New
3-6
<PAGE>
York, 8.04% in Texas, 6.59% in Pennsylvania, 5.38% in New Jersey and 5.01%
in Florida. No other state represents more than 5.00% of the aggregate Cut-
off Date Principal Balances of the Initial and Additional Loans. No more
than 1% of the Loans by Cut-off Date Principal Balance are secured by
property located in an area with the same five-digit zip code.
c. Marking Records. The Originator has caused the portions of the
---------------
Electronic Ledger relating to the Loans to be clearly and unambiguously
marked to indicate that such Loans constitute part of the Trust and are
owned by the Trust in accordance with the terms of the Trust created
hereunder.
d. No Adverse Selection. No adverse selection procedures have been
--------------------
employed in selecting the Loans.
e. Lender Concentration. No more than 5.0% of the Loans, by Cut-off
--------------------
Date Principal Balance, were originated by any one lender (other than the
Originator).
f. Home Ownership and Equity Protection Act. With respect to any
----------------------------------------
Loan subject to the Home Ownership and Equity Protection Act of 1994, each
such Loan has been originated and serviced in compliance with the
provisions thereof.
SECTION 3.05. Representations and Warranties Regarding the Loan Files.
-------------------------------------------------------
The Originator has represented and warranted to the Seller in the Transfer
Agreement, which representations and warranties the Seller has assigned to the
Trustee for the benefit of the Certificateholders and the Class C
Certificateholder that:
a. Possession. On the Closing Date, the Trustee or a Custodian will
----------
have possession of each original Initial Loan and Additional Loan and the
related Loan File. On each Subsequent Transfer Date, the Originator will
have possession of each original Subsequent Loan being transferred to the
Trust on that Subsequent Transfer Date and the related Loan File. There
are and there will be no custodial agreements or servicing contracts in
effect materially and adversely affecting the rights of the Originator to
make, or cause to be made, any delivery required hereunder or under the
Transfer Agreement.
b. Bulk Transfer Laws. The transfer, assignment and conveyance of
------------------
the Loans and the Loan Files by the Originator pursuant to the Transfer
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
SECTION 3.06. Repurchases of Loans for Breach of Representations and
------------------------------------------------------
Warranties.
----------
a. Subject to Section 3.07, the Originator shall repurchase a Loan, at
its Repurchase Price, not later than 90 days after the day on which the
Originator, the Servicer, the Seller or the Trustee first discovers or should
have discovered a breach of a representation or warranty set forth in Sections
2.03, 3.02, 3.03, 3.04 or 3.05, or in the Officer's Certificates delivered
pursuant to Sections 2.02(j) or 2.03(b)(vii), that materially and adversely
affects the Trust's, the
3-7
<PAGE>
Certificateholders' or the Class C Certificateholder's interest in such Loan and
which breach has not been cured within such time; provided, however, that (i) in
the event that a party other than the Originator first becomes aware of such
breach, such discovering party shall notify the Originator in writing within 5
Business Days of the date of such discovery and (ii) with respect to any Loan
incorrectly described on the List of Loans with respect to Cut-off Date
Principal Balance, which the Originator would otherwise be required to
repurchase pursuant to this Section, the Originator may, in lieu of repurchasing
such Loan, deliver to the Seller for deposit in the Certificate Account within
90 days from the date of such discovery cash in an amount sufficient to cure
such deficiency or discrepancy. Any such cash so deposited shall be distributed
to Certificateholders and the Class C Certificateholder on the immediately
following Payment Date as a collection of principal or interest on such Loan,
according to the nature of the deficiency or discrepancy. Notwithstanding any
other provision of this Agreement, the obligation of the Originator under this
Section shall not terminate upon a Service Transfer pursuant to Article VII.
b. On or prior to the date that is the second anniversary of the Closing
Date, the Originator may, at its election, substitute an Eligible Substitute
Loan for a Loan that it is obligated to repurchase pursuant to Section 3.06(a)
(such Loan being referred to as the "Replaced Loan") upon satisfaction of the
following conditions:
(i) the Originator shall have conveyed to the Seller the Loan to be
substituted for the Replaced Loan and the Loan File related to such Loan
and the Originator shall have marked the Electronic Ledger indicating that
such Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute Loan and
the Originator delivers an Officers' Certificate, substantially in the form
of Exhibit J-2 hereto, to the Trustee certifying that such Loan is an
Eligible Substitute Loan;
(iii) the Originator shall have delivered to the Trustee evidence of
filing of a UCC-1 financing statement executed by the Originator as debtor,
naming the Seller as secured party and filed in Minnesota, listing such
Loan to be substituted as collateral;
(iv) the Originator shall have delivered to the Trustee an executed
assignment to the Seller and to the Trustee on behalf of the Trust in
recordable form for the mortgage securing such Loan to be substituted;
(v) the Originator shall have delivered to the Trustee an Opinion of
Counsel (a) to the effect that the substitution of such Loan for such
Replaced Loan will not cause the Trust to fail to qualify as a REMIC at any
time under then applicable REMIC Provisions or cause any "prohibited
transaction" that will result in the imposition of a tax under such REMIC
Provisions and (b) to the effect of paragraph 9 of Exhibit F hereto; and
(vi) if the Scheduled Principal Balance of such Replaced Loan is
greater than the Scheduled Principal Balance of the Loan to be substituted,
the Originator shall have delivered to the Seller for deposit in the
Certificate Account the amount of such excess
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<PAGE>
and shall have included in the Officers' Certificate required by clause
(ii) above a certification that such deposit has been made.
Upon satisfaction of such conditions, the Trustee shall add such Loan to be
substituted to, and delete such Replaced Loan from, the List of Loans. Such
substitution shall be effected prior to the first Determination Date that occurs
more than 90 days after the Originator becomes aware, or should have become
aware, or receives written notice from the Trustee, of the breach referred to in
Section 3.06(a). Promptly after any such substitution of a Loan, the Originator
shall give written notice of such substitution to S&P, Moody's and Fitch.
c. If the Originator is required to repurchase a Loan under Section
3.06(a) or has elected to substitute an Eligible Substitute Loan for a Loan
under Section 3.06(b), and if the reason for such repurchase or substitution is
that the Originator has failed to deliver to the Trustee the Loan File for the
Loan to be repurchased or substituted for (except in the case of a failure to
deliver evidence of the lien on the related improved property and evidence of
due recording of such mortgage, deed of trust or security deed, if available),
then, notwithstanding the time periods set out in Sections 3.06(a) and 3.06(b),
the Originator shall either (i) repurchase such Loan, at its respective
Repurchase Price, within 30 days of the Closing Date, or (ii) substitute an
Eligible Substitute Loan for the Loan within 90 days of the Closing Date.
d. The Originator shall defend and indemnify the Seller, the Trustee, the
Certificateholders, and the Class C Certificateholder against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of any third-party action arising out of any breach of any such
representation and warranty.
SECTION 3.07. No Repurchase Under Certain Circumstances. Notwithstanding
-----------------------------------------
any provision of this Agreement to the contrary, no repurchase or substitution
pursuant to Section 3.06 shall be made unless the Originator (at its own
expense) obtains for the Trustee an Opinion of Counsel addressed to the Trustee
that any such repurchase or substitution would not, under the REMIC Provisions,
(i) cause the Trust to fail to qualify as a REMIC while any regular interest in
such REMIC is outstanding, (ii) result in a tax on prohibited transactions
within the meaning of Section 860F(a)(2) of the Code or (iii) constitute a
contribution after the startup day subject to tax under Section 860G(d) of the
Code. The Originator diligently shall attempt to obtain such Opinion of
Counsel. In the case of a repurchase or deposit pursuant to Section 3.06(a) or
(b), the Originator shall, notwithstanding the absence of such opinion as to the
imposition of any tax as the result of such purchase or deposit, repurchase such
Loan or make such deposit and shall guarantee the payment of such tax by paying
to the Trustee the amount of such tax not later than five Business Days before
such tax shall be due and payable to the extent that amounts previously paid
over to and then held by the Trustee pursuant to Section 6.06 are insufficient
to pay such tax and all other taxes chargeable under Section 6.06. Pursuant to
Section 6.06, the Servicer is hereby directed to withhold, and shall withhold
and pay over to the Trustee, an amount sufficient to pay such tax and any other
taxes imposed on "prohibited transactions" under Section 860F(a)(i) of the Code
or imposed on "contributions after startup date" under Section 860G(d) of the
Code from amounts otherwise distributable to the Class C Certificateholder. The
Servicer shall give notice to the Trustee at the time of such repurchase of the
amounts due from
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<PAGE>
the Originator pursuant to the guarantee of the Originator described above and
give notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant to
this Section other than from moneys provided to it by the Originator or from
moneys held in the funds and accounts created under this Agreement. The Trustee
shall be deemed conclusively to have complied with this Section if it follows
the directions of the Originator.
In the event any tax that is guaranteed by the Originator pursuant to this
Section 3.07 is refunded to the Trust or otherwise is determined not to be
payable, the Originator shall be repaid the amount of such refund or that
portion of any guarantee payment made by the Originator that is not applied to
the payment of such tax.
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
-----------------------------------------------------------
SECTION 4.01. Transfer of Loans.
-----------------
a. On or prior to the Closing Date, or the Subsequent Transfer Date in
the case of Subsequent Loans, the Originator shall deliver the Loan Files to the
Trustee. The Trustee shall maintain the Loan Files at its office or with a duly
appointed Custodian, who shall act as the agent of the Trustee on behalf of the
Certificateholders. The Trustee may release a Loan File to the Servicer pursuant
to Section 5.07. The Originator has filed a form UCC-1 financing statement
regarding the sale of the Loans to the Seller, and shall file continuation
statements in respect of such UCC-1 financing statement as if such financing
statement were necessary to perfect the security interest granted pursuant to
Section 2.01. The Originator shall take any other actions necessary to maintain
the perfection of such security interest.
b. The Originator shall file promptly in the appropriate recording
offices the assignments to the Trustee on behalf of the Trust of the mortgage,
deed of trust or security deed securing each Loan relating to real estate
located in Maryland, and shall deliver to the Trustee an Opinion of Counsel to
the effect that the recordation of assignments of the mortgages, deeds of trust
and security deeds, securing Loans relating to real estate located in any state
other than Maryland, is not necessary to effect the assignment to the Trustee of
the Originator's lien on the real property securing such Loans.
SECTION 4.02. Costs and Expenses. The Servicer agrees to pay all
------------------
reasonable costs and disbursements in connection with the vesting (including the
perfection and the maintenance of perfection, as against all third parties) in
the Trust of all right, title and interest in and to the Loans (including,
without limitation, the mortgage or deed of trust on the related real estate
granted thereby).
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ARTICLE V
SERVICING OF LOANS
------------------
SECTION 5.01. Responsibility for Loan Administration. The Servicer will
--------------------------------------
have the sole obligation to manage, administer, service and make collections on
the Loans and perform or cause to be performed all contractual and customary
undertakings of the holder of the Loans to the Obligor. Conseco Finance Corp.,
if it is the Servicer, may delegate some or all of its servicing duties to a
wholly owned subsidiary of Conseco Finance Corp., for so long as such subsidiary
remains, directly or indirectly, a wholly owned subsidiary of Conseco Finance
Corp. Notwithstanding any such delegation Conseco Finance Corp. shall retain all
of the rights and obligations of the Servicer hereunder. The Trustee, at the
request of a Servicing Officer, shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. 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 Loans 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 loans
(including manufactured housing contracts) serviced by the Servicer; provided,
however, that such degree of skill and care shall be at least as favorable as
the degree of skill and care generally applied by prudent servicers of home
improvement loans for prudent institutional investors.
SECTION 5.03. Records. The Servicer shall, during the period it is
-------
servicer hereunder, maintain such books of account and other records as will
enable the Trustee to determine the status of each Loan.
SECTION 5.04. Inspection.
----------
a. At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Loans, which have not previously been
provided to the Trust, and will cause its personnel to assist in any examination
of such records by the Trustee. The examination referred to in this Section
will be conducted in a manner which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Trustee may make, the
Trustee may, using generally accepted audit procedures, verify the status of
each Loan and review the Electronic Ledger and records relating thereto for
conformity to Monthly Reports prepared pursuant to Article VI and compliance
with the standards represented to exist as to each Loan in this Agreement.
b. At all times during the term hereof, the Servicer shall keep available
a copy of the List of Loans at its principal executive office for inspection by
Certificateholders.
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c. A Certificateholder holding Certificates representing in the aggregate
at least 5% of the Aggregate Certificate Principal Balance shall have the rights
of inspection afforded to the Trustee pursuant to this Section 5.04.
SECTION 5.05. Certificate Account.
-------------------
a. On or before the Closing Date, the Servicer shall establish the
Certificate Account on behalf of the Trust, which shall be an Eligible Account.
The Servicer shall pay into the Certificate Account, as promptly as practicable
(but not later than the next Business Day) following receipt thereof, all
amounts received with respect to the Loans, other than extension fees and
assumption fees, which fees shall be retained by the Servicer as compensation
for servicing the Loans, and other than Liquidation Expenses permitted by
Section 5.08. The Trustee shall hold all amounts paid into the Certificate
Account under this Agreement in trust for the Trustee, the Certificateholders
and the Class C Certificateholder until payment of any such amounts is
authorized under this Agreement. Only the Trustee may withdraw funds from the
Certificate Account.
b. If the Servicer so directs, the institution maintaining the
Certificate Account shall, in the name of the Trustee in its capacity as such,
invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Payment
Date. Any investment of funds in the Certificate Account shall be made in
Eligible Investments held by a financial institution in accordance with the
following requirements: (1) all Eligible Investments shall be held in an account
with such financial institution in the name of the Trustee, and the agreement
governing such account shall be governed by the laws of the State of Minnesota,
(2) with respect to securities held in such account, such securities shall be
(i) certificated securities (as such term is used in N.Y. U.C.C. (S) 8-
102(4)(i)), securities deemed to be certificated securities under applicable
regulations of the United States government, or uncertificated securities issued
by an issuer organized under the laws of the State of New York or the State of
Delaware, (ii) either (A) in the possession of such institution, (B) in the
possession of a clearing corporation (as such term is used in Minn. Stat. (S) 8-
102(5)) in the State of New York, registered in the name of such clearing
corporation or its nominee, not endorsed for collection or surrender or any
other purpose not involving transfer, not containing any evidence of a right or
interest inconsistent with the Trustee's security interest therein, and held by
such clearing corporation in an account of such institution, (C) held in an
account of such institution with the Federal Reserve Bank of New York or the
Federal Reserve Bank of Minneapolis, or (D) in the case of uncertificated
securities, issued in the name of such institution, and (iii) identified, by
book entry or otherwise, as held for the account of, or pledged to, the Trustee
on the records of such institution, and such institution shall have sent the
Trustee a confirmation thereof, and (3) with respect to repurchase obligations
held in such account, such repurchase obligations shall be identified by such
institution, by book entry or otherwise, as held for the account of, or pledged
to, the Trustee on the records of such institution, and the related securities
shall be held in accordance with the requirements of clause (2) above. Once such
funds are invested, such institution shall not change the investment of such
funds. All income and gain from such investments shall be added to the
Certificate Account and distributed on such Payment Date pursuant to Section
8.04(b). An amount equal to any net loss on such investments shall be deposited
in the Certificate Account by the Seller out of its own funds immediately as
realized.
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<PAGE>
The Servicer and the Trustee shall in no way be liable for losses on amounts
invested in accordance with the provisions hereof. Funds in the Certificate
Account not so invested must be insured to the extent permitted by law by the
Federal Deposit Insurance Corporation. "Eligible Investments" are any of the
--------------------
following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any Affiliate of the
Trustee, acting in its commercial capacity) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing for
such investment, the commercial paper or other short-term debt obligations
of such depository institution or trust company are rated at least A-1+ by
S&P, and F-1+ by Fitch (if rated by Fitch) and P-1 by Moody's (if rated by
Moody's) and (B) any other demand or time deposit or certificate of deposit
which is fully insured by the Federal Deposit Insurance Corporation;
(iii) shares of an investment company registered under the Investment
Company Act of 1940, whose shares are registered under the Securities Act
of 1933 and have a rating of AAA by both S&P and Fitch and Aaa by Moody's,
and whose only investments are in securities described in clauses (i) and
(ii) above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of America,
in either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii)(A) above;
(v) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a credit rating of at least AA from each of
the Rating Agencies that has rated the corporation; provided, however, that
securities issued by any particular corporation will not be Eligible
Investments to the extent that investment therein will cause the then
outstanding principal amount of securities issued by such corporation and
held as part of the corpus of the Trust to exceed 10% of amounts held in
the Certificate Account;
(vi) commercial paper having a rating of at least A-1+ from S&P, at
least F-1+ from Fitch (if rated by Fitch) and at least P-1 from Moody's at
the time of such investment;
(vii) money market funds rated AAAm or AAAm-G by S&P; and
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<PAGE>
(viii) other obligations or securities that are acceptable to each of
the Rating Agencies as an Eligible Investment hereunder and will not reduce
the rating assigned to any Class of Certificates by each of the Rating
Agencies below the lower of the then-current rating or the rating assigned
to such Certificates as of the Closing Date by each of the Rating Agencies,
as evidenced in writing;
provided that any such investment must constitute a "cash flow investment"
within the meaning of the REMIC Provisions.
The Trustee may trade with itself or an Affiliate in the purchase or sale
of such Eligible Investments. The Servicer acknowledges that to the extent that
regulations of the Comptroller of the Currency or other applicable regulatory
agency grant the Servicer the right to receive brokerage confirmations of
security transactions as they occur, the Servicer specifically waives receipt of
such confirmations.
c. If at any time the Trustee receives notice (from any of the Rating
Agencies, the Servicer or otherwise) that the Certificate Account has ceased to
be an Eligible Account, the Trustee shall, as soon as practicable but in no
event later than five Business Days of the Trustee's receipt of such notice,
transfer the Certificate Account and all funds and Eligible Investments therein
to an Eligible Account. Following any such transfer, the Trustee shall notify
each of the Rating Agencies and the Servicer of the location of the Certificate
Account.
SECTION 5.06. Enforcement.
-----------
a. The Servicer shall, consistent with customary servicing procedures,
act with respect to the Loans in such manner as will maximize the receipt of
principal and interest on such Loans and Liquidation Proceeds with respect to
Liquidated Loans.
b. In accordance with the standard of care specified in Section 5.02, the
Servicer may, in its own name, if possible, or as agent for the Trust, commence
proceedings for the foreclosure of any subject real estate, or may take such
other steps that in the Servicer's reasonable judgment will maximize Liquidation
Proceeds with respect to the Loan, including, for example, the sale of the Loan
to a third party for foreclosure or enforcement and, in the case of any default
on a related prior mortgage loan, the advancing of funds to correct such default
and the advancing of funds to pay off a related prior mortgage loan, which
advances are Liquidation Expenses that will be reimbursed to the Servicer out of
related Liquidation Proceeds before the related Net Liquidation Proceeds are
paid to Certificateholders and the Class C Certificateholder. The Servicer shall
also deposit in the Certificate Account any Net Liquidation Proceeds received in
connection with any Loan which became a Liquidated Loan in a prior Due Period.
c. The Servicer may sue to enforce or collect upon Loans, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Loan, the act of commencement shall be deemed to
be an automatic assignment of the Loan to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce a Loan on the ground that it is not a
real party in interest or a holder entitled to enforce the Loan, the Trustee on
behalf of the Trust shall,
5-4
<PAGE>
at the Servicer's expense, take such steps as the Servicer deems necessary to
enforce the Loan, including bringing suit in its name or the names of the
Certificateholders and the Class C Certificateholder.
d. The Servicer may grant to the Obligor on any Loan any rebate, refund
or adjustment out of the Certificate Account that the Servicer in good faith
believes is required because of the Principal Prepayment in Full of the Loan.
The Servicer will not permit any rescission or cancellation of any Loan.
e. The Servicer shall enforce any due-on-sale clause in a Loan if such
enforcement is called for under its then current servicing policies for
obligations similar to the Loans, provided that such enforcement is permitted by
applicable law and will not adversely affect any applicable insurance policy.
If an assumption of a Loan is permitted by the Servicer, upon conveyance of the
related property the Servicer shall use its best efforts to obtain an assumption
agreement in connection therewith.
f. Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Loan at a time when such Loan is not in default or such default is not
reasonably foreseeable, if such modification or waiver would both (i) be treated
as a taxable exchange under Section 1001 of the Code or any proposed, temporary
or final Treasury Regulations promulgated thereunder and (ii) cause the Trust to
fail to qualify as a REMIC or cause the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions.
SECTION 5.07. Trustee to Cooperate.
--------------------
a. Upon payment in full on any Loan, the Servicer will notify the Trustee
and Conseco Finance Corp. (if Conseco Finance Corp. is not the Servicer) on the
next succeeding Payment Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such payments which are required to be deposited in the
Certificate Account pursuant to Section 5.05 have been so deposited) and shall
request delivery of the Loan and Loan File to the Servicer. Upon receipt of such
delivery and request, the Trustee shall promptly release or cause to be released
such Loan and Loan File to the Servicer. Upon receipt of such Loan and Loan
File, each of Conseco Finance Corp. (if different from the Servicer) and the
Servicer is authorized to execute an instrument in satisfaction of such Loan and
to do such other acts and execute such other documents as the Servicer deems
necessary to discharge the Obligor thereunder and eliminate any lien on the
related real estate. The Servicer shall determine when a Loan has been paid in
full; provided that, to the extent that insufficient payments are received on a
Loan credited by the Servicer as prepaid or paid in full and satisfied, the
shortfall shall be paid by the Servicer out of its own funds, without any right
of reimbursement therefor (except from additional amounts recovered from the
related Obligor or otherwise in respect of such Loan), and deposited in the
Certificate Account.
b. From time to time as appropriate for servicing and foreclosing in
connection with a Loan, the Trustee shall, upon written request of a Servicing
Officer and delivery to the Trustee
5-5
<PAGE>
of a receipt signed by such Servicing Officer, cause the original Loan and the
related Loan File to be released to the Servicer and shall execute such
documents as the Servicer shall deem necessary to the prosecution of any such
proceedings. The Trustee shall stamp the face of each such Loan to be released
to the Servicer with a notation that the Loan has been assigned to the Trustee.
Upon request of a Servicing Officer, the Trustee shall perform such other acts
as reasonably requested by the Servicer and otherwise cooperate with the
Servicer in enforcement of the Certificateholders' and Class C
Certificateholder's rights and remedies with respect to Loans.
c. The Servicer's receipt of a Loan and/or Loan File shall obligate the
Servicer to return the original Loan and the related Loan File to the Trustee
when its need by the Servicer has ceased unless the Loan shall be liquidated or
repurchased or replaced as described in Section 3.06 or Section 8.06.
SECTION 5.08. Costs and Expenses. Except as provided in Section 8.04(b)
------------------
for the reimbursement of Advances, all costs and expenses incurred by the
Servicer in carrying out its duties hereunder (including payment of the
Trustee's fees pursuant to Section 11.06, fees and expenses of accountants and
payments of all fees and expenses incurred in connection with the enforcement of
Loans (including enforcement of Loans and foreclosures upon real estate securing
any such Loans) and all other fees and expenses not expressly stated hereunder
to be for the account of the Trust) shall be paid by the Servicer and the
Servicer shall not be entitled to reimbursement hereunder, except that the
Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Loan for customary out-of-pocket Liquidation Expenses incurred by it. The
Servicer shall not incur such Liquidation Expenses unless it determines in its
good faith business judgment that incurring such expenses will increase the Net
Liquidation Proceeds on the related Loan.
SECTION 5.09. Maintenance of Insurance. The Servicer shall at all times
------------------------
keep in force a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement, and a fidelity
bond. Such policy or policies and such fidelity bond shall be in such form and
amount as is generally customary among persons who service a portfolio of home
improvement loans having an aggregate principal amount of $10,000,000 or more,
and which are generally regarded as servicers acceptable to institutional
investors. The Servicer shall cause to be maintained with respect to the real
property securing a Loan hazard insurance (excluding flood insurance coverage)
if such Loan is secured by a first priority mortgage, deed of trust or security
deed or the initial principal balance of such Loan exceeds $30,000.
SECTION 5.10. Merger or Consolidation of Servicer. Any Person into which
-----------------------------------
the Servicer may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Servicer shall be a party shall be the successor of the Servicer hereunder,
provided such Person shall be an Eligible Servicer, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. The Servicer shall promptly
notify each of the Rating Agencies in the event it is a party to any merger,
conversion or consolidation.
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ARTICLE VI
REPORTS AND TAX MATTERS
-----------------------
SECTION 6.01. Monthly Reports. No later than one Business Day following
---------------
each Determination Date, the Servicer shall deliver to the Trustee and the
Rating Agencies a Monthly Report, substantially in the form of Exhibit M hereto.
SECTION 6.02. Officer's Certificate. Each Monthly Report pursuant to
---------------------
Section 6.01 shall be accompanied by a certificate of a Servicing Officer
substantially in the form of Exhibit H, certifying the accuracy of the Monthly
Report and that no Event of Termination or event that with notice or lapse of
time or both would become an Event of Termination has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
SECTION 6.03. Other Data. In addition, the Originator and (if different
----------
from the Originator) the Servicer shall, on request of the Trustee or any of the
Rating Agencies, furnish the Trustee and/or any such Rating Agencies such
underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants. On or before May 1 of each
----------------------------
year, commencing May 1, 2001, the Servicer at its expense shall cause a firm of
independent public accountants which is a member of the American Institute of
Certified Public Accountants to issue to the Servicer a report that such firm
has examined selected documents, records and management's assertions relating to
loans serviced by the Servicer and stating that, on the basis of such
examination, such servicing has been conducted in compliance with the minimum
servicing standards identified in the Mortgage Bankers Association of America's
Uniform Single Attestation Program for Mortgage Bankers, or any successor
uniform program, except for such significant exceptions or errors in records
that, in the opinion of such firm, generally accepted attestation standards
requires it to report.
SECTION 6.05. Statements to Certificateholders and the Class C
------------------------------------------------
Certificateholder.
-----------------
a. The Servicer shall prepare and furnish to the Trustee the statements
specified below relating to the Class A Certificates, the Class M Certificates,
the Class B Certificates and the Class C Certificate on or before the third
Business Day next preceding each Payment Date.
b. Concurrently with each distribution to Certificateholders, the Trustee
shall, so long as it has received the Monthly Report from the Servicer, forward
or cause to be forwarded by mail to each Holder of a Class A Certificate and (if
the Originator is not the Servicer) the Originator a statement setting forth the
following:
(i) the amount of such distribution to Holders of each Class of Class
A Certificates allocable to interest, separately identifying any Unpaid
Class A Interest Shortfall included in such distribution and any remaining
Unpaid Class A Interest Shortfall after giving effect to such distribution;
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<PAGE>
(ii) the amount of such distribution to Holders of each Class of
Class A Certificates allocable to principal, separately identifying the
aggregate amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class A Formula Distribution
Amount for such Payment Date exceeds the Class A Distribution Amount for
such Payment Date;
(iv) the Principal Balance of the Class A Certificate after giving
effect to the distribution of principal on such Payment Date;
(v) the Pool Scheduled Principal Balance for such Payment Date;
(vi) the Senior Enhancement Percentage for the Certificates and
whether or not a Trigger Event exists;
(vii) the Overcollateralization Amount and the Target
Overcollateralization Amount;
(viii) the Pool Factor;
(ix) the number and aggregate principal balances of Loans delinquent
(a) 30-59 days, (b) 60-89 days and (c) 90 or more days;
(x) the aggregate principal balance of any Defaulted Loans;
(xi) the number and aggregate principal balance of Loans that have
been granted extensions to their payment schedules;
(xii) the Average Sixty-Day Delinquency Ratio Test for the Loans (as
set forth in Exhibit M hereto);
(xiii) the Cumulative Realized Losses Test for the Loans (as set
forth in Exhibit M hereto);
(xiv) the number of Liquidated Loans, identifying such Loans and the
Net Liquidation Loss on such Loans; and
(xv) the Pre-Funded Amount for such Payment Date.
The Trustee and the Servicer shall, if any Certificateholder, Class C
Certificateholder or the Underwriter inquires by telephone, provide the
information contained in the most recent Monthly Report.
In the case of information furnished pursuant to clauses (i) through (iv)
above, the amounts shall be expressed as a dollar amount per Class A Certificate
with a 1% Percentage Interest or per $1,000 denomination of Class A Certificate.
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<PAGE>
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class A Certificate a statement
containing the information with respect to interest accrued and principal paid
on its Class A Certificates during such calendar year. Such obligation of the
Certificate Registrar shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
c. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class M-1 Certificate a copy of the
monthly statement forwarded to the Holders of Class A Certificates on such
Payment Date. The Servicer shall also furnish to the Trustee, which shall
forward such information to the Class M-1 Certificateholders as part of their
monthly statement, the following information:
(i) the amount of such distribution to Holders of Class M-1
Certificates allocable to interest, separately identifying any Unpaid Class
M-1 Interest Shortfall included in such distribution and any remaining
Unpaid Class M-1 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class M-1
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class M-1 Formula Distribution
Amount for such Payment Date exceeds the Class M-1 Distribution Amount for
such Payment Date;
(iv) the Class M-1 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class M-1 Liquidation Loss Interest Shortfall after
giving effect to any distribution on such Payment Date pursuant to Section
8.04(b)(12); and
(vi) the information set forth in clauses (v) through (xv) of Section
6.05(b).
In the case of the information in clauses (i) through (v) above, the
amounts shall be expressed as a dollar amount per Class M-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class M-1 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class M-1 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class M-1 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially
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comparable information shall be provided by the Certificate Registrar pursuant
to any requirements of the Code as from time to time in force.
d. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class M-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class A and Class M-1
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class M-2
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class M-2
Certificates allocable to interest, separately identifying any Unpaid Class
M-2 Interest Shortfall included in such distribution and any remaining
Unpaid Class M-2 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class M-2
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class M-2 Formula Distribution
Amount for such Payment Date exceeds the Class M-2 Distribution Amount for
such Payment Date;
(iv) the Class M-2 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class M-2 Liquidation Loss Interest Shortfall after
giving effect to any distribution on such Payment Date pursuant to Section
8.04(b)(13); and
(vi) the information set forth in clauses (v) through (xv) of Section
6.05(b).
In the case of the information in clauses (i) through (v) above, the
amounts shall be expressed as a dollar amount per Class M-2 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class M-2 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class M-2 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class M-2 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
e. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-1 Certificate a copy of the
monthly statements forwarded to the Holders of Class A and Class M Certificates
on such Payment Date. The Servicer shall also
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<PAGE>
furnish to the Trustee, which shall forward such information to the Class B-1
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class B-1
Certificates allocable to interest, separately identifying any Unpaid Class
B-1 Interest Shortfall included in such distribution and any remaining
Unpaid Class B-1 Interest Shortfall after giving effect to such
distribution;
(ii) the amount of such distribution to Holders of Class B-1
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class B-1 Formula Distribution
Amount for such Payment Date exceeds the Class B-1 Distribution Amount for
such Payment Date;
(iv) the Class B-1 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class B-1 Liquidation Loss Interest Shortfall after
giving effect to any distribution on such Payment Date pursuant to Section
8.04(b)(14); and
(vi) the information set forth in clauses (v) through (xv) of Section
6.05(b).
In the case of the information in clauses (i) through (v) above, the
amounts shall be expressed as a dollar amount per Class B-1 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-1 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class B-1 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class B-1 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
f. On each Payment Date, the Trustee shall forward or cause to be
forwarded by mail to each Holder of a Class B-2 Certificate a copy of the
monthly statements forwarded to the Holders of Class A, Class M and Class B-1
Certificates on such Payment Date. The Servicer shall also furnish to the
Trustee, which shall forward such information to the Class B-2
Certificateholders as part of their monthly statement, the following
information:
(i) the amount of such distribution to Holders of Class B-2
Certificates allocable to interest, separately identifying any Unpaid Class
B-2 Interest Shortfall
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<PAGE>
included in such distribution and any remaining Unpaid Class B-2 Interest
Shortfall after giving effect to such distribution;
(ii) the amount of such distribution to Holders of Class B-2
Certificates allocable to principal, separately identifying the aggregate
amount of any Principal Prepayments included therein;
(iii) the amount, if any, by which the Class B-2 Formula Distribution
Amount for such Payment Date exceeds the Class B-2 Distribution Amount for
such Payment Date;
(iv) the Class B-2 Principal Balance after giving effect to the
distribution of principal on such Payment Date;
(v) the Unpaid Class B-2 Liquidation Loss Interest Shortfall after
giving effect to any distribution on such Payment Date pursuant to Section
8.04(b)(15); and
(vi) the information set forth in clauses (v) through (xv) of Section
6.05(b).
In the case of the information in clauses (i) through (iv) above, the
amounts shall be expressed as a dollar amount per Class B-2 Certificate with a
1% Percentage Interest or per $1,000 denomination of Class B-2 Certificate.
Within 75 days after the end of each calendar year, the Certificate
Registrar shall furnish or cause to be furnished to each Person who at any time
during the calendar year was the Holder of a Class B-2 Certificate a statement
containing the applicable distribution information provided pursuant to this
Section aggregated for such calendar year or applicable portion thereof during
which such Person was the Holder of a Class B-2 Certificate. Such obligation of
the Certificate Registrar shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Certificate
Registrar pursuant to any requirements of the Code as from time to time in
force.
g. Copies of all reports and statements provided to the Trustee for the
Certificateholders shall also be provided to the Rating Agencies and the Class C
Certificateholder.
SECTION 6.06. Payment of Taxes. The Servicer shall be responsible for and
----------------
agrees to prepare, make and timely file all federal, state, local or other tax
returns, information statements and other returns and documents of every kind
and nature whatsoever required to be made or filed by or on behalf of the Trust
pursuant to the Code and other applicable tax laws and regulations. Each such
return, statement and document shall, to the extent required by the Code or
other applicable law and at the request of the Servicer, be signed on behalf of
the Trust by the Trustee. The Trustee shall have no responsibility whatsoever
for the accuracy or completeness of any such return, statement or document. The
Servicer agrees to indemnify the Trustee and hold it harmless for, from, against
and in respect to any and all liability, loss, damage and expense which may be
incurred by the Trustee based upon or as a result of the Trustee's execution of
any and all
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<PAGE>
such tax returns, statements and documents. The Servicer, if and for so long as
it is a Class C Certificateholder, shall be designated the "tax matters person"
on behalf of the Trust in the same manner as a partnership may designate a "tax
matters partner," as such term is defined in Section 6231(a)(7) of the Code. To
the extent permitted by the REMIC Provisions, any subsequent holder of the Class
C Certificate, by acceptance thereof, irrevocably designates and appoints the
Servicer as its agent to perform the responsibilities of the "tax matters
person" on behalf of the Trust if, and during such time as, the Servicer is not
the holder of the Class C Certificate. The Servicer may, at its expense, retain
such outside assistance as it deems necessary in the performance of its
obligations under this paragraph. The Servicer shall provide to the Internal
Revenue Service the name, title, address and telephone number of the person who
will serve as the representative of the REMIC.
Each of the Holders of the Certificates or the Class C Certificate, by
acceptance thereof, agrees to file tax returns consistent with and in accordance
with any elections, decisions or other reports made or filed with regard to
federal, state or local taxes on behalf of the Trust. The Servicer, as tax
matters person or as agent for the tax matters person, shall represent the Trust
in connection with all examinations of the Trust's affairs by tax authorities,
including resulting administrative and judicial proceedings. Each of the Holders
of the Certificates and Class C Certificate, by acceptance thereof, agrees to
cooperate with the Servicer in such matters and to do or refrain from doing any
or all things reasonably required by the Servicer to conduct such proceedings,
provided that no such action shall be required by the Servicer of any
Certificateholder that would entail unnecessary or unreasonable expenses for
such Certificateholder in the performance of such action.
The Class C Certificateholder shall pay, on behalf of the Trust, any
foreign, federal, state or local income, property, excise, sales, receipts or
any other similar or related taxes or charges which may be imposed upon the
Trust as a REMIC or otherwise and shall, to the extent provided in Section
10.06, be entitled to be reimbursed out of the Certificate Account or, if such
tax or charge results from a failure by the Trustee, the Originator or any
Servicer to comply with the provisions of Section 2.05 or 3.07, or a failure by
any Servicer to comply with the provisions of this Section 6.06, the Trustee,
the Originator or such Servicer, as the case may be, shall indemnify the Class C
Certificateholder for the payment of any such tax or charge. The Trustee shall
be entitled to withhold from amounts otherwise distributable to the Class C
Certificateholder any taxes or charges payable by the Class C Certificateholder
hereunder.
In the event a Class C Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Originator shall provide to the Internal
Revenue Service and the persons specified in Sections 860(E)(e)(5) and (6) of
the Code all information necessary for the application of Section 860E(e) and
any other applicable provision of the Code with respect to the transfer of the
Class C Certificate to such disqualified organization including, without
limitation, a computation showing the present value of the total anticipated
excess inclusions with respect to such Class C Certificate for periods after the
transfer as defined in the REMIC Provisions. In addition, to the extent required
by the REMIC Provisions, the Originator shall, upon the written request of
persons designated in Section 860E(e)(5) of the Code, furnish to such requesting
party and the
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Internal Revenue Service information sufficient to compute the present value of
anticipated excess inclusions within 60 days of the receipt of such written
request.
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<PAGE>
ARTICLE VII
SERVICE TRANSFER
----------------
SECTION 7.01. Events of Termination. "Event of Termination" means the
--------------------- --------------------
occurrence of any of the following:
a. Any failure by the Servicer to make any payment or deposit
required to be made hereunder (including an Advance) and the continuance of
such failure for a period of four Business Days;
b. Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement (other than a
covenant or agreement which is elsewhere in this Section specifically dealt
with) which continues unremedied for 30 days;
c. Any assignment or delegation by the Servicer of its duties or
rights hereunder except as specifically permitted hereunder, or any attempt
to make such an assignment or delegation;
d. A court having jurisdiction in the premises shall have entered a
decree or order for relief in respect of the Servicer in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Servicer, as
the case may be, or for any substantial liquidation of its affairs;
e. The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian or sequestrator (or other similar official) of the
Servicer or for any substantial part of its property, or shall have made
any general assignment for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to, pay its debts as they
become due, or shall have taken any corporate action in furtherance of the
foregoing; or
f. The failure of the Servicer to be an Eligible Servicer.
SECTION 7.02. Transfer. If an Event of Termination has occurred and is
--------
continuing, either the Trustee or Certificateholders, in the aggregate,
representing 25% or more of the Aggregate Certificate Principal Balance, by
notice in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), all authority and power of the Servicer
under this Agreement, whether with respect to the Loans, the Loan Files or
otherwise (except with respect to the Certificate Account, the transfer of which
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<PAGE>
shall be governed by Section 7.06), shall pass to and be vested in the Trustee
pursuant to and under this Section 7.02; and, without limitation, the Trustee is
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do any and all acts or things necessary or appropriate to effect the purposes
of such notice of termination. The Trustee shall cause all assignments of
mortgages, deeds of trust or security deeds securing the Loans to be duly
recorded. Each of the Originator and the Servicer agrees to cooperate with the
Trustee in effecting the termination of the responsibilities and rights of the
Servicer hereunder, including, without limitation, the transfer to the Trustee
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Certificate Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Loans. The Servicer shall
transfer to the new servicer (i) the Servicer's records relating to the Loans in
such electronic form as the new servicer may reasonably request and (ii) any
Loan Files in the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor. On and after the
----------------------------------------
time the Servicer receives a notice of termination pursuant to Section 7.02, the
Trustee shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof, and
the Servicer shall be relieved of such responsibilities, duties and liabilities
arising after such Service Transfer; provided, however, that (i) the Trustee
-
will not assume any obligations of the Originator pursuant to Section 3.06, and
(ii) the Trustee shall not be liable for any acts or omissions of the Servicer
occurring prior to such Service Transfer or for any breach by the Servicer of
any of its obligations contained herein or in any related document or agreement.
As compensation therefor, the Trustee shall be entitled to receive reasonable
compensation out of the Monthly Servicing Fee. Notwithstanding the above, the
Trustee may, if it shall be unwilling so to act, or shall, if it is legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, an Eligible Servicer as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, unless the Trustee is prohibited by law from so acting, the Trustee
shall act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Loans as it and such successor
shall agree; provided, however, that no such monthly compensation shall, without
-
the written consent of 100% of the Certificateholders, exceed the Monthly
Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
SECTION 7.04. Notification to Certificateholders and Class C
----------------------------------------------
Certificateholder.
-----------------
a. Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, to S&P, to Fitch, to
Moody's, to the Certificateholders and to the Class C Certificateholder at their
respective addresses appearing on the Certificate Register.
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b. Within 10 days following any termination or appointment of a successor
to the Servicer pursuant to this Article VII, the Trustee shall give written
notice thereof to S&P, to Fitch, to Moody's, to the Certificateholders and to
the Class C Certificateholder at their respective addresses appearing on the
Certificate Register.
SECTION 7.05. Effect of Transfer.
------------------
a. After the Service Transfer, the Trustee or new Servicer shall notify
Obligors to make payments directly to the new Servicer that are due under the
Loans after the effective date of the Service Transfer.
b. After the Service Transfer, the replaced Servicer shall have no further
obligations with respect to the management, administration, servicing or
collection of the Loans and the new Servicer shall have all of such obligations,
except that the replaced Servicer will transmit or cause to be transmitted
------
directly to the new Servicer for its own account, promptly on receipt and in the
same form in which received, any amounts (properly endorsed where required for
the new Servicer to collect them) received as payments upon or otherwise in
connection with the Loans.
c. A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Originator pursuant to Article X and Sections 3.07, 11.06 and 11.12(f))
other than those relating to the management, administration, servicing or
collection of the Loans after the Service Transfer.
SECTION 7.06. Transfer of Certificate Account. Notwithstanding the
-------------------------------
provisions of Section 7.02, if the Certificate Account shall be maintained with
the Servicer and an Event of Termination shall occur and be continuing, the
Servicer shall, after five days' written notice from the Trustee, or in any
event within ten days after the occurrence of the Event of Termination,
establish a new account or accounts in trust for the Certificateholders and the
Class C Certificateholder conforming with the requirements of this Agreement at
the corporate trust department of the Trustee or with an institution other than
the Servicer and promptly cause the Trustee to transfer all funds in the
Certificate Account to such new account, which shall thereafter be deemed the
Certificate Account for the purposes hereof.
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ARTICLE VIII
PAYMENTS
--------
SECTION 8.01. Monthly Payments.
----------------
a. Subject to the terms of this Article VIII, each Holder of a Certificate
or Class C Certificate as of a Record Date shall be paid on the next succeeding
Payment Date by check mailed to such Certificateholder or Class C
Certificateholder at the address for such Certificateholder or Class C
Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates of a Class with an aggregate Percentage
Interest of at least 5% of such Class and so requests, by wire transfer pursuant
to instructions delivered to the Trustee at least 10 days prior to such Payment
Date), the sum equal to such Certificateholder's or Class C Certificateholder's
Percentage Interest of the Class A-1 Distribution Amount, the Class A-2
Distribution Amount, the Class A-3 Distribution Amount, the Class A-4
Distribution Amount, the Class A-5 Distribution Amount, the Class M-1
Distribution Amount, the Class M-2 Distribution Amount, the Class B-1
Distribution Amount, the Class B-2 Distribution Amount and the Class C
Distribution Amount, as applicable. Final payment of any Certificate or the
Class C Certificate shall be made only upon presentation and surrender of such
Certificate or Class C Certificate at the office or agency of the Paying Agent.
b. Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing
such distribution to the Certificate Owners that it represents and to each
indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate are
to be made by the Depository and the Depository Participants in accordance with
the provisions of the Book-Entry Certificates. Neither the Trustee, the
Certificate Registrar, the Seller nor the Originator shall have any
responsibility therefor except as otherwise provided by applicable law. To the
extent applicable and not contrary to the rules of the Depository, the Trustee
shall comply with the provisions of the form of the Certificates as set forth in
Exhibits A through C hereto, and the Class C Certificate as set forth in Exhibit
I hereto.
c. The Trustee shall either act as the paying agent or appoint an Eligible
Institution to be the paying agent (in either such case, the "Paying Agent") to
make the payments to the Certificateholders and the Class C Certificateholder
required hereunder. The Trustee's corporate trust operations department, with
an office at 180 East Fifth Street, Third Floor, St. Paul, Minnesota 55101,
Attention: Tamara Schultz-Fugh, shall initially act as Paying Agent. The
Trustee shall require the Paying Agent (if other than the Trustee) to agree in
writing that all amounts held by the Paying Agent for payment hereunder will be
held in trust for the benefit of the Certificateholders and the Class C
Certificateholder and that it will notify the Trustee of any failure by the
Servicer to make funds available to the Paying Agent for the payment of amounts
due on the Certificates and the Class C Certificate.
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<PAGE>
SECTION 8.02. Advances.
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a. Not later than one Business Day following the Determination Date, the
Servicer shall advance all Delinquent Payments for the immediately preceding Due
Period by depositing the aggregate amount of such Delinquent Payments in the
Certificate Account; provided, however, that the Servicer shall be obligated to
advance Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such Advances from funds subsequently
available therefor in the Certificate Account in accordance with Section
8.04(b). If the Servicer fails to advance all Delinquent Payments required
under this Section 8.02, the Trustee shall be obligated to advance such
Delinquent Payments pursuant to Section 11.15.
b. The Servicer shall be entitled to reimbursement of an Advance from
subsequent funds available therefor in the Certificate Account in accordance
with Section 8.04(b).
SECTION 8.03. [RESERVED]
----------
SECTION 8.04. Permitted Withdrawals from the Certificate Account;
---------------------------------------------------
Payments.
--------
a. The Trustee shall, from time to time as provided herein, make
withdrawals from the Certificate Account of amounts deposited in said account
pursuant to Section 5.05 that are attributable to the Loans for the following
purposes:
(i) to make payments in the amounts and in the manner provided for
in Section 8.04(b);
(ii) to pay to the Originator with respect to each Loan or property
acquired in respect thereof that has been repurchased or replaced pursuant
to Section 3.06, all amounts received thereon and not required to be
distributed to Certificateholders as of the date on which the related
Scheduled Principal Balance or Repurchase Price is determined;
(iii) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it and not otherwise reimbursed, to the
extent such reimbursement is permitted pursuant to Section 5.08;
(iv) to withdraw any amount deposited in the Certificate Account that
was not required to be deposited therein; or
(v) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (iii), the
Servicer's entitlement thereto is limited to collections or other recoveries on
the related Loan, the Servicer shall keep and maintain separate accounting, on a
Loan by Loan basis, for the purpose of justifying any withdrawal from the
Certificate Account pursuant to such clause.
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<PAGE>
b. On each Payment Date, the Trustee shall apply the Amount Available for
such Payment Date, to make payment in the following order of priority, subject
to Section 8.04(c) and the last sentence of this Section 8.04(b):
(1) to pay the Monthly Servicing Fee and any other compensation owed
to the Servicer pursuant to Section 7.03;
(2) to pay the Class A Formula Interest Distribution Amount to the
Class A Certificateholders as follows:
(i) the amount in clause (a)(i) of the definition of Class A
Formula Distribution Amount to the Class A-1 Certificateholder; the
amount in clause (a)(ii) of the definition of Class A Formula
Distribution Amount to the Class A-2 Certificateholders; the amount in
clause (a)(iii) of the definition of Class A Formula Distribution
Amount to the Class A-3 Certificateholders; the amount in clause
(a)(iv) of the definition of Class A Formula Distribution Amount to
the Class A-4 Certificateholders; the amount in clause (a)(v) of the
definition of Class A Formula Distribution Amount to the Class A-5
Certificateholders; or, if the Amount Available is less than the
amount necessary to pay all Class A Formula Interest Distribution
Amounts, to each Class of Class A Certificates pro rata in accordance
with its respective entitlement to interest; and
(ii) to each Class of Class A Certificates the amount, if any, of
the Unpaid Class A Interest Shortfall of such Class or, if the
remaining Amount Available is less than the amount necessary to pay
all Unpaid Class A Interest Shortfalls, pro rata to each Class of
Class A Certificates based on the Unpaid Class A Interest Shortfall of
each such Class;
(3) after payment of the amounts specified in clauses (1) and (2)
above, to the Class M-1 Certificateholders the Class M-1 Formula Interest
Distribution Amount;
(4) after payment of the amounts specified in clauses (1) through (3)
above, to the Class M-2 Certificateholders the Class M-2 Formula Interest
Distribution Amount;
(5) after payment of the amounts specified in clauses (1) through (4)
above, to the Class B-1 Certificateholders the Class B-1 Formula Interest
Distribution Amount;
(6) after payment of the amounts specified in clauses (1) through (5)
above, to the Class B-2 Certificateholders the Class B-2 Formula Interest
Distribution Amount;
(7) after payment of the amounts specified in clauses (1) through (6)
above, to pay principal in respect of the Class A Certificates as follows:
(i) if there is a Class A Principal Deficiency Amount for such
Payment Date, the remaining Amount Available pro rata to each Class of
Class A Certificates based on the Class Principal Balance of each
Class; and
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(ii) if there is no Class A Principal Deficiency Amount for such
Payment Date, the remaining Amount Available up to the Class A Formula
Principal Distribution Amount as follows:
(A) to the Class A-1 Certificateholders, the Class A Formula
Principal Distribution Amount, but in no event more than is
necessary to reduce the Class A-1 Principal Balance to zero;
(B) to the Class A-2 Certificateholders, any remaining Class
A Formula Principal Distribution Amount, but in no event more
than is necessary to reduce the Class A-2 Principal Balance to
zero;
(C) to the Class A-3 Certificateholders, any remaining Class
A Formula Principal Distribution Amount, but in no event more
than is necessary to reduce the Class A-3 Principal Balance to
zero;
(D) to the Class A-4 Certificateholders, any remaining Class
A Formula Principal Distribution Amount, but in no event more
than is necessary to reduce the Class A-4 Principal Balance to
zero; and
(E) to the Class A-5 Certificateholders, any remaining Class
A Formula Principal Distribution Amount, but in no event more
than is necessary to reduce the Class A-5 Principal Balance to
zero;
(8) after payment of the amounts specified in clauses (1) through (7)
above, to the Class M-1 Certificateholders the Class M-1 Formula Principal
Distribution Amount;
(9) after payment of the amounts specified in clauses (1) through (8)
above, to the Class M-2 Certificateholders the Class M-2 Formula Principal
Distribution Amount;
(10) after payment of the amounts specified in clauses (1) through (9)
above, to the Class B-1 Certificateholders the Class B-1 Formula Principal
Distribution Amount;
(11) after payment of the amounts specified in clauses (1) through
(10) above, to the Class B-2 Certificateholders the Class B-2 Formula
Principal Distribution Amount;
(12) after payment of the amounts specified in clauses (1) through
(11) above, to the Class M-1 Certificateholders the Class M-1 Formula
Liquidation Loss Interest Amount;
(13) after payment of the amounts specified in clauses (1) through
(12) above, to the Class M-2 Certificateholders the Class M-2 Formula
Liquidation Loss Interest Amount;
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(14) after payment of the amounts specified in clauses (1) through
(13) above, to the Class B-1 Certificateholders the Class B-1 Formula
Liquidation Loss Interest Amount;
(15) after payment of the amounts specified in clauses (1) through
(14) above, to the Class B-2 Certificateholders the Class B-2 Formula
Liquidation Loss Interest Amount;
(16) after payment of the amounts specified in clauses (1) through
(15) above, to reimburse the Servicer or the Trustee, as applicable, for
any unreimbursed Advances made with respect to the Loans in respect of
current or prior Payment Dates;
(17) after payment of the amounts specified in clauses (1) through
(16) above, to reimburse the Class C Certificateholder for expenses
incurred by and reimbursable to it pursuant to Section 10.06;
(18) after payment of the amounts specified in clauses (1) through
(17) above, to pay the remainder, if any, of the Amount Available to the
Class C Certificateholder.
If the Trustee shall not have received the applicable Monthly Report by any
Payment Date, the Trustee shall, in accordance with this Section 8.04(b),
distribute all funds then in the Certificate Account to Certificateholders, to
the extent of such funds, on such Payment Date.
c. Notwithstanding the priorities set forth above, any Pre-Funded Amount
deposited in the Certificate Account shall be applied solely to pay principal of
the Class A Certificates until reduced to zero, then to the Class M-1, Class M-
2, Class B-1 and Class B-2 Certificates in that order of priority.
SECTION 8.05. Reassignment of Repurchased and Replaced Loans. Upon
----------------------------------------------
receipt by the Trust, by deposit in the Certificate Account, of the Repurchase
Price under Section 3.06(a), or upon receipt by the Trust of an Eligible
Substitute Loan under Section 3.06(b) and receipt by the Trust, by deposit in
the Certificate Account, of any additional amount under Section 3.06(b)(vi), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as Exhibit J-1 or J-2, as applicable, the Trustee shall convey and assign to the
Originator all of the Certificateholders' right, title and interest in the
repurchased Loan or Replaced Loan without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Trustee. Upon such deposit of the Repurchase
Price or receipt of such Eligible Substitute Loan and related deposit of any
additional amount under Section 3.06(b)(vi), the Servicer shall be deemed to
have released any claims to such Loan as a result of Advances with respect to
such Loan.
SECTION 8.06. Class C Certificateholder's Purchase Option.
-------------------------------------------
a. The Class C Certificateholder shall, subject to subsection (b) hereof,
have the option to purchase all of the Loans and all property acquired in
respect of any Loan remaining in
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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 Loan (other
than any Loan as to which title to the underlying property has been
acquired and whose fair market value is included pursuant to clause (y)
below), together with accrued and unpaid interest on each such Loan at a
rate per annum equal to the Weighted Average Pass-Through Rate, plus (y)
the fair market value of such acquired property (as reasonably determined
by the Servicer as of the close of business on the third Business Day
preceding the date of such purchase), and
(ii) the Aggregate Certificate Principal Balance as of the date of
such purchase (less any amounts on deposit in the Certificate Account on
such purchase date and representing payments of principal in respect of the
Loans) plus an amount necessary to pay the Class A Formula Interest
Distribution Amount, the Class M-1 Formula Interest Distribution Amount,
the Class M-1 Formula Liquidation Loss Interest Distribution Amount, the
Class M-2 Formula Interest Distribution Amount, the Class M-2 Formula
Liquidation Loss Interest Distribution Amount, the Class B-1 Formula
Interest Distribution Amount, the Class B-1 Formula Liquidation Loss
Interest Distribution Amount, the Class B-2 Formula Interest Distribution
Amount and the Class B-2 Formula Liquidation Loss Interest Distribution
Amount due on the Payment Date occurring in the calendar month following
such purchase date (less any amounts on deposit in the Certificate Account
on such purchase date and representing payments of interest in respect of
the Loans at a rate per annum equal to the Weighted Average Pass-Through
Rate).
b. The purchase by the Class C Certificateholder of all of the Loans
pursuant to this Section 8.06 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) such purchase being made pursuant to a plan of complete
liquidation in accordance with Section 860F of the Code, as provided
in Section 12.04, and
(iii) the Class C Certificateholder having provided the Trustee
and the Depository (if any) with at least 30 days' written notice.
If such option is exercised, the Class C Certificateholder shall provide to the
Trustee (at the Class C Certificateholder's expense) the certification required
by Section 12.04, which certificate shall constitute a plan of complete
liquidation within the meaning of Section 860F of the Code, and the Trustee
shall promptly sign such certification and release to the Class C
Certificateholder the Loan Files pertaining to the Loans being purchased.
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<PAGE>
c. The Class C Certificateholder may assign its rights under this Section
8.06, separately from its other rights as Holder of the Class C 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 8.06(a).
d. The Servicer shall notify the Trustee and the Class C
Certificateholder (whether or not the Class C Certificateholder has then
assigned its rights under this Section 8.06 pursuant to subsection (c)) no later
than two Business Days after the Determination Date relating to the first Due
Period which includes the date on which the Pool Scheduled Principal Balance
first becomes less than 20% of the Cut-off Date Pool Principal Balance, to the
effect that the Pool Scheduled Principal Balance is then less than 20% of the
Cut-off Date Pool Principal Balance.
e. If the Class C Certificateholder (or its assignee) has not delivered
to the 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 the Class A-5 Pass-Through Rate will increase to a floating rate equal to
the Expense Adjusted Weighted Average Loan Rate, but in no event greater than
9.02%.
SECTION 8.07. Pre-Funding Account.
-------------------
a. On or before the Closing Date, the Trustee shall establish the Pre-
Funding Account on behalf of the Trust, which must be an Eligible Account, and
shall deposit therein the amount received from the Seller pursuant to Section
2.02(l). The Pre-Funding Account shall be entitled "Pre-Funding Account, U.S.
Bank Trust National Association as Trustee for the benefit of holders of Home
Improvement Loan Certificates, Series 2000-E." Funds deposited in the Pre-
Funding Account shall be held in trust by the Trustee for the Holders of the
Certificates and the Class C Certificate for the uses and purposes set forth
herein.
b. On or before the Closing Date the Originator shall deposit in the Pre-
Funding Account the amount specified in Section 2.02(l). Amounts on deposit in
such account shall be withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall withdraw from
the Pre-Funding Account an amount equal to 100% of the Cut-off Date
Principal Balance of each Subsequent Loan transferred and assigned to the
Trustee on such Subsequent Transfer Date and pay such amount to or upon the
order of the Originator upon satisfaction of the conditions set forth in
Section 2.03(b) with respect to such transfer and assignment.
(ii) On the Business Day immediately preceding the Post-Funding
Payment Date, the Trustee shall deposit into the Certificate Account any
amounts remaining in the Pre-Funding Account, net of investment earnings.
c. The Pre-Funding Account shall be part of the Trust but not part of the
REMIC. The Trustee on behalf of the Trust shall be the legal owner of the Pre-
Funding Account. The
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<PAGE>
Seller shall be the beneficial owner of the Pre-Funding Account, subject to the
foregoing power of the Trustee to transfer amounts in the Pre-Funding Account to
the Certificate Account. Funds in the Pre-Funding Account shall, at the
direction of the Servicer, be invested in Eligible Investments of the kind
described in clauses (i) and (ii)(A) of the definition of "Eligible Investments"
and that mature no later than the Business Day prior to the next succeeding
Payment Date. All amounts earned on deposits in the Pre-Funding Account shall be
taxable to the Seller. The Trustee shall release to the Seller all investment
earnings in the Pre-Funding Account on the first Payment Date after the end of
the Pre-Funding Period.
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<PAGE>
ARTICLE IX
THE CERTIFICATES AND THE CLASS C CERTIFICATE
--------------------------------------------
SECTION 9.01. The Certificates and the Class C Certificate. The Class A,
--------------------------------------------
the Class M and the Class B Certificates and the Class C Certificate shall be
substantially in the forms set forth in Exhibits A, B, C and I, as applicable,
and shall, on original issue, be executed by the Trustee on behalf of the Trust
to or upon the order of the Originator. The Class A, the Class M and the Class B
Certificates shall be evidenced by (i) one or more Class A-1 Certificates
evidencing $114,800,000 in Original Class A-1 Principal Balance, (ii) one or
more Class A-2 Certificates evidencing $31,500,000 in Original Class A-2
Principal Balance, (iii) one or more Class A-3 Certificates evidencing
$43,000,000 in Original Class A-3 Principal Balance, (iv) one or more Class A-4
Certificates evidencing $33,400,000 in Original Class A-4 Principal Balance, (v)
one or more Class A-5 Certificates evidencing $33,050,000 in Original Class A-5
Principal Balance, (vi) one or more Class M-1 Certificates evidencing
$18,600,000 in Original Class M-1 Principal Balance, (vii) one or more Class M-2
Certificates evidencing $7,800,000 in Original Class M-2 Principal Balance,
(viii) one or more Class B-1 Certificates evidencing $7,350,000 in Original
Class B-1 Principal Balance, and (ix) one or more Class B-2 Certificates
evidencing $10,500,000 in Original Class B-2 Principal Balance, beneficial
ownership of such Classes of Certificates (other than the Class B-2 Certificate)
to be held through Book-Entry Certificates in minimum dollar denominations of
$1,000 and integral multiples of $1.00 in excess thereof. The Class B-2
Certificate shall be evidenced by a single Class B-2 Certificate issued on the
Closing Date to the Seller or its designee, but beneficial ownership of the
Class B-2 Certificate may in connection with any transfer thereof (subject to
the conditions set forth in Section 9.02(b)(1) be thereafter held through Book-
Entry Certificates. The Class C Certificate shall be evidenced by a single Class
C Certificate issued on the Closing Date to the Seller or its designee and shall
represent 100% of the Percentage Interest of the Class C Certificate.
The Certificates and the Class C Certificate shall be executed by manual
signature on behalf of the Trustee by a duly authorized Responsible Officer or
authorized signatory. Certificates or the Class C Certificate bearing the
signatures of individuals who were at any time the proper officers of the
Trustee shall bind the Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificate or Class C Certificate, or did not hold such offices at the
date of such Certificates or Class C Certificate. No Certificate or Class C
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate or Class C Certificate has been
executed by manual signature in accordance with this Section, and such signature
upon any Certificate or Class C Certificate shall be conclusive evidence, and
the only evidence, that such Certificates or Class C Certificate has been duly
executed and delivered hereunder. All Certificates and the Class C Certificate
shall be dated the date of their execution, except for those Certificates and
the Class C Certificate executed on the Closing Date, which shall be dated the
Closing Date.
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<PAGE>
SECTION 9.02. Registration of Transfer and Exchange of Certificates and
---------------------------------------------------------
the Class C Certificate.
-----------------------
a. The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.03 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and the Class C Certificate
and of transfers and exchanges of Certificates and the Class C Certificate as
herein provided. The Trustee initially appoints itself to be the "Certificate
Registrar" and transfer agent for the purpose of registering Certificates and
the Class C Certificate and transfers and exchanges of Certificates and the
Class C Certificate as provided herein. The Trustee will give prompt written
notice to Certificateholders, the Class C Certificateholder and the Servicer of
any change in the Certificate Registrar.
b. (1) Subject to clauses (2) and (3) below, no transfer of a Class B-2
or Class C Certificate shall be made by the Seller 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, is
made in accordance with the Act and laws or, with respect to a Class B-2
Certificate, is made in reliance on Rule 144A under the Act to a QIB that is
acquiring such Class B-2 Certificate for its own account or for the account of
another QIB. In the event that any such transfer is to be made, (A) the
Originator may require a written Opinion of Counsel acceptable to and in form
and substance satisfactory to the Originator that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from the Act and laws or is being made pursuant to the Act and laws,
which Opinion of Counsel shall not be an expense of the Trustee or the
Originator, (B) the Trustee shall require the transferee to execute an
investment letter substantially in the form of Exhibit K attached hereto, which
investment letter shall not be an expense of the Trustee or the Originator and
(C) with respect to a transfer of a Class B-2 Certificate, (i) a certificate
from the transferor desiring to effect such transfer substantially in the form
attached as Exhibit Q-1 hereto or such other certification reasonably acceptable
to the Trustee and (ii) a certificate from the prospective transferee
substantially in the form attached as Exhibit Q-2 hereto or such other
certification reasonably acceptable to the Trustee. If the Class B-2 Certificate
is a Book-Entry Certificate, the transferor will be deemed to have made as of
the transfer date each of the representations and warranties set forth on
Exhibit Q-1 hereto in respect of such Certificate and the transferee will be
deemed to have made as of the transfer date each of the representations and
warranties set forth on Exhibit Q-2 hereto in respect of such Certificate, in
each case as if such Certificate were evidenced by a Definitive Certificate. The
Class B-2 or Class C Certificateholder desiring to effect such transfer shall,
and does hereby agree to, indemnify the Trustee, the Originator and the
Certificate Registrar against any liability that may result if the transfer is
not so exempt, is not made in accordance with such federal and state laws or is
not in compliance with Rule 144A.
(2) No transfer of a Class A (prior to the adoption by the Department
of Labor, in substantially the form proposed, of an amendment to prohibited
transaction exemptions as proposed on August 16, 2000) Class M, Class B or Class
C Certificate or any interest therein shall be made to any employee benefit plan
that is subject to ERISA, or that is described in Section 4975(e)(1) of the Code
or to any person or entity purchasing on behalf of, or with assets of, such an
employee benefit plan (each, a "Plan"), unless the Plan, at its expense,
delivers to the Originator and the Trustee, an Opinion of Counsel in form
satisfactory to the Originator and the
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<PAGE>
Trustee that the purchase and holding of such Certificate or Class C Certificate
by such Plan will not result in the assets of the Trust being deemed to be "plan
assets" and subject to the prohibited transaction provisions of ERISA and the
Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in this
Agreement. Unless such opinion is delivered and in the case of Book-Entry
Certificates, each person acquiring such a Certificate or Class C Certificate
will be deemed to represent to the Trustee, the Originator, the Seller and the
Servicer either (i) that such person is neither a Plan, nor acting on behalf of
a Plan, subject to ERISA or to Section 4975 of the Code, or (ii) that the
purchase and holding of the Certificate or Class C Certificate by such Plan will
not result in the assets of the Trust being deemed to be Plan assets and subject
to the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee, the Originator or the Servicer to any obligation or
liability in addition to those undertaken in this Agreement. The provisions
contained in this Section 9.02(b)(2) shall no longer apply to the Class A
Certificates if the Seller or the Servicer delivers to the Trustee an Officer's
Certificate stating that amendments proposed by the United States Department of
Labor (the "DOL") to be made to Prohibited Transaction Exemption 89-90, 54 Fed.
Reg. 42,581 (198), as amended by PTE 97-34, 62 Fed. Reg. 39021 (July 21, 1997)
and similar exemptions have been published in final form substantially as
proposed in the DOL Exemption Application No. D-10809, 65 Fed. Reg. 51454
(August 23, 2000).
(3) Notwithstanding anything to the contrary contained herein, (A)
no Class C Certificate, nor any interest therein, shall be transferred, sold or
otherwise disposed of to a "disqualified organization," within the meaning of
Section 860E(e)(5) of the Code (a "Disqualified Organization"), including, but
not limited to, (i) the United States, a state or political subdivision thereof,
a foreign government, an international organization or an agency or
instrumentality of any of the foregoing, (ii) an organization (other than a
cooperative described in Section 521 of the Code) which is exempt from the taxes
imposed by Chapter 1 of the Code and not subject to the tax imposed on unrelated
business income by Section 511 of the Code, or (iii) a cooperative described in
Section 1381(a)(2)(C) of the Code, and (B) prior to any registration of any
transfer, sale or other disposition of a Class C Certificate, the proposed
transferee shall deliver to the Trustee, under penalties of perjury, an
affidavit that such transferee is not a Disqualified Organization, with respect
to which the Trustee shall have no actual knowledge that such affidavit is
false, and the transferor and the proposed transferee shall each deliver to the
Trustee an affidavit with respect to any other information reasonably required
by the Trustee pursuant to the REMIC Provisions, including, without limitation,
information regarding the transfer of noneconomic residual interests and
transfers of any residual interest to or by a foreign person; provided, however,
that, upon the delivery to the Trustee of an Opinion of Counsel, in form and
substance satisfactory to the Trustee and rendered by Independent counsel, to
the effect that the beneficial ownership of a Class C Certificate by any
Disqualified Organization will not result in the imposition of federal income
tax upon the Trust or any Certificateholder or Class C Certificateholder or any
other person or otherwise adversely affect the status of the Trust as a REMIC,
the foregoing prohibition on transfers, sales and other dispositions, as well as
the foregoing requirement to deliver a certificate prior to any registration
thereof, shall, with respect to such Disqualified Organization, terminate.
Notwithstanding any transfer, sale or other disposition of a Class C
Certificate, or any interest therein, to a Disqualified Organization or the
registration thereof in the Certificate Register, such transfer, sale or other
disposition and any
9-3
<PAGE>
registration thereof, unless accompanied by the Opinion of Counsel described in
the preceding sentence, shall be deemed to be void and of no legal force or
effect whatsoever and such Disqualified Organization shall be deemed not to be a
Class C Certificateholder for any purpose hereunder, including, but not limited
to, the receipt of distributions on a Class C Certificate, and shall be deemed
to have no interest whatsoever in a Class C Certificate. Each Class C
Certificateholder, by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 9.02(b)(3).
(4) Any transfer, sale or other disposition not in compliance with
the provisions of this Section 9.02(b) shall be deemed to be void and of no
legal force or effect whatsoever and such transferee shall be deemed not to be
the Certificateholder or Class C Certificateholder, as applicable, for any
purpose hereunder, including, but not limited to, the receipt of distributions
on the Certificate or Class C Certificate, and shall be deemed to have no
interest whatsoever in the Certificate or Class C Certificate.
(5) The Trustee shall give notice to the Rating Agencies promptly
following any transfer, sale or other disposition of a Class C Certificate.
c. At the option of a Certificateholder or a Class C Certificateholder,
Certificates and the Class C Certificate may be exchanged for other Certificates
or Class C Certificate of authorized denominations of a like aggregate original
denomination, upon surrender of such Certificates or the Class C Certificate to
be exchanged at the Corporate Trust Office. Whenever any Certificates or the
Class C Certificate are so surrendered for exchange, the Trustee shall execute
and deliver the Certificates or Class C Certificate which the Certificateholder
or Class C Certificateholder making the exchange is entitled to receive. Every
Certificate or Class C Certificate presented or surrendered for transfer or
exchange shall be duly endorsed by, or shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by, the holder thereof or his or her attorney duly
authorized in writing.
d. Except as provided in paragraph (e) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of such Certificates may not be
transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such Certificates; (iii) ownership
and transfers of registration of such Certificates on the books of the
Depository shall be governed by applicable rules established by the Depository;
(iv) the Depository may collect its usual and customary fees, charges and
expenses from its Depository Participants; (v) the Trustee shall deal with the
Depository, Depository Participants and indirect participating firms as
representatives of the Certificate Owners of such Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representatives shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
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<PAGE>
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
e. If (x)(i) the Seller or the Depository advises the Trustee in writing
that the Depository is no longer willing or able properly to discharge its
responsibilities as Depository and (ii) the Trustee or the Originator is unable
to locate a qualified successor or (y) the Originator at its sole option advises
the Trustee in writing that it elects to terminate the book-entry system through
the Depository, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Depository, accompanied by registration instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Originator nor the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Certificates all references herein to obligations imposed upon or to be
performed by the Depository shall be deemed to be imposed upon and performed by
the Trustee, to the extent applicable with respect to such Definitive
Certificates and the Trustee shall recognize the Holders of the Definitive
Certificates as Certificateholders hereunder.
f. On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one Class M-1
Certificate, one Class M-2 Certificate, and one Class B-1 Certificate, each in
registered form registered in the name of the Depository's nominee, Cede & Co.,
the total face amount of which represents 100% of the Original Class Principal
Balance of each Class, respectively. At any time after the Closing Date, if so
requested by the Class B-2 Certificateholder in connection with the transfer of
the Class B-2 Certificates, there shall be delivered to the Depository one Class
B-2 Certificate in registered form registered in the name of the Depository's
nominee, Cede & Co., the total face amount of which represents the Original
Class B-2 Principal Balance. Each such Certificate registered in the name of the
Depository's nominee shall bear the following legend:
"Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
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<PAGE>
g. Each of the Certificates and the Class C Certificate shall be a
"security" for purposes of Section 8-102(a)(15) of the Uniform Commercial Code
and shall be governed by such Article 8 as in effect in the State of Minnesota
from time to time.
SECTION 9.03. No Charge; Disposition of Void Certificates or Class C
------------------------------------------------------
Certificate. No service charge shall be made to a Certificateholder or Class C
-----------
Certificateholder for any transfer or exchange of a Certificate or a Class C
Certificate, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of a Certificate or a Class C
Certificate. All Certificates and Class C Certificate surrendered for transfer
and exchange shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or Class C
------------------------------------------------------------
Certificate. If (a) any mutilated Certificate or Class C Certificate is
-----------
surrendered to the Certificate Registrar, or the Certificate Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate or Class C Certificate, and (b) there is delivered to the
Certificate Registrar and the Trustee such security or indemnity as may be
required by each to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate or Class C
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate or Class C Certificate, a new Certificate
or Class C Certificate of like tenor and original denomination. Upon the
issuance of any new Certificate or Class C Certificate under this Section 9.04,
the Trustee may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate or Class C Certificate
issued pursuant to this Section 9.04 shall constitute complete and indefeasible
evidence of ownership of the Percentage Interest, as if originally issued,
whether or not the mutilated, destroyed, lost or stolen Certificate or Class C
Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate or Class C Certificate for registration of transfer, the Servicer,
the Seller, the Trustee, the Paying Agent and the Certificate Registrar may
treat the person in whose name any Certificate or Class C Certificate is
registered as the owner of such Certificate or Class C Certificate for the
purpose of receiving remittances pursuant to Section 8.01 and for all other
purposes whatsoever, and none of the Servicer, the Seller, the Trustee, the
Certificate Registrar, the Paying Agent or any agent of the Servicer, the
Seller, the Trustee, the Paying Agent or the Certificate Registrar shall be
affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' and Class C
-------------------------------------------------
Certificateholder's Names and Addresses. The Certificate Registrar will furnish
---------------------------------------
to the Trustee and the Servicer, within five days after receipt by the
Certificate Registrar of a request therefor from the Trustee in writing, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Certificateholders and the Class C Certificateholder as of the most
recent Record Date. If Holders of Certificates representing, in the aggregate,
25% or more of the Aggregate Certificate Principal Balance apply in writing to
the Trustee (hereinafter referred to as "Applicants"), and such application
states that the Applicants desire to communicate with other Certificateholders
or
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<PAGE>
the Class C Certificateholder with respect to their rights under this Agreement
or under the Certificates or the Class C Certificate and is accompanied by a
copy of the communication which such Applicants propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such application,
afford such Applicants access during normal business hours to the most recent
list of Certificateholders and the Class C Certificateholder held by the
Trustee. If such list is as of a date more than 90 days prior to the date of
receipt of such Applicants' request, the Trustee shall promptly request from the
Certificate Registrar a current list as provided above, and shall afford such
Applicants access to such list promptly upon receipt. Every Certificateholder
and the Class C Certificateholder, by receiving and holding a Certificate or a
Class C Certificate, agrees with the Certificate Registrar and the Trustee that
none of the Originator, the Certificate Registrar or the Trustee shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Certificateholders or the Class C Certificateholder
hereunder, regardless of the source from which such information was derived.
SECTION 9.07. Authenticating Agents. The Trustee may appoint one or more
---------------------
Authenticating Agents with power to act on its behalf and subject to its
direction in the execution and delivery of the Certificates or the Class C
Certificate. For all purposes of this Agreement, the execution and delivery of
Certificates or the Class C Certificate by the Authenticating Agent pursuant to
this Section shall be deemed to be the execution and delivery of Certificates or
the Class C Certificate "by the Trustee."
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<PAGE>
ARTICLE X
INDEMNITIES
-----------
SECTION 10.01. Real Estate. The Seller and Originator will jointly and
-----------
severally defend and indemnify the Trust, the Trustee (including the Custodian
and any other agents of the Trustee) and the Certificateholders and the Class C
Certificateholder against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation arising out of or resulting from the use or ownership of any real
estate related to a Loan by the Originator or the Servicer or any Affiliate of
either. 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 10.02. Liabilities to Obligors. No obligation or liability to any
-----------------------
Obligor under any of the Loans is intended to be assumed by the Trust, the
Certificateholders or the Class C Certificateholder under or as a result of this
Agreement and the transactions contemplated hereby and, to the maximum extent
permitted and valid under mandatory provisions of law, the Trust, the
Certificateholders and the Class C Certificateholder expressly disclaim such
assumption.
SECTION 10.03. Tax Indemnification. The Originator agrees to pay, and to
-------------------
indemnify, defend and hold harmless the Trust, the Trustee (including the
Custodian and any other agents of the Trustee), the Certificateholders and the
Class C Certificateholder from, any taxes which may at any time be asserted with
respect to, and as of the date of, the transfer of the Loans to the Trust,
including, without limitation, any sales, gross receipts, general corporation,
personal property, privilege or license taxes (but not including any federal,
state or other taxes arising out of the creation of the Trust and the issuance
of the Certificates and the Class C Certificate) and costs, expenses and
reasonable counsel fees in defending against the same, whether arising by reason
of the acts to be performed by the Originator, the Seller, the Servicer or the
Trustee under this Agreement or imposed against the Trust, a Certificateholder,
the Class C Certificateholder or otherwise.
SECTION 10.04. Servicer's Indemnities. The Servicer shall defend and
----------------------
indemnify the Trust, the Trustee (including the Custodian and any other agents
of the Trustee), the Certificateholders and the Class C Certificateholder
against any and all costs, expenses, losses, damages, claims and liabilities,
including reasonable fees and expenses of counsel and expenses of litigation, in
respect of any action taken or omitted to be taken by the Servicer with respect
to any Loan. This indemnity shall survive any Service Transfer (but the
original Servicer's obligations under this Section 10.04 shall not relate to any
actions of any subsequent Servicer after a Service Transfer) and any payment of
the amount owing under, or any repurchase by the Originator of, any such Loan.
SECTION 10.05. Operation of Indemnities. Indemnification under this
------------------------
Article shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Originator or the Servicer has made
any indemnity payments to the Trustee pursuant to this
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<PAGE>
Article and the Trustee thereafter collects any of such amounts from others, the
Trust will repay such amounts collected to the Originator or the Servicer, as
the case may be, without interest.
SECTION 10.06. REMIC Tax Matters. If a Class C Certificateholder,
-----------------
pursuant to Section 6.06, pays any taxes or charges imposed upon the Trust as a
REMIC or otherwise, such taxes or charges, except to the extent set forth in the
following proviso, shall be expenses and costs of the Trust and the Class C
Certificateholder shall be entitled to be reimbursed therefor out of the
Certificate Account as provided in Section 8.04; provided, however, that any
such taxes or charges shall not be expenses or costs of the Trust, nor will the
Class C Certificateholder be entitled to reimbursement therefor out of the
Certificate Account, if and to the extent that such taxes or charges resulted
from a failure (i) by the Originator, the Trustee or any Servicer to comply with
the provisions of Section 2.05, (ii) by any Servicer to comply with the
provisions of Section 6.06, or (iii) by the Trustee to execute any tax returns
pursuant to Section 11.11.
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<PAGE>
ARTICLE XI
THE TRUSTEE
-----------
SECTION 11.01. Duties of Trustee. The Trustee, prior to the occurrence of
-----------------
an Event of Termination and after the curing of all Events of Termination which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Termination has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however, that:
a. Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished
to the Trustee and conforming to the requirements of this Agreement;
b. The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
c. The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificateholders representing, in
the aggregate, 25% or more of the Aggregate Certificate Principal Balance
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
d. The Trustee shall not be charged with knowledge of any event
referred to in Section 7.01 unless a Responsible Officer of the Trustee at
the Corporate Trust Office obtains actual knowledge of such event or the
Trustee receives written notice of such
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<PAGE>
event from the Servicer or the Certificateholders representing, in the
aggregate, 25% or more of the Aggregate Certificate Principal Balance.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Originator, the Seller or the Servicer under
this Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement. The Trustee shall
not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as otherwise
-------------------------------------
provided in Section 11.01:
a. The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of a Servicing Officer, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
b. The Trustee may consult with counsel and any opinion of any
counsel for the Originator, the Seller or the Servicer shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by the Trustee hereunder in good faith and in
accordance with such Opinion of Counsel;
c. The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct
or defend any litigation hereunder or in relation hereto, at the request,
order or direction of any of the Certificateholders, pursuant to the
provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby;
provided, however, that nothing contained herein shall relieve the Trustee
of the obligations, upon the occurrence of an Event of Termination (which
has not been cured), to exercise such of the rights and powers vested in it
by this Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs;
d. Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing so to do by Certificateholders
representing, in the aggregate, 25% or more of the Aggregate Certificate
Principal Balance; provided, however, that if the payment within a
reasonable time to the Trustee
11-2
<PAGE>
of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to so proceeding.
The reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; and
e. The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions
of such agents, attorneys or custodians if appointed by it with due care
hereunder.
SECTION 11.03. Trustee Not Liable for Certificates, Class C Certificate or
-----------------------------------------------------------
Loans. The Trustee assumes no responsibility for the correctness of the
-----
recitals contained herein, in the Certificates or in the Class C Certificate
(other than the Trustee's execution thereof). The Trustee makes no
representations as to the validity or sufficiency of this Agreement, of the
Certificates or of the Class C Certificate (other than its execution thereof) or
of any Loan, Loan File or related document. The Trustee shall not be
accountable for the use or application by the Servicer, the Originator or the
Seller of funds paid to the Originator or the Seller, as applicable in
consideration of conveyance of the Loans to the Trust by the Originator and the
Seller or deposited in or withdrawn from the Certificate Account by the
Servicer.
SECTION 11.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or other capacity may become the owner or pledgee of Certificates
representing less than all the beneficial interest in the Trust with the same
rights as it would have if it were not Trustee.
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive
-----------------------------------------------------------
Events of Termination. Holders of Certificates representing, in the aggregate,
---------------------
25% or more of the Aggregate Certificate Principal Balance shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that, subject to Section 11.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided,
further that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction by the Certificateholders. Holders of the Certificates
representing, in the aggregate, 51% or more of the Aggregate Certificate
Principal Balance may on behalf of all Certificateholders waive any past Event
of Termination hereunder and its consequences, except a default in respect of a
covenant or provision hereof which under Section 12.07 cannot be modified or
amended without the consent of all Certificateholders, and upon any such waiver,
such Event of Termination shall cease to exist and shall be deemed to have been
cured for every purpose of this Agreement; but no such waiver shall extend to
any subsequent or other Event of Termination or impair any right consequent
thereon.
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<PAGE>
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses. The
-----------------------------------------------
Servicer agrees:
a. to pay to the Trustee reasonable compensation for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
b. except as otherwise expressly provided herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
c. to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the Trust and its duties hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The covenants in this Section 11.06 shall be for the benefit of the Trustee
in its capacities as Trustee, Paying Agent and Certificate Registrar hereunder,
and shall survive the termination of this Agreement.
SECTION 11.07. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any State, authorized
under such laws to exercise corporate trust powers, and shall have a combined
capital and surplus of at least $50,000,000 or shall be a member of a bank
holding system the aggregate combined capital and surplus of which is
$50,000,000, provided that the Trustee's separate capital and surplus shall at
all times be at least the amount required by Section 310(a)(2) of the Trust
Indenture Act of 1939, as amended. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of a
supervising or examining authority, then for the purposes of this Section 11.07,
the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In addition, the Trustee (or, if the Trustee is U.S. Bank
National Association, the parent company of U.S. Bank Trust National
Association) shall at all times have (a) a long-term deposit rating from S&P of
at least BBB or as shall be otherwise acceptable to S&P, (b) have a long-term
deposit rating from Moody's of at least Baa2 or as shall be otherwise acceptable
to Moody's and (c) a long-term deposit rating from Fitch of at least BBB or as
shall be otherwise acceptable to Fitch. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 11.07,
the Trustee shall resign immediately in the manner and with the effect specified
in Section 11.08.
SECTION 11.08. Resignation or Removal of Trustee. The Trustee may at any
---------------------------------
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer and the Originator. Upon receiving such notice
of resignation, the Originator shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which
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<PAGE>
instrument shall be delivered to each of the Servicer and the Originator and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.07 and shall fail to resign after written request
therefor by the Originator, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Originator may
remove the Trustee. If the Originator shall have removed the Trustee under the
authority of the immediately preceding sentence, the Originator shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.08 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.09.
SECTION 11.09. Successor Trustee. Any successor Trustee appointed as
-----------------
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Originator and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The predecessor Trustee shall deliver
or cause to be delivered to the successor Trustee the Loans and the Loan Files
and any related documents and statements held by it hereunder; and, if the Loans
are then held by a Custodian pursuant to a custodial agreement, the predecessor
Trustee and the Custodian shall amend such custodial agreement to make the
successor Trustee the successor to the predecessor Trustee thereunder; and the
Servicer, the Originator and the predecessor Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor Trustee all such
rights, powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this Section
11.09 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 11.09, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to the Rating Agencies and to each Certificateholder and
the Class C Certificateholder at their addresses as shown in the Certificate
Register. If the Servicer fails to mail such notice within ten days after
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Servicer.
11-5
<PAGE>
SECTION 11.10. Merger or Consolidation of Trustee. Any Person into which
----------------------------------
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 11.07,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Trustee shall promptly notify the Rating Agencies in the event it is a party to
any merger, conversion or consolidation.
SECTION 11.11. Tax Returns. Upon the Servicer's request, the Trustee will
-----------
furnish the Servicer with all such information as the Servicer may reasonably
require in connection with preparing all tax returns of the Trust and the
Trustee shall execute such returns.
SECTION 11.12. Obligor Claims. In connection with any offset defenses, or
--------------
affirmative claims for recovery, asserted in legal actions brought by Obligors
under one or more Loans based upon provisions therein complying with, or upon
other rights or remedies arising from, any legal requirements applicable to the
Loans, including, without limitation, the Federal Trade Commission's Trade
Regulation Rule Concerning Preservation of Consumers' Claims and Defenses (16
C.F.R. (S) 433) as amended from time to time:
a. The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a creditor, or a
joint venturer with or an Affiliate of, or acting in concert or cooperation
with, any home improvement lender, in the arrangement, origination or
making of Loans. The Trustee is the holder of the Loans only as trustee on
behalf of the Certificateholders and the Class C Certificateholder, and not
as a principal or in any individual or personal capacity;
b. The Trustee shall not be personally liable for or obligated to pay
Obligors any affirmative claims asserted thereby, or responsible to
Certificateholders or the Class C Certificateholder for any offset defense
amounts applied against Loan payments, pursuant to such legal actions;
c. The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to final judicial
orders or judgments, or judicially approved settlement agreements,
resulting from such legal actions;
d. The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors' legal
actions to recover affirmative claims against Certificateholders and the
Class C Certificateholder;
e. The Trustee will cooperate with and assist Certificateholders and
the Class C Certificateholder in their defense of legal actions by Obligors
to recover affirmative claims if such cooperation and assistance is not
contrary to the interests of the Trustee as a party to such legal actions
and if the Trustee is satisfactorily indemnified for all liability, costs
and expenses arising therefrom; and
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<PAGE>
f. The Originator hereby agrees to indemnify, hold harmless and
defend the Trustee, Certificateholders and the Class C Certificateholder
from and against any and all liability, loss, costs and expenses of the
Trustee, Certificateholders and the Class C Certificateholder resulting
from any affirmative claims for recovery asserted or collected by Obligors
under the Loans. Notwithstanding any other provision of this Agreement,
the obligation of the Originator under this Section 11.12(f) shall not
terminate upon a Service Transfer pursuant to Article VII.
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Loans or the Obligors, the Originator and the Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Originator and the Trustee may consider necessary or desirable.
If the Originator shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in case an Event of Termination
shall have occurred and be continuing, the Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.07 hereunder and no notice to Certificateholders or the Class C
Certificateholder of the appointment of co-trustee(s) or separate trustee(s)
shall be required under Section 11.09.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 11.13 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such co-trustee or separate trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee or separate
trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then co-trustees and separate trustees, as
effectively as if given to each of them. Every instrument appointing any co-
trustee or separate trustee shall refer to this Agreement and the conditions of
this Article XI. Each co-trustee and separate trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any
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lawful act under or in respect of this Agreement on its behalf and in its name.
If any co-trustee or separate trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties, rights, remedies and
trusts shall vest in and be exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
SECTION 11.14. Trustee and U.S. Bancorp. In the event the Trustee ceases
------------------------
to be a direct, wholly owned subsidiary of U.S. Bancorp, the Trustee shall
promptly notify the Rating Agencies.
SECTION 11.15. Trustee Advances.
----------------
a. If the Servicer fails to deposit into the Certificate Account Advances
as required by Section 8.02, then the Trustee shall, subject to the provisions
of paragraph (b) below, from its own funds, deposit into the Certificate Account
the amount not so deposited by the Servicer on or before the Business Day
preceding the related Payment Date (a "Trustee Advance").
b. The Trustee shall not be required to make any Trustee Advance if and to
the extent that it determines in good faith that the funds, if advanced, would
not be recoverable by it from subsequent amounts available in the Certificate
Account in accordance with Section 8.04(b).
c. The Trustee shall be entitled to reimbursement of a Trustee Advance
from funds subsequently available therefor in the Certificate Account in
accordance with Section 8.04(b).
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ARTICLE XII
MISCELLANEOUS
-------------
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties.
------------------------------------------------------
The Servicer shall not resign from the obligations and duties hereby imposed on
it except upon determination that the performance of its duties hereunder is no
longer permissible under applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel for the
Servicer to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the responsibilities and obligations of the Servicer in accordance with Section
7.03.
Notwithstanding the foregoing, Conseco Finance Corp., if it is the
Servicer, may delegate some or all of its servicing duties to a wholly owned
subsidiary of the Originator, for so long as said subsidiary remains, directly
or indirectly, a wholly owned subsidiary of Conseco Finance Corp.
Notwithstanding any such delegation, Conseco Finance Corp. shall retain all of
the rights and obligations of the Servicer hereunder.
SECTION 12.02. Conseco Finance Corp. and Seller Not to Engage in Certain
---------------------------------------------------------
Transactions with Respect to the Trust. Neither Conseco Finance Corp. nor the
--------------------------------------
Seller shall:
a. Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
b. Purchase any Certificates in an agency or trustee capacity; or
c. Loan any money to the Trust (other than Advances pursuant to
Section 8.02).
SECTION 12.03. Maintenance of Office or Agency. The Trustee will maintain
-------------------------------
in Minneapolis or St. Paul, Minnesota, an office or agency where Certificates or
the Class C Certificate may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee in respect of the
Certificates, the Class C Certificate and this Agreement may be served. On the
date hereof the Trustee's office for such purposes is located at 180 East 5th
Street, Second Floor, St. Paul, Minnesota 55101. The Trustee will give prompt
written notice to the Originator, the Seller, the Servicer, the
Certificateholders and the Class C Certificateholder of any change in the
location of the Certificate Register or any such office or agency.
SECTION 12.04. Termination.
-----------
a. The Trust created hereby and the respective obligations and
responsibilities of the Originator, the Seller, the Servicer and the Trustee
created hereby (other than the responsibility of the Trustee to make any final
distributions to Certificateholders and the Class C Certificateholder as set
forth below) shall terminate on the earlier of (a) the Payment Date on which the
principal balance of all of the Loans is reduced to zero; or (b) the Payment
Date
12-1
<PAGE>
occurring in the month following the sale of the Loans pursuant to Section
8.06; provided, that in no event shall the trust created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof, and provided, further, that
the Servicer's and the Originator's representations and warranties and
indemnities by the Originator and the Servicer shall survive termination. Any
termination of the Trust must be conducted so as to qualify as a "qualified
liquidation" of the REMIC within the meaning of the REMIC Provisions.
b. Notice of any termination, specifying the Final Payment Date (which
shall be a date that would otherwise be a Payment Date) upon which all
Certificateholders or the Class C Certificateholder may surrender their
Certificates or the Class C Certificate to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Trustee (upon
direction by the Servicer ten days prior to the date such notice is to be
mailed) by letter to each of the Rating Agencies, the Certificateholders and the
Class C Certificateholder mailed no later than the fifth Business Day of the
month of the Final Payment Date specifying (1) the Final Payment Date upon which
final payment on the Certificates and the Class C Certificate will be made upon
presentation and surrender of Certificates and the Class C Certificate at the
office or agency of the Trustee therein designated; (2) the amount of any such
final payment; and (3) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates and the Class C Certificate at the office or agency of the
Trustee therein specified. Any notice of sale of the Loans pursuant to Section
8.06 shall constitute the adoption by the Trustee on behalf of the
Certificateholders and the Class C Certificateholder of a plan of complete
liquidation within the meaning of Section 860F of the Code on the date such
notice is given when signed by the Trustee. Each such notice shall, to the
extent required by the REMIC Provisions or other applicable law, be signed on
behalf of the Trust by the Trustee. The Trustee shall give such notice to the
Certificate Registrar at the time such notice is given to the Certificateholders
and the Class C Certificateholder. In the event such notice is given in
connection with the sale of the Loans pursuant to Section 8.06, the Class C
Certificateholder or the Trustee, as applicable, shall deposit in the
Certificate Account on the Final Payment Date in immediately available funds an
amount equal to the purchase price specified in Section 8.06 and upon such
deposit the Certificateholders and the Class C Certificateholder will be
entitled to the amount of such purchase price but not amounts in excess thereof,
all as provided herein. Upon such final deposit, the Trustee shall promptly
release to the purchaser of the Loans pursuant to Section 8.06 the Loan Files
for the remaining Loans, and the Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
c. Upon presentation and surrender of the Certificates and the Class C
Certificate, the Trustee shall cause to be distributed from the Certificate
Account, in the following order of priority, to the Certificateholders and the
Class C Certificateholder on the Final Payment Date in proportion to their
respective Percentage Interests: (1) to the extent the Amount Available is
sufficient therefor, and in the order of priority provided for in Section
8.04(b), an amount equal to (i) as to Class A Certificates, the Class A
Principal Balance and, together with any Unpaid Class A Interest Shortfall and
one month's interest at the Pass-Through Rate for each Class of Class A
Certificates on the applicable Class Principal Balance, respectively, (ii) as to
the Class
12-2
<PAGE>
M-1 Certificates, the Class M-1 Principal Balance, together with any
Unpaid Class M-1 Interest Shortfall, any Unpaid Class M-1 Liquidation Loss
Interest Shortfall and one month's interest at the Class M-1 Pass-Through Rate
on the Class M-1 Principal Balance, (iii) as to Class M-2 Certificates, the
Class M-2 Principal Balance, together with any Unpaid Class M-2 Interest
Shortfall, any Unpaid Class M-2 Liquidation Loss Interest Shortfall and one
month's interest at the Class M-2 Pass-Through Rate on the Class M-2 Principal
Balance, (iv) as to Class B-1 Certificates, the Class B-1 Principal Balance,
together with any Unpaid Class B-1 Interest Shortfall, any Unpaid Class B-1
Liquidation Loss Interest Shortfall and one month's interest at the Class B-1
Pass-Through Rate on the Class B-1 Principal Balance, and (v) as to Class B-2
Certificates, the Class B-2 Principal Balance, together with any Unpaid Class
B-2 Interest Shortfall, any Unpaid Class B-2 Liquidation Loss Interest Shortfall
and one month's interest at the Class B-2 Pass-Through Rate on the Class B-2
Principal Balance; and (2) as to the Class C Certificate, the amount which
remains on deposit in the Certificate Account (other than amounts retained to
meet claims) after application pursuant to clause (1) above. The distribution
on the Final Payment Date pursuant to this Section 12.04 shall be in lieu of the
distribution otherwise required to be made on such Payment Date in respect of
each Class of Certificates and the Class C Certificate.
d. In the event that all of the Certificateholders and the Class C
Certificateholder do not surrender their Certificates and the Class C
Certificate for cancellation within three months after the time specified in the
above-mentioned written notice, the Originator shall give a second written
notice to the remaining Certificateholders and the Class C Certificateholder to
surrender their Certificates and the Class C Certificate for cancellation and
receive the final distribution with respect thereto. If within three months
after the second notice all the Certificates and the Class C Certificate shall
not have been surrendered for cancellation, the Originator shall transfer to
itself all amounts remaining on deposit in the Certificate Account, to hold in
trust for Certificateholders and the Class C Certificateholder who have not
surrendered their Certificates or the Class C Certificate, as the case may be,
for cancellation, together with the final record list of Certificateholders and
the Class C Certificateholder, and the Originator shall take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates and to contact the
Class C Certificateholder concerning its surrender of its Class C Certificate,
and the cost thereof shall be paid out of the funds and other assets which
remain in trust hereunder.
SECTION 12.05. Acts of Certificateholders and Class C Certificateholder.
--------------------------------------------------------
a. Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates representing, in the aggregate, 51% or more of the
Aggregate Certificate Principal Balance.
b. Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by
Certificateholders or the Class C Certificateholder may be embodied in and
evidenced by one or more instruments of substantially
12-3
<PAGE>
similar tenor signed by such Certificateholders or the Class C Certificateholder
in person or by an agent duly appointed in writing; and except as herein
otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee and, where required, to
the Servicer. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and (subject to Section 11.01) conclusive in favor of the Trustee, the Servicer
and the Originator if made in the manner provided in this Section.
c. The fact and date of the execution by any Certificateholder or the
Class C Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
d. The ownership of Certificates and the Class C Certificate shall be
proved by the Certificate Register.
e. Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder or the Class C Certificateholder shall bind
every holder of every Certificate or the Class C Certificate, as applicable,
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof, in respect of anything done, or omitted to be done by the Trustee,
the Servicer or the Originator in reliance thereon, whether or not notation of
such action is made upon such Certificates or Class C Certificate.
f. The Trustee may require such additional proof of any matter referred to
in this Section as it shall deem necessary.
SECTION 12.06. 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 Holders of Certificates representing, in the
aggregate, 66-2/3% or more of the Aggregate Certificate Principal Balance, and
any attempt to do so without such consent shall be void.
SECTION 12.07. Amendment.
---------
a. This Agreement may be amended from time to time by the Originator, the
Servicer and the Trustee, without the consent of any of the Certificateholders
or the Class C Certificateholder, to correct manifest error, to cure any
ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein, as the case may be, to make such
changes as are necessary to maintain the status of the Trust as a "real estate
mortgage investment conduit" under the REMIC Provisions of the Code or to
otherwise effectuate the benefits of such status to the Trust, the
Certificateholders or the Class C Certificateholder, including, without
limitation, to implement any provision permitted by law that would enable a
REMIC to avoid the imposition of any tax, or to make any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by
12-4
<PAGE>
an Opinion of Counsel for the Servicer, adversely affect in any material respect
the interests of any Certificateholder.
b. This Agreement may also be amended from time to time by the Servicer,
the Originator and the Trustee, with the consent of Holders of Certificates
representing, in the aggregate, 66-2/3% or more of the Aggregate Certificate
Principal Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of such Certificateholders; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of payments on the Loans or distributions which
are required to be made on any Certificate, (b) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the holders of
all Certificates then outstanding, (c) result in the disqualification of the
Trust as a REMIC under the Code, (d) adversely affect the status of the Trust as
a REMIC or the status of the Certificates as "regular interests" in the REMIC,
or (e) cause any tax (other than any tax imposed on "net income from foreclosure
property" under Section 860G(c)(1) of the Code that would be imposed without
regard to such amendment) to be imposed on the Trust, including, without
limitation, any tax imposed on "prohibited transactions" under Section
860F(a)(1) of the Code or on "contributions after the startup date" under
Section 860G(d)(1) of the Code. This Agreement may not be amended without the
consent of the Class C Certificateholder, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement which would modify in any manner the rights of the Class C
Certificateholder.
c. This Agreement shall not be amended under this Section without the
consent of 100% of the Certificateholders and the Class C Certificateholder if
such amendment would result in the disqualification of the Trust as a REMIC
under the Code.
d. Concurrently with the solicitation of any consent pursuant to this
Section 12.07, the Trustee shall furnish written notification to S&P, Moody's
and Fitch. Promptly after the execution of any amendment or consent pursuant to
this Section 12.07, the Trustee shall furnish written notification of the
substance of such amendment to S&P, Fitch, Moody's, each Certificateholder and
the Class C Certificateholder.
e. It shall not be necessary for the consent of Certificateholders and the
Class C Certificateholder under this Section 12.07 to approve the particular
form of any proposed amendment, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of the execution thereof by Certificateholders and
the Class C Certificateholder shall be subject to such reasonable requirements
as the Trustee may prescribe.
f. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise.
g. In connection with any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel to the Servicer to the effect
that such amendment is authorized or permitted by this Agreement.
12-5
<PAGE>
h. Upon the execution of any amendment or consent pursuant to this Section
12.07, this Agreement shall be modified in accordance therewith, and such
amendment or consent shall form a part of this Agreement for all purposes, and
every Certificateholder or the Class C Certificateholder hereunder shall be
bound thereby.
i. In the absence of the consent described in subsection (d) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment (i) will
not adversely affect the status of the REMIC as a REMIC or the status of the
Certificates as "regular interests" therein, and (ii) will not cause any tax
(other than any tax imposed on "net income from foreclosure property" under
Section 860G(c)(1) of the Code that would be imposed without regard to such
amendment) to be imposed on the Trust, including, without limitation, any tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
SECTION 12.08. Notices. All communications and notices pursuant hereto to
-------
the Seller, the Servicer, the Originator, the Trustee, S&P, Fitch and Moody's
shall be in writing and delivered or mailed to it at the appropriate following
address:
If to the Seller:
Conseco Finance Securitizations Corp.
300 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Attention: Chief Financial Officer
Telecopier Number: (651) 293-5746
If to 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
12-6
<PAGE>
If to the Trustee:
U.S. Bank Trust National Association
Corporate Trust Department
180 East Fifth Street
Second Floor
St. Paul, Minnesota 55101
Attention: Tamara Schultz-Fugh
Telecopier Number: (651) 244-0089
If to S&P:
Standard & Poor's
55 Water Street
New York, New York 10041
Attention: Mortgage Surveillance
If to Fitch:
Fitch, Inc.
One State Street Plaza, 31st Floor
New York, New York 10004
If to Moody's:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10041
If to the Underwriter:
Credit Suisse First Boston Corporation
Transaction Advisory Group
11 Madison Avenue, 23rd Floor
New York, New York 10010
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder or
the Class C Certificateholder shall be in writing and delivered or mailed at the
address shown in the Certificate Register.
SECTION 12.09. Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter
12-7
<PAGE>
hereof, and all prior understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.
SECTION 12.10. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 12.11. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of Minnesota.
SECTION 12.12. Covenants re Bankruptcy, etc.
----------------------------
(a) The Originator, the Servicer, the Seller and the Trustee, by entering
into this Agreement, and each Certificateholder and the Class C
Certificateholder, by accepting a Certificate or Class C Certificate, as
applicable, hereby covenant and agree that they will not at any time institute
against the Trust, or join in the institution against the Trust of, any
bankruptcy proceedings under any federal or state bankruptcy or similar law in
connection with any obligations with respect to the Certificates or this
Agreement.
(b) The Originator, the Servicer, the Seller and the Trustee, by entering
into this Agreement, and each Certificateholder and the Class C
Certificateholder, by accepting a Certificate or Class C Certificate, as
applicable, hereby covenant and agree that the Trust shall not, except as
expressly provided in this Agreement:
(i) sell, transfer, exchange or otherwise dispose of any portion of
the Trust Fund;
(ii) dissolve or liquidate in whole or in part;
(iii) engage, directly or indirectly, in any business other than that
of holding the Trust Fund and issuing the Certificates and the Class C
Certificate, and the actions contemplated or required to be performed by or
on behalf of the Trust under this Agreement;
(iv) incur, create or assume any indebtedness for borrowed money
other than the Certificates;
(v) voluntarily file a petition for bankruptcy, reorganization,
assignment for the benefit if its creditors or other similar proceeding; or
(vi) merge, convert or consolidate with any other Person.
12-8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized this 28th day
of September, 2000.
CONSECO FINANCE CORP.
By: /s/ Phyllis A. Knight
-----------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
CONSECO FINANCE SECURITIZATIONS CORP.
By: /s/ Phyllis A. Knight
-----------------------------------------
Phyllis A. Knight
Senior Vice President and Treasurer
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Trustee
By: /s/ Tamara Schultz-Fugh
-----------------------------------------
Tamara Schultz-Fugh
Trust Officer
12-9
<PAGE>
STATE OF MINNESOTA )
) ss.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me this 28th day of
September, 2000, by Phyllis A. Knight, a Senior Vice President and Treasurer of
Conseco Finance Corp., a Delaware corporation, on behalf of the corporation.
/s/ Cindy M. Wandersee
---------------------------
Notary Public
Cindy M. Wandersee
Notary Public - Minnesota
My Comm. Expires Jan. 31, 2005
STATE OF MINNESOTA )
) ss.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me this 28th day of
September, 2000, by Phyllis A. Knight, a Senior Vice President and Treasurer of
Conseco Finance Securitizations Corp., a Minnesota corporation, on behalf of the
corporation.
/s/ Cindy M. Wandersee
---------------------------
Notary Public
Cindy M. Wandersee
Notary Public - Minnesota
My Comm. Expires Jan. 31, 2005
STATE OF MINNESOTA )
) ss.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me this 28th day of
September, 2000, by Tamara Schultz-Fugh, Trust Officer, of U.S. Bank Trust
National Association, a national banking association, on behalf of the national
banking association.
/s/ L. Elaine Eby
---------------------------
Notary Public
L. Elaine Eby
Notary Public
Minnesota
My Commission Expires Jan. 31, 2005
12-10
<PAGE>
EXHIBIT A
---------
FORM OF CLASS A-[1][2][3][4][5] CERTIFICATE
-------------------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
Class A-[1][2][3][4][5] No.
(Senior)
Cut-off Date: Pass-Through Rate: __________%
as defined in the Pooling and Servicing
Agreement dated September 1, 2000 Denomination: $_______________
First Payment Date: Aggregate Denomination of
October 16, 2000 all Class A-[1][2][3][4][5]
Certificates: $_______________
Servicer: Final Scheduled Payment Date:
Conseco Finance Corp. _____________ (or if such day is
not a Business Day, then the next
succeeding Business Day)
CUSIP: __________
CERTIFICATE FOR HOME IMPROVEMENT LOANS
SERIES 2000-E, CLASS A-[1][2][3][4][5] (SENIOR)
-----------------------------------------------
EXCEPT AS PROVIDED IN SECTION 9.02(B)(2) OF THE POOLING AND SERVICING
AGREEMENT, BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE
OR ANY INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE
BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE
CODE (EACH, A "PLAN") ACKNOWLEDGES THAT EITHER THE CERTIFICATEHOLDER HAS
DELIVERED TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE
TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS
DELIVERED, IS
A-1
<PAGE>
DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE SELLER AND THE SERVICER
EITHER (I) THAT THE PERSON ACQUIRING THE CERTIFICATE IS NEITHER A PLAN, NOR
ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE, OR
(II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT
RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO
THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT
THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE AGREEMENT.
This certifies that ____________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement Loans, Series 2000-E, Class
A-[1][2][3][4][5] issued by Conseco Finance Home Improvement Loan Trust 2000-E
(the "Trust"), which includes among its assets a pool of home improvement loans
(the "Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
September 1, 2000, among Conseco Finance Corp., as Originator and Servicer (the
"Originator"), Conseco Finance Securitizations Corp., as Seller (the "Seller")
and U.S. Bank Trust National Association, as Trustee of the Trust (the
"Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in October 2000, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class A-[1][2][3][4][5] Certificates with an aggregate
Percentage Interest of at least 5% of the Class A-[1][2][3][4][5] Certificates
and so desires, by wire transfer pursuant to instructions delivered to the
Trustee at least 10 days prior to such Payment Date) to the registered
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class A-[1][2][3][4][5]
Distribution Amount for such Payment Date. Distributions of interest and
principal on the Class A-[1][2][3][4][5] Certificates will be made primarily
from amounts available in respect of the Loans. The final scheduled Payment
Date of this Certificate is ________________ or the next succeeding Business Day
if such ________________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the Agreement
for payment hereunder and that the Trustee in its
A-2
<PAGE>
individual capacity is not personally liable to the Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Certificateholder agrees to disclosure of
his, her or its name and address to other Certificateholders under the
conditions specified in the Agreement.
Except as provided in section 9.02(b)(2) of the Agreement, no transfer of
this Certificate or any interest herein to any employee benefit plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or that is described in Section 4975(e)(1) of the Code or to any
person or entity purchasing on behalf of, or with assets of, such an employee
benefit plan (each, a "Plan") will be registered unless the transferee, at its
expense, delivers to the Originator and the Trustee an opinion of counsel
(satisfactory to the Originator and the Trustee) that the purchase and holding
of this Certificate by such Plan will not result in the assets of the Trust
being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee, the
Originator, the Seller or the Servicer to any obligation or liability in
addition to those undertaken in the Agreement. Unless such opinion is
delivered, each person acquiring this Certificate will be deemed to represent to
the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee or its
agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.
A-3
<PAGE>
The Originator, the Seller, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Originator, the Seller, the
Servicer, the Trustee, the Paying Agent or the Certificate Registrar may treat
the person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Originator, the Seller, the Servicer, the Trustee,
the Paying Agent, the Certificate Registrar nor any such agent shall be affected
by any notice to the contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the state of Minnesota from time to time.
A-4
<PAGE>
IN WITNESS WHEREOF, Conseco Finance Home Improvement Loan Trust 2000-E has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: September ____, 2000 CONSECO FINANCE HOME IMPROVEMENT
LOAN TRUST 2000-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: _________________________________
Authorized Officer
A-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________the within Certificate for Home Improvement
Loans, Series 2000-E, and does hereby irrevocably constitute and appoint
____________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: September ____, 2000 By: ________________________________
Signature
A-6
<PAGE>
EXHIBIT B
---------
FORM OF CLASS M-[1][2] CERTIFICATE
----------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES [AND CLASS M-1 CERTIFICATES] AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
Class M-[1][2] No.
(Subordinate)
Cut-off Date: Pass-Through Rate: _________%
as defined in the Pooling and
Servicing Agreement dated
September 1, 2000
First Payment Date: Denomination: $________________
October 16, 2000
Servicer: Aggregate Denomination of
Conseco Finance Corp. all Class M-[1][2] Certificates:
$_______________
Final Scheduled Payment Date:
_______________ (or if such day is not a
Business Day, then the next succeeding
Business Day)
CUSIP: _______________
CERTIFICATE FOR HOME IMPROVEMENT LOANS
SERIES 2000-E, CLASS M-[1][2] (SUBORDINATE)
-------------------------------------------
BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE OR ANY
INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH,
A "PLAN") ACKNOWLEDGES THAT EITHER THE CERTIFICATEHOLDER HAS DELIVERED TO THE
ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
B-1
<PAGE>
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE
TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS
DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE SELLER AND
THE SERVICER EITHER (I) THAT THE PERSON ACQUIRING THE CERTIFICATE IS NEITHER A
PLAN, NOR ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE
CODE, OR (II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN
WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND
SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL
NOT SUBJECT THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE AGREEMENT.
This certifies that ____________________ is the registered owner of the
undivided Percentage Interest represented by the original principal amount set
forth above in the Certificates for Home Improvement Loans, Series 2000-E, Class
M-[1][2] issued by Conseco Finance Home Improvement Loan Trust 2000-E (the
"Trust"), which includes among its assets a pool of home improvement loans (the
"Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
September 1, 2000, among Conseco Finance Corp., as Originator and Servicer (the
"Originator"), Conseco Finance Securitizations Corp., as Seller (the "Seller")
and U.S. Bank Trust National Association, as Trustee of the Trust (the
"Trustee"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in October 2000, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class M-[1][2] Certificates with an aggregate Percentage
Interest of at least 5% of the Class M-[1][2] Certificates and so desires, by
wire transfer pursuant to instructions delivered to the Trustee at least 10 days
prior to such Payment Date) to the registered Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Payment Date, in an amount equal to the Certificateholder's
Percentage Interest of the Class M-[1][2] Distribution Amount for such Payment
Date. Distributions of interest and principal on the Class M-[1][2]
Certificates will be
B-2
<PAGE>
made primarily from amounts available in respect of the Loans. The final
scheduled Payment Date of this Certificate is _______________ or the next
succeeding Business Day if such _______________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account to the extent
available for distribution to the Certificateholder as provided in the
Agreement, for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC") to the Trustee or its
agent for registration of
B-3
<PAGE>
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL in as much as the registered owner hereof, Cede & Co., has an interest
herein.
The Originator, the Seller, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Originator, the Seller, the
Servicer, the Trustee, the Paying Agent or the Certificate Registrar may treat
the person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Originator, the Seller, the Servicer, the Trustee,
the Paying Agent, the Certificate Registrar nor any such agent shall be affected
by any notice to the contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the state of Minnesota from time to time.
B-4
<PAGE>
IN WITNESS WHEREOF, Conseco Finance Home Improvement Loan Trust 2000-E has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: September ____, 2000 CONSECO FINANCE HOME IMPROVEMENT
LOAN TRUST 2000-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: ________________________________
Authorized Officer
B-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _____________________________________________________________ the within
Certificate for Home Improvement Loans, Series 2000-E, and does hereby
irrevocably constitute and appoint ______________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated: September ____, 2000 By: _______________________________
Signature
B-6
<PAGE>
EXHIBIT C
---------
FORM OF CLASS B-[1][2] CERTIFICATE
----------------------------------
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A[, /AND]
THE CLASS M CERTIFICATES [AND THE CLASS B-1 CERTIFICATES] AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
[THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.]
Class B-[1][2] No.
(Subordinate)
Cut-off Date: Pass-Through Rate: _________%
as defined in the Pooling and (or, the Weighted Average Loan
Servicing Agreement dated Rate, if less)
September 1, 2000
First Payment Date: Denomination: $_______________
October 16, 2000
Servicer: Aggregate Denomination of
Conseco Finance Corp. all Class B-[1][2] Certificates:
$_______________
Final Scheduled Payment Date:
______________ (or if such day is not a
Business Day, then the next succeeding
Business Day)
CUSIP: _______________
C-1
<PAGE>
CERTIFICATES FOR HOME IMPROVEMENT LOANS
SERIES 2000-E, CLASS B-[1][2] (SUBORDINATE)
-------------------------------------------
BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE OR ANY
INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH,
A "PLAN") ACKNOWLEDGES THAT EITHER THE CERTIFICATEHOLDER HAS DELIVERED TO THE
ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF COUNSEL
(SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND HOLDING
OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE TRUST
BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS
DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE SELLER AND
THE SERVICER EITHER (I) THAT THE PERSON ACQUIRING THE CERTIFICATE IS NEITHER A
PLAN, NOR ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE
CODE, OR (II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN
WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND
SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL
NOT SUBJECT THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE AGREEMENT.
This certifies that ______________________________ is the registered owner
of the undivided Percentage Interest represented by the original principal
amount set forth above in the Certificates for Home Improvement Loans, Series
2000-E, Class B-[1][2], issued by Conseco Finance Home Improvement Loan Trust
2000-E (the "Trust"), which includes among its assets a pool of home improvement
loans (the "Loans") (including, without limitation, all mortgages, deeds of
trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of September 1, 2000, among Conseco Finance Corp., as
Originator and Servicer (the "Originator"), Conseco Finance Securitizations
Corp., as Seller (the "Seller") and U.S. Bank Trust National Association as
Trustee of the Trust (the "Trustee"). This Certificate is one of the
Certificates described in the Agreement and is issued pursuant and subject to
the Agreement. By acceptance of this Certificate the holder assents to and
becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
C-2
<PAGE>
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in October 2000, so long
as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B-[1][2] Certificates with an aggregate Percentage
Interest of at least 5% of the Class B-[1][2] Certificates and so desires, by
wire transfer pursuant to instructions delivered to the Trustee at least 10 days
prior to such Payment Date) to the registered Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Payment Date, in an amount equal to the Certificateholder's
Percentage Interest of the Class B-[1][2] Distribution Amount for such Payment
Date. Distributions of interest and principal on the Class B-[1][2]
Certificates will be made primarily from amounts available in respect of the
Loans. The final scheduled Payment Date of this Certificate is _______________
or the next succeeding Business Day if such _______________ is not a Business
Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account, to the extent
available for distribution to the Certificateholder as provided in the
Agreement, for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all
amendments thereto will be provided to any Certificateholder free of charge upon
a written request to the Trustee.
C-3
<PAGE>
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Paul, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Originator, the Seller, the
Servicer, the Trustee, the Paying Agent or the Certificate Registrar may treat
the person in whose name this Certificate is registered as the owner hereof for
all purposes, and neither the Originator, the Seller, the Servicer, the Trustee,
the Paying Agent, the Certificate Registrar nor any such agent shall be affected
by any notice to the contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the state of Minnesota from time to time.
C-4
<PAGE>
IN WITNESS WHEREOF, Conseco Finance Home Improvement Loan Trust 2000-E has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: September ____, 2000 CONSECO FINANCE HOME IMPROVEMENT
LOAN TRUST 2000-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: _____________________________
Authorized Officer
C-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto _______________________________________________________ the within
Certificate for Home Improvement Loans, Series 2000-E, and does hereby
irrevocably constitute and appoint ______________________________ Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee, with full power of substitution in the premises.
Dated: September ____, 2000 By: __________________________________
Signature
C-6
<PAGE>
EXHIBIT D
---------
FORM OF ASSIGNMENT
------------------
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of September 1, 2000, among the undersigned, Conseco Finance Corp. and
U.S. Bank Trust National Association as Trustee (the "Trustee"), the undersigned
does hereby transfer, convey and assign, set over and otherwise convey, without
recourse, to Conseco Finance Home Improvement Loan Trust 2000-E, created by the
Agreement, to be held in trust as provided in the Agreement, (i) all right,
title and interest in the home improvement loans identified in the List of Loans
attached to the Agreement (including, without limitation, all related mortgages,
deeds of trust and security deeds and any and all rights to receive payments on
or with respect to the Loans due after the applicable Cut-off Date), (ii) all
rights under any hazard, flood or other individual insurance policy on the real
estate securing a Loan for the benefit of the creditor of such Initial Loan,
(iii) all rights Conseco Finance Securitizations Corp. may have against the
originating lender with respect to Initial Loans originated by a lender other
than Conseco Finance Securitizations Corp., (iv) all rights of the Seller under
the Transfer Agreement, (v) all rights under the Errors and Omissions Protection
Policy and the Fidelity Bond as such policy and bond relate to the Initial
Loans, (vi) all rights under any title insurance policies, if applicable, on any
of the properties securing Initial Loans, (vii) all documents contained in the
Loan Files relating to the Initial Loans, (viii) amounts in the Certificate
Account and the Pre-Funding Account (including all proceeds of investments of
the funds in Certificate Account) and (ix) all proceeds and products of the
foregoing.
This Assignment is made pursuant to and upon the representations and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others. All undefined capitalized terms used in this
Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ______ day of September, 2000.
CONSECO FINANCE SECURITIZATIONS CORP.
[Seal] By: ___________________________________
[Name]
[Title]
D-1
<PAGE>
EXHIBIT E
---------
FORM OF CERTIFICATE OF OFFICER
------------------------------
[Conseco Finance Corp.]
[Conseco Finance Securitizations Corp.]
I, _______________________, hereby certify that I am a [title] of [Conseco
Finance Corp., a Delaware corporation] [Conseco Finance Securitizations Corp., a
Minnesota corporation] (the "Company"), and that as such I am duly authorized to
execute and deliver this certificate on behalf of [Conseco Finance Corp.]
[Conseco Finance Securitizations Corp.] in connection with the Pooling and
Servicing Agreement dated as of September 1, 2000 (the "Agreement") among
Conseco Finance Corp., Conseco Finance Securitizations Corp. and U.S. Bank Trust
National Association as Trustee (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
(i) attached hereto as Exhibit I are true and correct copies of the
Restated Certificate of Incorporation of [Conseco Finance Corp.] [Conseco
Finance Securitizations Corp.], together with all amendments thereto as in
effect on the date thereof;
(ii) attached hereto as Exhibit II are true and correct copies of the
Bylaws of [Conseco Finance Corp.] [Conseco Finance Securitizations Corp.],
as amended, as in effect on the date hereof;
(iii) the representations and warranties of [Conseco Finance
Securitizations Corp.] contained in Sections 3.01 and 3.03 of the Agreement
are true and correct on and as of the date hereof and, to the best of my
knowledge, the representations and warranties of [Conseco Finance Corp.]
contained in Sections 3.02, 3.04 and 3.05 of the Agreement are true and
correct on and as of the date hereof;
(iv) no event with respect to [Conseco Finance Corp.] [Conseco
Finance Securitizations Corp.] has occurred and is continuing which would
constitute an Event of Termination or an event that with notice or lapse of
time or both would become an Event of Termination under the Agreement; and
(v) each of the agreements and conditions of [Conseco Finance Corp.]
[Conseco Finance Securitizations Corp.] to be performed on or before the
date hereof pursuant to the Agreement have been performed in all material
respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
September, 2000.
____________________________
[Name]
[Title]
E-1
<PAGE>
EXHIBIT F
---------
FORM OF OPINION OF COUNSEL FOR THE ORIGINATOR
---------------------------------------------
The opinion of Dorsey & Whitney LLP shall be to the effect that
(capitalized terms have the meanings set forth in the Pooling and Servicing
Agreement):
1. the Originator is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, with corporate power
to execute, deliver and perform its obligations under the Pooling and Servicing
Agreement, the Certificates and the Class C Certificate.
2. The Pooling and Servicing Agreement has been duly authorized by all
requisite corporate action, duly executed and delivered by the Originator, and
constitutes the valid and binding obligation of the Originator enforceable in
accordance with its terms. The Certificates have been duly authorized by all
requisite corporate action and, when duly and validly executed by the Trustee in
accordance with the Pooling and Servicing Agreement, will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing Agreement.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by the
Originator for the consummation of the transactions contemplated by the Pooling
and Servicing Agreement, except such as may be required under blue sky laws
under any jurisdiction in connection with the offering of the Certificates by
the Underwriter pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and the Trust is not
required to be registered as an investment company under the Investment Company
Act of 1940.
5. Neither the transfer of the Loans to the Trustee acting on behalf of
the Trust, nor the assignment of the Originator's lien on the related real
estate which is the subject of a home improvement loan, nor the issuance or sale
of the Certificates and the Class C Certificate, nor the execution and delivery
of the Pooling and Servicing Agreement, nor the consummation of any other of the
transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates, the Class C Certificate or the
Pooling and Servicing Agreement by the Originator will conflict with, or result
in a breach, violation or acceleration of, or constitute a default under, any
term or provision of the Restated Certificate of Incorporation or Bylaws of the
Originator or of any indenture or other agreement or instrument known to us to
which the Originator is a party or by which it is bound, or result in a
violation of, or contravene the terms of any statute, order or regulation,
applicable to the Originator, of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it.
6. There are no actions or proceedings pending, nor to the best of our
knowledge, are there any investigations pending or overtly threatened against
the Originator before any court, administrative agency or other tribunal (A)
asserting the invalidity of the Pooling and Servicing Agreement, the
Certificates, the Class C Certificate, the hazard or flood insurance policies
F-1
<PAGE>
applicable to any Loans or the Errors and Omissions Protection Policy, (B)
seeking to prevent the issuance of the Certificates or the Class C Certificate
or the consummation of any of the transactions contemplated by the Pooling and
Servicing Agreement, (C) which is likely materially and adversely to affect the
performance by the Originator of its obligations under, or the validity or
enforceability of the Pooling and Servicing Agreement, the Certificates or the
Class C Certificate, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates or the Class C Certificate described in the
Prospectus and the Prospectus Supplement under the heading "Certain Federal
Income Tax Consequences."
7. The transfer of the Loans to the Trust in accordance with Section 2.01
of the Pooling and Servicing Agreement would not be avoidable as a preferential
transfer under Section 547 of the United States Bankruptcy Code (11 U.S.C. (S)
547), as in effect on the date hereof, in the event that the Originator became a
debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Originator has
transferred to the Trustee acting on behalf of the Trust all of the Originator's
right, title and interest in the Loans, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Loans, and has delivered the Loan Files to the Trustee or its custodian.
No filing or other action, other than the filing of a financing statement on
Form UCC-1 with the Secretary of State of the State of Minnesota identifying the
Loans as collateral and naming the Originator as debtor and the Trust as secured
party, and the filing of continuation statements as required by Section 4.01 of
the Pooling and Servicing Agreement, is necessary to perfect as against third
parties the assignment of the Loans by the Originator to the Trust. We have
separately provided you with our opinion concerning whether such assignment
could be recharacterized as a pledge rather than a sale in the event the
Originator became a debtor under the United States Bankruptcy Code. However, in
the event such assignment were characterized as a pledge securing a loan from
the Certificateholders to the Originator, it is our opinion that the Trustee
would be deemed to have a valid and perfected security interest in the Loans and
the proceeds thereof, which security interest would be prior to any other
security interest that may be perfected under the Uniform Commercial Code as in
effect in the State of Minnesota and over any "lien creditor" (as defined in
Minn. Stat. (S)336.9-301(3)) who becomes such after the Closing Date, except
that a subsequent purchaser of any Loan who gives new value and takes possession
thereof in the ordinary course of his business would have priority over the
Trustee's security interest in such Loan, if such purchaser acts without
knowledge that such Loan was subject to a security interest. We have assumed for
the purposes of this opinion that during the term of the Pooling and Servicing
Agreement the Trustee, or its custodian, shall maintain possession of the Loan
Files for the purpose of perfecting the assignment to the Trustee of the Loans.
We express no opinion with respect to the enforceability of any individual Loan
or the existence of any claims, rights or other matters in favor of any Obligor
or the owner of any financed home improvement.
9. In reliance upon certain representations and warranties set forth in
the Pooling and Servicing Agreement and assuming that the Originator and the
Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing on behalf of the REMIC of a proper election to be taxed as
a REMIC, as of the date hereof the REMIC created pursuant to the Pooling and
Servicing Agreement will qualify as a REMIC. Further, the Certificates will
evidence ownership of the "regular interests" in the REMIC and the Class C
F-2
<PAGE>
Certificate will evidence ownership of the single class of "residual interest"
in the REMIC. For Minnesota income tax purposes, and subject to the foregoing
assumptions, and the provisions of Minnesota law as of the date hereof, the
Trust (excluding the Pre-Funding Account) will not be subject to tax and the
income of the Trust will be taxable to the holders of interests therein, all in
accordance with the provisions of the Code concerning REMICs. Moreover,
ownership of Certificates will not be a factor in determining whether such owner
is subject to Minnesota income taxes. Therefore, if the owner of Certificates is
not otherwise subject to Minnesota income or franchise taxes in the State of
Minnesota, such owner will not become subject to such Minnesota taxes solely by
virtue of owning Certificates.
10. The transfer of the Loans and the proceeds thereof by the Originator
to the Trustee on the date hereof pursuant to the Pooling and Servicing
Agreement would not be avoidable as a fraudulent transfer under the Uniform
Fraudulent Transfer Act as in effect in Minnesota on the date hereof (Minn.
Stat. (S)(S) 513.41 through 513.51), nor, should the Originator become a debtor
under the United States Bankruptcy Code, as a fraudulent transfer under Section
548 of the United States Bankruptcy Code (11 U.S.C. (S) 548) as in effect on the
date hereof.
F-3
<PAGE>
EXHIBIT G
---------
FORM OF TRUSTEE'S ACKNOWLEDGMENT
--------------------------------
U.S. Bank Trust National Association, a national banking association
organized under the laws of the United States, acting as trustee (the "Trustee")
of Conseco Finance Home Improvement Loan Trust 2000-E (the "Trust") created
pursuant to the Pooling and Servicing Agreement dated as of September 1, 2000
among Conseco Finance Corp., Conseco Finance Securitizations Corp. (the
"Seller") and the Trustee (the "Agreement") (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement)
acknowledges, pursuant to Section 2.04 of the Agreement, that the Trustee has
received the following: (i) all right, title and interest in the home
improvement loans identified in the List of Loans attached to the [Agreement]
[Subsequent Transfer Instrument of even date herewith] (the ["Initial Loans"]
["Subsequent Loans"]), including, without limitation, all related mortgages and
deeds of trust and any and all rights to receive payments on or with respect to
the [Initial/Subsequent] Loans (due after the [Cut-off Date] [Subsequent Cut-off
Date]), (ii) all rights under any hazard, flood or other individual insurance
policy on the real estate securing [an Initial] [a Subsequent] Loan for the
benefit of the creditor of such [Initial/Subsequent] Loan, (iii) all rights the
Seller may have against the originating lender with respect to
[Initial/Subsequent] Loans originated by a lender other than the Seller, (iv)
all rights under the Errors and Omissions Protection Policy and the Fidelity
Bond as such policy and bond relate to the [Initial/Subsequent] Loans, (v) all
rights under any title insurance policies, if applicable, on any of the
properties securing [Initial/Subsequent] Loans and all rights under the Transfer
Agreement dated September 1, 2000 between Conseco Finance Corp. and the Seller,
(vi) all documents contained in the Loan Files relating to the
[Initial/Subsequent] Loans, [(vii) amounts in the Certificate Account and the
Pre-Funding Account (including all proceeds of investments of funds in the
Certificate Account, and (viii) all rights of Seller under the Transfer
Agreement, [(ix)] all proceeds and products of the foregoing; and declares that,
directly or through a Custodian, it will hold all Loan Files that have been
delivered in trust, upon the trusts set forth in the Agreement for the use and
benefit of all Certificateholders and the holders of the Class C Certificate.
[From Trustee or Custodian as applicable.] The Trustee acknowledges that it
has conducted a cursory review of the Loan Files and hereby confirms that except
as noted on the document exception listing attached hereto, each Loan File
contained (a) an original promissory note, (b) with respect to each Loan, an
original or a copy of the mortgage or deed of trust or similar evidence of a
lien on the related improved real estate, (c) in the case of Loans originated by
a lender other than the Seller, an original or a copy of an assignment of the
mortgage, deed of trust or security deed by the lender to the Seller, and (d)
any extension, modification or waiver agreement(s). The Trustee has not
otherwise reviewed the Loans and Loan Files for compliance with the terms of the
Pooling and Servicing Agreement.
G-1
<PAGE>
IN WITNESS WHEREOF, U.S. Bank Trust National Association, as Trustee has
caused this acknowledgment to be executed by its duly authorized officer and its
corporate seal affixed hereto as of this ______, day of September, 2000.
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Trustee
[Seal] By _______________________________
[Name]
[Title]
G-2
<PAGE>
EXHIBIT H
---------
FORM OF CERTIFICATE OF SERVICING OFFICER
----------------------------------------
Conseco Finance Corp.
I, _______________________, hereby certify that I am a [title] of Conseco
Finance Corp., a Delaware corporation (the "Company"), and that as such I am
duly authorized to execute and deliver this certificate on behalf of the Company
pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of September 1, 2000 between the Company, Conseco Finance
Securitizations Corp. and U.S. Bank Trust National Association, as Trustee of
Conseco Finance Home Improvement Loan Trust 2000-E (all capitalized terms used
herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Monthly Report for the period from _______________ to
_______________ attached to this certificate is complete and accurate in
accordance with the requirements of Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
September, 2000.
CONSECO FINANCE CORP.
By: _______________________
[Name]
[Title]
H-1
<PAGE>
EXHIBIT I
---------
FORM OF CLASS C CERTIFICATE
---------------------------
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS MB1 CERTIFICATES, THE CLASS MB2 CERTIFICATES, THE CLASS
BB1 CERTIFICATES AND THE CLASS BB2 CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED
TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN); ANY SUCH TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION
9.02 OF SUCH POOLING AND SERVICING AGREEMENT.
BY ACCEPTANCE OF THIS CERTIFICATE, THE PURCHASER OF THE CERTIFICATE OR ANY
INTEREST HEREIN BY, ON BEHALF OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH,
A "PLAN") ACKNOWLEDGES THAT EITHER THE CERTIFICATEHOLDER HAS DELIVERED TO THE
ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF COUNSEL
(SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND HOLDING
OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE TRUST
BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
ORIGINATOR OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS DELIVERED, IS DEEMED TO
REPRESENT TO THE TRUSTEE, THE ORIGINATOR AND THE SERVICER EITHER (I) THAT THE
PERSON ACQUIRING THE CERTIFICATE IS NEITHER A PLAN, NOR ACTING ON BEHALF OF A
PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE, OR (II) THAT THE PURCHASE
AND HOLDING OF THIS CERTIFICATE BY
I-1
<PAGE>
SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN
ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE
CODE AND WILL NOT SUBJECT THE TRUSTEE, THE ORIGINATOR OR THE SERVICER TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
Class C No.
(Subordinate)
Cut-off Date: Percentage Interest:
As defined in the Pooling
and Servicing Agreement
dated September 1, 2000
First Payment Date:
October 16, 2000
CERTIFICATE FOR HOME IMPROVEMENT LOANS, SERIES 2000-E
Original Aggregate Certificate Principal Balance of the Trust: $300,000,000
This certifies that Green Tree Finance Corp.--Two is the registered owner
of the Residual Interest represented by this Certificate, and entitled to
certain distributions out of Conseco Finance Home Improvement Loan Trust 2000-E
(the "Trust"), which includes among its assets a pool of home improvement loans
(the "Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
September 1, 2000, among Conseco Finance Corp., as Servicer (the "Originator"),
Conseco Finance Securitizations Corp., as Seller (the "Seller") and U.S. Bank
Trust National Association, as Trustee of the Trust (the "Trustee"). This Class
C Certificate is described in the Agreement and is issued pursuant and subject
to the Agreement. By acceptance of this Class C Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in October 2000, so long
as the Agreement has not been terminated, by check to the registered Class C
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Payment Date, in an amount equal to the
difference between (A) the Amount Available, and (B) the sum of (i) the Class A
Distribution Amount, (ii) the Class M-1 Distribution Amount, (iii) the Class M-2
Distribution Amount, (iv) the Class B-1 Distribution Amount, (v) the Class B-2
Distribution Amount, (vi) the Monthly Servicing Fee with respect to the Loans,
(vii) amounts to reimburse the Class C Certificateholder for reimbursable
expenses incurred by them, and (viii) amounts to reimburse the Servicer or the
Trustee, as applicable, for prior Advances with respect to the Loans. The final
I-2
<PAGE>
scheduled Payment Date of this Class C Certificate is _______________ or the
next succeeding Business Day if such _______________ is not a Business Day.
The Class C Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Class C Certificateholder as provided
in the Agreement for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Class C Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Class C Certificateholder agrees to
disclosure of his, her or its name and address to other Certificateholders under
the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator or the Servicer to any obligation or liability in
addition to those undertaken in the Agreement. Unless such opinion is delivered,
each person acquiring this Certificate will be deemed to represent to the
Trustee, the Originator and the Servicer either (i) that such person is neither
a Plan, nor acting on behalf of a Plan, subject to ERISA or to Section 4975 of
the Code, or (ii) that the purchase and holding of this Certificate by such Plan
will not result in the assets of the Trust being deemed to be Plan assets and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee, the Originator or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement.
This Class C Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class C Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class C Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class C
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Minneapolis or St. Paul, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon a new Class C Certificate evidencing the
same Class C Certificate will be issued to the designated transferee or
transferees.
The Originator, the Seller, the Servicer, the Trustee, the Paying Agent and
the Certificate Registrar and any agent of the Originator, the Seller, the
Servicer, the Trustee, the Paying Agent or the Certificate Registrar may treat
the person in whose name this Class C Certificate is
I-3
<PAGE>
registered as the owner hereof for all purposes, and neither the Originator, the
Seller, the Servicer, the Trustee, the Paying Agent, the Certificate Registrar
nor any such agent shall be affected by any notice to the contrary.
The holder of this Class C Certificate, by acceptance hereof, agrees that,
in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of the Trust for its first taxable year shall provide that
the Trust elects to be treated as a "real estate mortgage investment conduit" (a
"REMIC") under the Code for such taxable year and all subsequent taxable years.
The Certificates shall be "regular interests" in the REMIC and the Class C
Certificate shall be the "residual interest" in the REMIC. In addition, the
holder of this Class C Certificate, by acceptance hereof, (i) agrees to file tax
returns consistent with and in accordance with any elections, decisions or other
reports made or filed with regard to federal, state or local taxes on behalf of
the Trust, and (ii) agrees to cooperate with the Originator in connection with
examinations of the Trust's affairs by tax authorities, including administrative
and judicial proceedings, and (iii) makes the additional agreements,
designations and appointments, and undertakes the responsibilities, set forth in
Section 6.06 of the Agreement.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the state of Minnesota from time to time.
I-4
<PAGE>
IN WITNESS WHEREOF, Conseco Finance Home Improvement Loan Trust 2000-E has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: September ____, 2000 CONSECO FINANCE HOME IMPROVEMENT
LOAN TRUST 2000-E
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: ________________________________
Authorized Officer
I-5
<PAGE>
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________ the within Certificate for Home Improvement Loans,
Series 2000-E, and does hereby irrevocably constitute and appoint
_______________ Attorney to transfer the said certificate on the Certificate
Register maintained by the Trustee, with full power of substitution in the
premises.
Dated: September ____, 2000 By: ______________________________
Signature
I-6
<PAGE>
EXHIBIT J-1
-----------
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
-----------------------------------------------
Conseco Finance Corp.
I, ____________________________hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Sections 3.06 and 8.05 of the Pooling and Servicing
Agreement (the "Agreement") dated as of September 1, 2000 among the Company,
Conseco Finance Securitizations Corp. and U.S. Bank Trust National Association,
as Trustee of Conseco Finance Home Improvement Loan Trust 2000-E (all
capitalized terms used herein without definition having the respective meanings
specified in the Agreement), and further certifies that:
1. The Loans on the attached schedule are to be repurchased by the Company
on the date hereof pursuant to Section 3.06 of the Agreement.
2. Upon deposit of the Repurchase Price for such Loans, such Loans may,
pursuant to Section 8.05 of the Agreement, be assigned by the Trustee to the
Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
________________, 2000.
CONSECO FINANCE CORP.
By: ______________________________
[Name]
[Title]
J-1-1
<PAGE>
EXHIBIT J-2
-----------
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
-----------------------------------------------
Conseco Finance Corp.
I, _________________________________________________________, hereby
certify that I am a [title] of Conseco Finance Corp., a Delaware corporation
(the "Company"), and that as such I am duly authorized to execute and deliver
this certificate on behalf of the Company pursuant to Sections 3.06(b) and 8.05
of the Pooling and Servicing Agreement (the "Agreement") dated as of September
1, 2000 among the Company, Conseco Finance Securitizations Corp. and U.S. Bank
Trust National Association, as Trustee of Conseco Finance Home Improvement Loan
Trust 2000-E (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan have been
delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on the date
hereof pursuant to Section 3.06(b) of the Agreement and each such Loan is an
Eligible Substitute Loan [description, as to each Loan, as to how it satisfies
the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 3.05(b)(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to the
Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Loans.
5. The requirements of Section 3.06(b) of the Agreement have been met with
respect to each such Eligible Substitute Loan.
[6. There has been deposited in the Certificate Account the amounts listed
on the schedule attached hereto as the amount by which the Scheduled Principal
Balance of each Replaced Loan exceeds the Scheduled Principal Balance of each
Loan being substituted therefor.]
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
_________________, 2000.
CONSECO FINANCE CORP.
By:___________________________________
[Name]
[Title]
J-2-1
<PAGE>
EXHIBIT J-3
-----------
FORM OF CERTIFICATE REGARDING SUBSTITUTION FOR PREPAID LOANS
------------------------------------------------------------
Conseco Finance Corp.
I, _________________________________________________________, hereby
certify that I am a [title] of Conseco Finance Corp., a Delaware corporation
(the "Company"), and that as such I am duly authorized to execute and deliver
this certificate on behalf of the Company pursuant to Section 2.06 of the
Pooling and Servicing Agreement (the "Agreement") dated as of September 1, 2000
among the Company, Conseco Finance Securitizations Corp. and U.S. Bank Trust
National Association, as Trustee of Conseco Finance Home Improvement Loan Trust
2000-E (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan have been
delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on the date
hereof pursuant to Section 2.06 of the Agreement and each such Loan is an
Eligible Substitute Loan [description, as to each Loan, as to how it satisfies
the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 2.06(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to the
Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Loans.
5. The requirements of Section 2.06 of the Agreement have been met with
respect to each such Eligible Substitute Loan.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
_________________, 2000.
CONSECO FINANCE CORP.
By: ___________________________________
[Name]
[Title]
J-3-1
<PAGE>
EXHIBIT K
---------
FORM OF REPRESENTATION LETTER
-----------------------------
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Conseco Finance Corp.
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Certificates for Home Improvement Loans, Series 2000-E, Class C
The undersigned purchaser (the "Purchaser") understands that the purchase
of the above-referenced certificates (the "Certificates") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), which includes
banks, savings and loan associations, registered brokers and dealers, insurance
companies, investment companies, and organizations described in Section
501(c)(3) of the Internal Revenue Code, corporations, business trusts and
partnerships, not formed for the specific purpose of acquiring the Certificates
offered, with total assets in excess of $5,000,000. The undersigned represents
on behalf of the Purchaser that the Purchaser is an "Accredited Investor" within
the meaning of such definition. The Purchaser is urged to review carefully the
responses, representations and warranties it is making herein.
Representations and Warranties
------------------------------
The Purchaser makes the following representations and warranties in order
to permit the Trustee, Conseco Finance Corp., and ______________________________
to determine its suitability as a purchaser of Certificates and to determine
that the exemption from registration relied upon by Conseco Finance Corp. under
Section 4(2) of the 1933 Act is available to it.
1. The Purchaser understands that the Certificates have not been and will
not be registered under the 1933 Act and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that Conseco Finance
Corp. is not required to register the Certificates and that any transfer must
comply with Section 9.02 of the Pooling and Servicing Agreement relating to the
Certificates.
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates.
3. The Purchaser is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment. The
K-1
<PAGE>
Purchaser has reviewed the Prospectus Supplement dated September ___, 2000, to
the Prospectus dated September ___, 2000 (the "Prospectus") with respect to the
Certificates, and has been given such information concerning the Certificates,
the underlying home improvement loans and Conseco Finance Corp. as it has
requested.
4. The Purchaser is acquiring the Certificates as principal for its own
account (or for the account of one or more other institutional investors for
which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser either (check one box):
[_] is not, and is not acting on behalf of or with assets of, an
employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended or that is described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or
[_] has provided the Trustee and Servicer with the opinion of counsel
described in Section 9.02(b)(2) of the Pooling and Servicing
Agreement, or
[_] acknowledges that it is deemed to make the representation set
forth in Section 9.02(b)(2) of the Pooling and Servicing
Agreement.
6. The Purchaser understands that such Certificate will bear a legend
substantially as set forth in the form of Certificate included in the Pooling
and Servicing Agreement.
7. The Purchaser, as holder of the Class C Certificate, acknowledges (i)
it may incur tax liabilities in excess of any cash flows generated by the
interest and (ii) it intends to pay the taxes associated with holding the Class
C Certificate as they become due.
8. The Purchaser agrees that it will obtain from any purchaser of the
Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 7 and in this paragraph 8. The
representations and warranties contained herein shall be binding upon the heirs,
executors, administrators and other successors of the undersigned. If there is
more than one signatory hereto, the obligations, representations, warranties and
agreements of the undersigned are made jointly and severally.
K-2
<PAGE>
Executed at __________________________________, ________________________,
this ______ day of ________________________.
Purchaser's Name (Print)
By: _________________________________
Signature
Its: ____________________________
Address of Purchaser
Purchaser's Taxpayer
Identification Number
K-3
<PAGE>
EXHIBIT L
---------
LIST OF INITIAL AND ADDITIONAL LOANS
[To Be Supplied]
L-1
<PAGE>
EXHIBIT M
---------
FORM OF MONTHLY REPORT
----------------------
CERTIFICATES FOR HOME IMPROVEMENT LOANS, SERIES 2000-E
Payment Date: ___________________
1. Amount Available (including Monthly
Servicing Fee) _____________
2. Formula Principal Distribution Amount: _____________
(a) Scheduled principal _____________
(b) Principal Prepayments _____________
(c) Liquidated Loans _____________
(d) Repurchases _____________
(e) Previously undistributed (a)-(d) amounts _____________
(f) Pre-Funded Amount, if any
(only on Post-Funding Payment Date) _____________
(g) Overcollateralization Increase Amount _____________
(h) Overcollateralization Decrease Amount _____________
3. Monthly Servicing Fee _____________
4. Expense Adjusted Weighted Average Loan Rate _____________
Class A Certificates
--------------------
Interest
5. Aggregate current interest
(a) Class A-1 Pass-Through Rate (____%) _____________
(b) Class A-1 Interest _____________
(c) Class A-2 Pass-Through Rate (____%) _____________
(d) Class A-2 Interest _____________
(e) Class A-3 Pass-Through Rate (____%) _____________
(f) Class A-3 Interest _____________
(g) Class A-4 Pass-Through Rate (____%) _____________
(h) Class A-4 Interest _____________
(i) Class A-5 Pass-Through Rate (____% or
the Expense Adjusted Weighted Average
Loan Rate, if less) _____________
(j) Class A-5 Interest _____________
M-1
<PAGE>
6. Amount applied to Unpaid Class A Interest Shortfall ____________
7. Remaining Unpaid Class A Interest Shortfall ____________
Class M-1 Certificates
----------------------
8. Amount Available less all preceding
distributions ____________
Interest On Class M-1 Adjusted Principal Balance
9. Class M-1 Adjusted Principal Balance ____________
10. Current Interest
(a) Class M-1 Pass-Through Rate (____% or the Expense
Adjusted Weighted Average Loan Rate, if less) ____________
(b) Class M-1 Interest
11. Amount applied to Unpaid Class M-1 Interest Shortfall ____________
12. Remaining Unpaid Class M-1 Interest Shortfall ____________
Class M-2 Certificates
----------------------
13. Amount Available less all preceding
distributions ____________
Interest On Class M-2 Adjusted Principal Balance
14. Class M-2 Adjusted Principal Balance ____________
15. Current Interest
(a) Class M-2 Pass-Through Rate (____% or
the Expense Adjusted Weighted Average
Loan Rate, if less) ____________
(b) Class M-2 Interest
16. Amount applied to Unpaid Class M-2 Interest Shortfall ____________
17. Remaining Unpaid Class M-2 Interest Shortfall ____________
M-2
<PAGE>
Class B-1 Certificates
----------------------
18. Amount Available less all preceding
distributions _____________
Interest On Class B-1 Adjusted Principal Balance
19. Class B-1 Adjusted Principal Balance _____________
Current Interest
(a) Class B-1 Pass-Through Rate (____% or
the Expense Adjusted Weighted Average
Loan Rate, if less) _____________
(b) Class B-1 Interest _____________
20. Amount applied to Unpaid Class B-1 Interest Shortfall _____________
21. Remaining Unpaid Class B-1 Interest Shortfall _____________
Class B-2 Certificates
----------------------
22. Amount Available less all preceding
distributions _____________
Interest On Class B-2 Adjusted Principal Balance
23. Class B-2 Adjusted Principal Balance _____________
Current Interest
(a) Class B-2 Pass-Through Rate (____% or
the Expense Adjusted Weighted Average
Loan Rate, if less) _____________
(b) Class B-2 Interest _____________
24. Amount applied to Unpaid Class B-2 Interest Shortfall _____________
25. Remaining Unpaid Class B-2 Interest Shortfall _____________
Principal
26. Trigger Event:
(a) Average Sixty-Day Delinquency Ratio Test
(i) Sixty-Day Delinquency Ratio for current
M-3
<PAGE>
Payment Date ___________
(ii) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month
and two preceding months may not exceed
42.5% of the Senior Enhancement Percentage) ___________
(b) Cumulative Realized Losses Test
(i) Cumulative Realized Losses for
current Payment Date ___________
(ii) Cumulative Realized Losses Ratio
(Losses as a percentage of Cut-off Date Principal
Balances of Loans may not exceed
6.00% from October 1, 2003 to September 31,
2004, 7.13% from October 1, 2004 to September 31,
2005, 7.50% from October 1, 2005 to
September 31, 2007, and 8.00% thereafter) ___________
27. Senior Enhancement Percentage:
(a fraction, expressed as a percentage: ___________
(a) the numerator of which is the excess of (A) the
Pool Scheduled Principal Balance over (B) the
Principal Balance of the most senior class of
Certificates outstanding ___________
(b) the denominator of which is the Pool Scheduled
Principal Balance ___________
Class A Certificates
28. Amount Available less all preceding distributions ___________
29. Class A principal distribution:/1/
(a) the Class A Formula Principal Distribution Amount:
(i) Class A-1 ___________
(ii) Class A-2 ___________
(iii) Class A-3 ___________
(iv) Class A-4 ___________
(v) Class A-5 ___________
30. (a) Class A-1 Principal Balance ___________
(b) Class A-2 Principal Balance ___________
_________________________
/1/ If a Class A Principal Deficiency Amount exists, the remaining Amount
Available is to be distributed pro rata to each Class of Class A Certificate
based on the Class A Principal Balance.
M-4
<PAGE>
(c) Class A-3 Principal Balance ____________
(d) Class A-4 Principal Balance ____________
(e) Class A-5 Principal Balance ____________
31. (a) Amount, if any, by which Class A Formula Principal
Distribution Amount exceeds amounts distributed
pursuant to item (29) ____________
Class M-1 Certificates
----------------------
32. Amount Available less all preceding distributions ____________
Principal
33. Class M-1 principal distribution ____________
34. Class M-1 Principal Balance ____________
35. Amount, if any, by which Class M-1 Formula Principal
Distribution Amount exceeds Class M-1 Principal
Distribution Amount ____________
Class M-2 Certificates
----------------------
36. Amount Available less all preceding
distributions ____________
Principal
37. Class M-2 principal distribution ____________
38. Class M-2 Principal Balance ____________
39. Amount, if any, by which the Class M-2 Formula
Principal Distribution Amount exceeds the
Class M-2 Principal Distribution Amount ____________
Class B-1 Certificates
----------------------
40. Amount Available less all preceding
distributions ____________
Principal
41. Class B-1 principal distribution ____________
42. Class B-1 Principal Balance ____________
M-5
<PAGE>
43. Amount, if any, by which Class B-1 Formula Principal
Distribution Amount exceeds Class B-1 Principal
Distribution Amount ___________
Class B-2 Certificates
----------------------
44. Amount Available less all preceding
distributions ___________
Principal
45. Class B-2 principal distribution ___________
46. Class B-2 Principal Balance ___________
47. Amount, if any, by which Class B-2 Formula Principal
Distribution Amount exceeds Class B-2 Principal
Distribution Amount ___________
Class M-1 Certificates
----------------------
48. Amount Available less all preceding
distributions ___________
Liquidation Loss Interest
49. Amount applied to Class M-1 Liquidation Loss Interest Amount ___________
50. Class M-1 Liquidation Loss Interest Shortfall ___________
51. Amount applied to Unpaid Class M-1 Liquidation Loss
Interest Shortfall ___________
52. Remaining Unpaid Class M-1 Liquidation Loss
Interest Shortfall ___________
Class M-2 Certificates
----------------------
53. Amount Available less all preceding distributions ___________
Liquidation Loss Interest
54. Amount applied to Class M-2 Liquidation Loss Interest Amount ___________
55. Class M-2 Liquidation Loss Interest Shortfall ___________
56. Amount applied to Unpaid Class M-2 Liquidation Loss
Interest Shortfall ___________
M-6
<PAGE>
57. Remaining Unpaid Class M-2 Liquidation Loss
Interest Shortfall ___________
Class B-1 Certificates
----------------------
58. Amount Available less all preceding
distributions ___________
Liquidation Loss Interest
59. Amount applied to Class B-1 Liquidation Loss Interest Amount ___________
60. Class B-1 Liquidation Loss Interest Shortfall ___________
61. Amount applied to Unpaid Class B-1 Liquidation Loss
Interest Shortfall ___________
62. Remaining Unpaid Class B-1 Liquidation Loss
Interest Shortfall ___________
Class B-2 Certificates
----------------------
63. Amount Available less all preceding
distributions ___________
Liquidation Loss Interest
64. Amount applied to Class B-2 Liquidation Loss Interest Amount ___________
65. Class B-2 Liquidation Loss Interest Shortfall ___________
66. Amount applied to Unpaid Class B-2 Liquidation Loss
Interest Shortfall ___________
67. Remaining Unpaid Class B-2 Liquidation Loss
Interest Shortfall ___________
68. Servicer
Reimbursement for unreimbursed Advances ___________
Class A, Class M And Class B Certificates
-----------------------------------------
69. Pool Scheduled Principal Balance ___________
70. Pool Factor ___________
71. Loans Delinquent:
M-7
<PAGE>
30 - 59 days ________________
60 - 89 days ________________
90 or more days ________________
72. Principal Balance of Defaulted Loans ________________
73. Principal Balance of Loans with Extensions ________________
74. Number of Liquidated Loans and
Net Liquidation Loss ________________
75. Number of Loans Remaining ________________
76. Pre-Funded Amount ________________
77. Reimbursement of Class C Certificateholder expenses ________________
78. Overcollateralization Amount ________________
79. Target Overcollateralization Amount ________________
Class C Certificate
-------------------
80. Class C Distribution Amount ________________
Please contact the Bondholder Relations Department of U.S. Bank Trust
National Association at (612) 224-0444 with any questions regarding this
Statement or your Distribution.
M-8
<PAGE>
EXHIBIT N
---------
FORM OF ADDITION NOTICE
-----------------------
_______________, 2000
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, MN 55101
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
September 1, 2000, among Conseco Finance Corp. (the "Originator"),
Conseco Finance Securitizations Corp. (the "Seller") and U.S. Bank
Trust National Association as Trustee (the "Trustee") relating to
Certificates for Home Improvement Loans, Series 2000-E
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the meanings
given them in the Agreement. The Seller hereby notifies the Trustee of an
assignment to the Trust of Subsequent Loans on the date and in the amounts set
forth below:
Subsequent Transfer Date: __________________________
Cut-off Date Principal Balance of Subsequent Loans 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 CORP.
By: ______________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION
By: __________________________________
Name:
Title:
N-1
<PAGE>
EXHIBIT O
---------
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
--------------------------------------
In accordance with the Pooling and Servicing Agreement (the "Agreement")
dated as of September 1, 2000, among the undersigned, Conseco Finance
Securitizations Corp. (the "Seller") and U.S. Bank Trust National Association as
Trustee (the "Trustee"), the undersigned does hereby transfer, assign, set over
and otherwise convey, without recourse, to Conseco Finance Home Improvement Loan
Trust 2000-E, created by the Agreement, to be held in trust as provided in the
Agreement, (i) all right, title and interest in the home improvement loans
identified in the List of Loans attached hereto (each a "Subsequent Loan"),
including, without limitation, all related mortgages, deeds of trust, security
deeds and any and all rights to receive payments on or with respect to the
Subsequent Loans (excluding principal due before the Subsequent Cut-off Date),
(ii) all rights under any hazard, flood or other individual insurance policy on
the real estate securing a Subsequent Loan for the benefit of the creditor of
such Loan, (iii) all rights the Originator may have against the originating
lender with respect to the Subsequent Loans originated by a lender other than
the Originator, (iv) all rights under the Errors and Omissions Protection Policy
and the Fidelity Bond as such policy and bond relate to the Subsequent Loans,
(v) all rights under any title insurance policies, if applicable, on any of the
properties securing Subsequent Loans, (vi) all documents contained in the
related Loan Files, and (vii) all proceeds and products of the foregoing and all
rights of the Seller under the Subsequent Transfer Agreement between the Seller
and the undersigned and all rights of the Seller under the Subsequent Transfer
Agreement with Conseco Finance Corp.
Each of the Subsequent Loans constitutes a Subsequent Loan under the
Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Section 2.03 and Article
III of the Agreement and no others. All undefined capitalized terms used in this
Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this _______ day of _______________, 2000.
CONSECO FINANCE CORP.
[Seal] By: _______________________________
Name:
Title:
O-1
<PAGE>
EXHIBIT P
---------
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
--------------------------------------------------
I, ________________________, hereby certify that I am a [title] of Conseco
Finance Corp., a Delaware corporation (the "Company"), and that as such I am
duly authorized to execute and deliver this certificate on behalf of the
Originator in connection with the Pooling and Servicing Agreement dated as of
September 1, 2000 (the "Agreement") among the Originator, Conseco Finance
Securitizations Corp. and U.S. Bank Trust National Association as Trustee. All
capitalized terms used herein without definition have the respective meanings
specified in the Agreement. The undersigned further certifies that:
1. This Certificate is delivered in connection with the sale to the Trust
on __________________ (the "Subsequent Transfer Date") of Loans (the "Subsequent
Loans") identified in the List of Loans attached to the Subsequent Transfer
Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and warranties
in Section 3.01, 3.02, 3.03, 3.04 and 3.05 of the Agreement are true and
correct; all representations and warranties in Sections 3.02 and 3.03 of the
Agreement with respect to the Subsequent Loans are true to the best of his
knowledge; and all representations in Section 3.04 of the Agreement with respect
to the Subsequent Loans are true and correct.
3. All conditions precedent to the sale of the Subsequent Loans to the
Trust under Section 2.03 of the Agreement have been satisfied.
4. Each of the Subsequent Loans constitutes a Subsequent Loan under the
Agreement.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ________ day
of _______________, 2000.
By: _______________________________
Name:
Title:
P-1
<PAGE>
EXHIBIT Q-1
FORM OF TRANSFEROR CERTIFICATE
[Date]
U.S. Bank Trust National Association, as Certificate Registrar
180 East Fifth Street
St. Paul, Minnesota 55101
Re: Conseco Finance Home Improvement Loans Trust 2000-E
Certificates for Home Improvement Loans, Series 2000-E
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
the Class B-2 Certificate having a Class B-2 Principal Balance as of September
28, 2000 (the "Closing Date") of $__________ (the "Transferred Certificates").
The Certificates, including the Transferred Certificates, were issued pursuant
to the Pooling and Servicing Agreement (the "Pooling Agreement"), among Conseco
Finance Securitizations Corp., as Seller, Conseco Finance Corp., as Originator
and Servicer and U.S. Bank Trust National Association, as Trustee. All
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling Agreement. The Transferor hereby
certifies, represents and warrants to you, as Certificate Registrar, that:
1. The Transferor is the lawful owner of the Transferred
Certificates with the full right to transfer such Transferred Certificates
free from any and all claims and encumbrances whatsoever.
2. The Transferred Certificates are being transferred in accordance
with (i) the transfer restrictions set forth in the Pooling Agreement and
(ii) Rule 144A under the Securities Act of 1933 (the "Act"), as amended, to
a Transferee that the Transferor reasonably believes is a qualified
institutional buyer within the meaning of Rule 144A purchasing the
Transferred Certificates for its own account or for the account of a
qualified institutional buyer, in a transaction meeting the requirements of
Rule 144A and in accordance with any applicable securities laws of any
state of the United States or any other jurisdiction.
Q-1-1
<PAGE>
Very truly yours,
_________________________________
(Transferor)
By:______________________________
Name:____________________________
Title:___________________________
Q-1-2
<PAGE>
EXHIBIT Q-2
FORM OF TRANSFEREE CERTIFICATE
[Date]
U.S. Bank Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
Re: Conseco Finance Home Improvement Loans Trust 2000-E
Certificates for Home Improvement Loans, Series 2000-E
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
the Class B-2 Certificate having a Class B-2 Principal Balance as of September
28, 2000 (the "Closing Date") of $__________ (the "Transferred Certificates").
The Certificates, including the Transferred Certificates, were issued pursuant
to the Pooling and Servicing Agreement (the "Pooling Agreement"), among Conseco
Finance Securitizations Corp., as Seller, Conseco Finance Corp., as Originator
and Servicer and U.S. Bank Trust National Association, as Trustee. All
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling Agreement. The Transferee hereby
certifies, represents and warrants to you, as Certificate Registrar, that:
1. The Transferee is a "qualified institutional buyer" (a "Qualified
Institutional Buyer") as that term is defined in Rule 144A ("Rule 144A")
under the Securities Act of 1933, as amended (the "1933 Act") and has
completed one of the forms of certification to that effect attached hereto
as Annex 1 and Annex 2. The Transferee is aware that the sale to it of the
Transferred Certificates is being made in reliance on Rule 144A. The
Transferee is acquiring the Transferred Certificates for its own account or
for the account of a Qualified Institutional Buyer, and understands that
such Transferred Certificates may be resold, pledged or transferred only
(i) to a person reasonably believed to be a Qualified Institutional Buyer
that purchases for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to
another exemption from registration under the 1933 Act.
Q-2-1
<PAGE>
2. The Transferee has been furnished with all information regarding
the Transferred Certificates and distributions thereon and the nature,
performance and servicing of the Loans, that it has requested.
Very truly yours,
_________________________________
(Transferee)
By:______________________________
Name:
Title:
Q-2-2
<PAGE>
ANNEX 1 TO Exhibit Q-2
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[for Transferees other than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and U.S. Bank Trust National Association, as Certificate
Registrar, with respect to the Class B-2 Certificates being transferred (the
"Transferred Certificates") as described in the Transferee Certificate to which
this certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive
officer of the entity purchasing the Transferred Certificates (the
"Transferee").
2. The Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A") because (i) the Transferee owned and/or invested on a discretionary
basis $______________________/2/ in securities (other than the excluded
securities referred to below) as of the end of the Transferee's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and
(ii) the Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a bank,
-----------------
savings and loan association or similar institution), or similar
business trust, partnership, or any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking institution
----
organized under the laws of any State, U.S. territory or the District
of Columbia, the business of which is substantially confined to
banking and is supervised by the State or territorial banking
commission or similar official or is a foreign bank or equivalent
institution, and (b) has an audited net worth of at least $25,000,000
as demonstrated in its latest annual financial statement, a copy of
---------
which is attached hereto, as of a date not more than 16 months
------------------------
preceding the date of sale of the Note in the case of a U.S. bank, and
not more than 18 months preceding such date of sale for a foreign bank
or equivalent institution.
___ Savings and Loan. The Transferee (a) is a savings and loan
----------------
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over any
such institutions or is a foreign savings and loan
______________________
/2/ Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
Q-2-3
<PAGE>
association or equivalent institution and (b) has an audited net worth
of at least $25,000,000 as demonstrated in its latest annual financial
statement, a copy of which is attached hereto, as of a date not more
----------------------------------
than 16 months preceding the date of sale of the Note in the case of a
U.S. savings and loan association, and not more than 18 months
preceding such date of sale for a foreign savings and loan association
or equivalent institution.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
-------------
Section 15 of the Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Transferee is an insurance company whose
-----------------
primary and predominant business activity is the writing of insurance
or the reinsuring of risks underwritten by insurance companies and
which is subject to supervision by the insurance commissioner or a
similar official or agency of a State, U.S. territory or the District
of Columbia.
___ State or Local Plan. The Transferee is a plan established and
-------------------
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within the
----------
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Transferee is an investment advisor registered
------------------
under the Investment Advisers Act of 1940, as amended.
___ Other. (Please supply a brief description of the entity and a cross-
-----
reference to the paragraph and subparagraph under subsection (a)(1) of
Rule 144A pursuant to which it qualifies. Note that registered
investment companies should complete Annex 2 rather than this Annex
1.)___________________________________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
3. The term "securities" as used herein does not include (i)
---------- ----------------
securities of issuers that are affiliated with the Transferee, (ii)
securities that are part of an unsold allotment to or subscription by the
Transferee, if the Transferee is a dealer, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps. For purposes of
determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Transferee, the Transferee did not include any
of the securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the
Transferee used the cost of such securities to the Transferee, unless the
Transferee reports its securities holdings in its financial statements on
the basis of their market value, and no current information with respect to
the cost of those securities has been published, in which case the
securities
Q-2-4
<PAGE>
were valued at market. Further, in determining such aggregate amount, the
Transferee may have included securities owned by subsidiaries of the
Transferee, but only if such subsidiaries are consolidated with the
Transferee in its financial statements prepared in accordance with
generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Transferee's direction. However, such
securities were not included if the Transferee is a majority-owned,
consolidated subsidiary of another enterprise and the Transferee is not
itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the
Transferred Certificates are relying and will continue to rely on the
statements made herein because one or more sales to the Transferee may be
in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Transferred Certificates
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each case
where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional
buyer" status of such third party has been established by the Transferee
through one or more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the
Transferred Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the
Transferee is a bank or savings and loan as provided above, the Transferee
agrees that it will furnish to such parties any updated annual financial
statements that become available on or before the date of such purchase,
promptly after they become available.
_______________________________________
Print Name of Transferee
By:____________________________________
Name:__________________________________
Title:_________________________________
Date:__________________________________
Q-2-5
<PAGE>
ANNEX 2 TO Exhibit Q-2
----------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[for Transferees that are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor] (the
"Transferor") and U.S. Bank Trust National Association, as Certificate
Registrar, with respect to the Class B-2 Certificates being transferred (the
"Transferred Certificates") as described in the Transferee Certificate to which
this certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive
officer of the entity purchasing the Transferred Certificates (the
"Transferee") or, if the Transferee is a "qualified institutional buyer" as
that term is defined in Rule 144A under the Securities Act of 1933, as
amended ("Rule 144A") because the Transferee is part of a Family of
Investment Companies (as defined below), is an executive officer of the
investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Transferee is an investment company registered
under the Investment Company Act of 1940, as amended and (ii) as marked
below, the Transferee alone owned and/or invested on a discretionary basis,
or the Transferee's Family of Investment Companies owned, at least
$100,000,000 in securities (other than the excluded securities referred to
below) as of the end of the Transferee's most recent fiscal year. For
purposes of determining the amount of securities owned by the Transferee or
the Transferee's Family of Investment Companies, the cost of such
securities was used, unless the Transferee or any member of the
Transferee's Family of Investment Companies, as the case may be, reports
its securities holdings in its financial statements on the basis of their
market value, and no current information with respect to the cost of those
securities has been published, in which case the securities of such entity
were valued at market.
____ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded
securities referred to below) as of the end of the Transferee's
most recent fiscal year (such amount being calculated in
accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other than
the excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
------------------------------
or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because
one investment adviser is a majority owned subsidiary of the other).
Q-2-6
<PAGE>
4. The term "securities" as used herein does not include (i)
----------
securities of issuers that are affiliated with the Transferee or are part
of the Transferee's Family of Investment Companies, (ii) bank deposit notes
and certificates of deposit, (iii) loan participations, (iv) repurchase
agreements, (v) securities owned but subject to a repurchase agreement and
(vi) currency, interest rate and commodity swaps. For purposes of
determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Transferee, or owned by the Transferee's Family
of Investment Companies, the securities referred to in this paragraph were
excluded.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to
the Transferee will be in reliance on Rule 144A.
____ ____ Will the Transferee be purchasing the Transferred
Certificates only for the Transferee's own account?
Yes No
6. If the answer to the foregoing question is "no", then in each case
where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional
buyer" status of such third party has been established by the Transferee
through one or more of the appropriate methods contemplated by Rule 144A.
7. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions
herein. Until such notice, the Transferee's purchase of the Transferred
Certificates will constitute a reaffirmation of this certification by the
undersigned as of the date of such purchase.
_____________________________________________
Print Name of Transferee or Adviser
By:___________________________________________
Name:
Title:
IF AN ADVISER:
______________________________________________
Print Name of Transferee
Date:_________________________________________
Q-2-7
<PAGE>
Under penalties of perjury, I declare that I have examined this certificate
and to the best of my knowledge and belief it is true, correct and complete and
will further declare that I will inform the Indenture Trustee of any change in
the information provided above, and, if applicable, I further declare that I
have the authority* to sign this document.
Name_____________________________________________________
Title (if applicable)____________________________________
Signature and Date_______________________________________
*Note: If signed pursuant to a power of attorney, the power of attorney must
accompany this certificate.]
Q-2-8
