EXHIBIT 4.1
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
SALE AND SERVICING AGREEMENT
between
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
and
GREEN TREE FINANCIAL CORPORATION
as Seller and Servicer
Dated as of December 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS....................................................1-1
SECTION 1.01. General...............................................1-1
SECTION 1.02. Specific Terms........................................1-1
ARTICLE II - TRANSFER OF CONTRACTS.........................................2-1
SECTION 2.01. Transfer of Contracts.................................2-1
SECTION 2.02. Conditions to Acceptance by Owner Trustee.............2-1
ARTICLE III - REPRESENTATIONS AND WARRANTIES...............................3-1
SECTION 3.01. Representations and Warranties Regarding the Company
and Covenants of the Company.........................3-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract.............................................3-3
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate...........................3-8
SECTION 3.04. Representations and Warranties Regarding the Contract
Files................................................3-9
SECTION 3.05. Repurchase of Contracts for Breach of
Representations and Warranties.......................3-9
ARTICLE IV - PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS.....................................4-1
SECTION 4.01. Custody of Contracts..................................4-1
SECTION 4.02. Filings...............................................4-1
SECTION 4.03. Name Change or Relocation.............................4-1
SECTION 4.04. Chief Executive Office................................4-2
SECTION 4.05. Costs and Expenses....................................4-2
ARTICLE V - SERVICING OF CONTRACTS.........................................5-1
SECTION 5.01. Responsibility for Contract Administration............5-1
SECTION 5.02. Standard of Care......................................5-1
SECTION 5.03. Records...............................................5-1
SECTION 5.04. Inspection; Computer Tape.............................5-1
SECTION 5.05. Collections...........................................5-2
SECTION 5.06. Enforcement...........................................5-3
SECTION 5.07. Satisfaction of Contracts.............................5-4
SECTION 5.08. Costs and Expenses....................................5-4
SECTION 5.09. Maintenance of Insurance..............................5-4
SECTION 5.10. [RESERVED]............................................5-5
SECTION 5.11. Deposit of Funds......................................5-5
SECTION 5.12. Retitling; Lien Holder................................5-5
SECTION 5.13. [RESERVED]............................................5-6
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer.....5-6
SECTION 5.15. Annual Report of Accountants..........................5-6
SECTION 5.16. Certain Duties of the Servicer Under the Trust
Agreement............................................5-6
i
SECTION 5.17. [RESERVED]
SECTION 5.18. Annual Statement as to Compliance; Notice of Servicer
Termination Event....................................5-7
SECTION 5.19. [RESERVED]
SECTION 5.20. Maintenance of Lien Interests in Real Property........5-7
SECTION 5.21. Covenants, Representations, and Warranties of
Servicer.............................................5-8
SECTION 5.22. Purchase of Contracts Upon Breach of Covenant.........5-8
ARTICLE VI - DISTRIBUTIONS; TRUST ACCOUNTS; LIMITED GUARANTY;
STATEMENTS TO SECURITYHOLDERS........................................6-1
SECTION 6.01. Trust Accounts........................................6-1
SECTION 6.02. Collection Account Deposits...........................6-2
SECTION 6.03. Permitted Withdrawals.................................6-2
SECTION 6.04. [RESERVED] ...........................................6-3
SECTION 6.06. Distributions.........................................6-3
SECTION 6.08. Claims Upon Policy....................................6-7
SECTION 6.09. Effect of Payments by the Note Insurer; Subrogation...6-8
SECTION 6.10. Notices to the Note Insurer...........................6-9
SECTION 6.11. Rights of the Note Insurer To Exercise Rights of
Noteholders..........................................6-9
SECTION 6.12. Withdrawals From Undelivered Contract Account.........6-9
ARTICLE VII - SERVICE TRANSFER.............................................7-1
SECTION 7.01. Servicer Termination Event............................7-1
SECTION 7.02. [RESERVED]............................................7-4
SECTION 7.03. [RESERVED]............................................7-4
SECTION 7.04. Notification to Securityholders.......................7-4
SECTION 7.05. Effect of Transfer....................................7-5
SECTION 7.06. Transfer of Collection Account........................7-5
SECTION 7.07. Limits on Liability...................................7-5
SECTION 7.08. Waiver of Past Defaults...............................7-6
ARTICLE VIII - TERMINATION.................................................8-1
SECTION 8.01. Company's or Servicer's Repurchase Option.............8-1
SECTION 8.02. Liquidation of Trust Estate...........................8-2
ARTICLE IX - INDEMNITIES...................................................9-1
SECTION 9.01. Company's Indemnities.................................9-1
SECTION 9.02. Liabilities to Obligors...............................9-1
SECTION 9.03. Servicer's Indemnities................................9-1
SECTION 9.04. Operation of Indemnities..............................9-2
ARTICLE X - MISCELLANEOUS.................................................10-1
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation
of Servicing Duties................................10-1
SECTION 10.02. Assignment or Delegation by Company.................10-1
SECTION 10.03. Amendment...........................................10-2
ii
SECTION 10.04. Notices.............................................10-3
SECTION 10.05. Merger and Integration..............................10-5
SECTION 10.06. Headings............................................10-5
SECTION 10.07. Governing Law.......................................10-5
SECTION 10.08. Limitation of Liability.............................10-5
SECTION 10.09. The Note Insurer....................................10-5
SECTION 10.10. Third Party Rights..................................10-6
SECTION 10.11. Limitation of Liability. ..........................10-6
EXHIBIT A - FORM OF ASSIGNMENT...........................................A - 1
EXHIBIT B - FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS..............................................B - 1
EXHIBIT C - FORM OF MONTHLY REPORT.......................................C - 1
EXHIBIT D - FORM OF CERTIFICATE OF SERVICING OFFICER.....................D - 1
iii
THIS SALE AND SERVICING AGREEMENT, dated as of December 1, 1998, between
Green Tree Home Improvement and Home Equity Loan Trust 1998-F (the "Issuer" or
the "Trust") and Green Tree Financial Corporation, a corporation organized and
existing under the laws of the State of Delaware, as Seller and Servicer (the
"Company").
WHEREAS, the Issuer wishes to purchase from the Company certain
"Contracts," as hereinafter defined; and
WHEREAS, Financial Security Assurance Inc. (the "Note Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement; and
WHEREAS, the Company and the Issuer wish to set forth the terms and
conditions pursuant to which the Issuer will acquire the Contracts and the
Company will service the Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, the Company and the Issuer agree as provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. General.
For the purpose of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires, the terms defined in this Article
include the plural as well as the singular, the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision, and Section
references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
All terms defined in any Related Document and not otherwise defined in
this Agreement shall have the meanings given them in such Related Document.
"Advance Payment" means, with respect to any Due Period, any payment by an
Obligor that was not due under the related Contract during or before such Due
Period and which payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Liquidation Loss Principal Amount" means, as of any Payment
Date, the excess, if any, of (a) the Note Principal Balance as of the preceding
Payment Date (after giving effect to distributions of principal thereon) over
(b) the Pool Scheduled Principal Balance.
"Agreement" means this Sale and Servicing Agreement as the same may be
amended or supplemented from time to time.
"Amount Available" means, as to any Payment Date, an amount equal to the
Collected Funds for that Payment Date, plus any amounts required to be deposited
in the Collection Account for such Payment Date pursuant to Sections 6.05, 8.01
and 8.02, plus any Insured Payment deposited in the Note Distribution Account
for such Payment Date.
"Amount Held for Future Distribution" means, as to any Payment Date, the
total of the amounts held in the Collection Account on the last day of the
related Due Period on account of Advance Payments in respect of such Due Period.
"Assignment" means the Assignment from the Company to the Trust in
substantially the form of Exhibit A, whereby the Company assigns the Contracts
to the Trust.
1-1
"Average Sixty-Day Delinquency Ratio Test" means, to be considered
"satisfied" for any Payment Date, that the arithmetic average of the Sixty-Day
Delinquency Ratios for such Payment Date and for the two immediately preceding
Payment Dates is less than or equal to 4.5%.
"Average Thirty-Day Delinquency Ratio Test" means, to be considered
"satisfied" for any Payment Date, that the arithmetic average of the Thirty-Day
Delinquency Ratios for such Payment Date and for the two immediately preceding
Payment Dates is less than or equal to 7.5%.
"Backup Servicer" means the Indenture Trustee, which shall initially serve
as Backup Servicer hereunder in the event of the termination of the Servicer,
subject to the right of the Indenture Trustee to assign such duties to another
party pursuant to Section 7.01.
"Business Day" means any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banking institutions in Minneapolis, Minnesota,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee or successor Indenture Trustee are authorized
or obligated by law, executive order or governmental decree to be closed.
"Certificate" means the Certificate issued under the Trust Agreement.
"Certificate Distribution Account" means the account established and
maintained pursuant to Section 6.01(c).
"Certificate Distribution Amount" means the amount specified in Section
6.06(a)(xv).
"Certificateholder" means the person in whose name a Certificate is
registered on the Certificate Register.
"Civil Relief Interest Shortfall" means, with respect to any Due Period,
for any Contract as to which there has been a reduction in the amount of
interest collectible thereon for the most recently ended Due Period as a result
of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended, the amount,
if any, by which interest collectible on such Contract during the most recently
ended Due Period is less than one month's interest on the outstanding principal
balance of such Contract at a rate equal to the related Contract Interest Rate.
"Class" means pertaining to each Class of Notes.
"Class A Cross-over Date" means the Payment Date on which the Class A
Principal Balance (after giving effect to the distributions of principal on the
Class A Certificates on such Payment Date) is reduced to zero.
"Class A Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class A Noteholders on such Payment Date pursuant to
Sections 8.02(c)(1) and (5) of the Indenture.
1-2
"Class A Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class A Formula Principal Distribution Amount, (b) the Class A
Interest Amount, and (c) any Unpaid Class A Interest Shortfall.
"Class A Formula Principal Distribution Amount" means, as to any Payment
Date on or before the Class A Cross-over Date, the lesser of (a) the Senior
Formula Principal Distribution Amount and (b) the Class A Principal Balance;
and, as to any Payment Date after the Class A Crossover Date, zero.
"Class A Interest Amount" means, as to any Payment Date, the sum of the
Class A-1 Interest Amount and the Class A-2 Interest Amount.
"Class A Portion" means, as to any Payment Date, a fraction, the numerator
of which is the sum of the Class A Principal Balance, and the denominator of
which is the Note Principal Balance.
"Class A Principal Balance" means, as to any Payment Date, the sum of the
Class A-1 Principal Balance and the Class A-2 Principal Balance.
"Class A Principal Deficiency Amount" means, as to any Payment Date, the
amount, if any, by which the Pool Scheduled Principal Balance on such Payment
Date is less than the Class A Principal Balance.
"Class A Principal Distribution Amount" means (1) as to any Payment Date
on which there is no Class A Principal Deficiency Amount, the lesser of (a) the
Amount Available remaining after distribution of amounts described in Sections
6.06(a)(i) through (iv) and (b) the Class A Formula Principal Distribution
Amount, and (2) as to any Payment Date on which there is a Class A Principal
Deficiency Amount not covered by an Insured Payment on such Payment Date, the
Amount Available less amounts described in Section 6.06(a)(i) through (iv).
"Class A-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class A-1 Interest Rate on the Class A-1 Principal Balance
for such Payment Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-1 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-1 Interest Amount and the Unpaid
Class A-1 Interest Shortfall for such Payment Date.
"Class A-1 Interest Rate" means a per annum rate of interest equal to
6.62%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-1 Notes" means the Class A-1 Notes issued by the Trust pursuant
to the Indenture.
1-3
"Class A-1 Principal Balance" means, as to any Payment Date, the Original
Class A-1 Principal Balance less all amounts distributed to Holders of Class A-1
Notes on any prior Payment Date on account of principal pursuant to Section
8.02(c) of the Indenture.
"Class A-2 Interest Amount" means, with respect to any Payment Date, one
month's interest (or, with respect to the first Payment Date, interest from and
including the Closing Date to but excluding the first Payment Date) at the Class
A-2 Interest Rate on the Class A-2 Principal Balance for such Payment Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class A-2 Notes on such Payment Date pursuant to Section 8.02(c)(1) of the
Indenture is less than the sum of the Class A-2 Interest Amount for such Payment
Date and the Unpaid Class A-2 Interest Shortfall.
"Class A-2 Interest Rate" means a per annum rate of interest equal to
6.62%, computed on the basis of a year of 360 days and twelve 30-day months.
"Class A-2 Notes" means the Class A-2 Notes issued by the Trust pursuant
to the Indenture.
"Class A-2 Principal Balance" means, as to any Payment Date the Original
Class A-2 Principal Balance less all amounts distributed to Holders of Class A-2
Notes on prior Payment Dates on account of principal pursuant to Section 8.02(c)
of the Indenture.
"Class B Cross-over Date" means the earlier of:
(a) the Class M-2 Cross-over Date, and
(b) the first Payment Date on or after the Payment Date occurring in
January 2003.
"Class B Floor Reduction Amount" means, as to any Payment Date on or prior
to the Class M-2 Cross-over Date, the amount, if any, by which the Class B
Percentage of the Formula Principal Distribution Amount exceeds (a) the Class B
Principal Balance for such Payment Date less (b) $2,250,000, and, as to any
Payment Date after the Class M-2 Cross-over Date, zero.
"Class B Formula Principal Distribution Amount" means, as to any Payment
Date, the Class B Percentage of the Formula Principal Distribution Amount less
the Class B Floor Reduction Amount.
"Class B Percentage" means 100% minus the Senior Percentage.
"Class B Principal Balance" means, as to any Payment Date, the sum of the
Class B-1 Principal Balance and the Class B-2 Principal Balance.
"Class B Principal Balance Test" means, to be considered "satisfied" for
any Payment Date, that the fraction, expressed as a percentage, the numerator of
which is the sum of the Class B
1-4
Principal Balance as of such Payment Date and the denominator of which is the
Pool Scheduled Principal Balance as of the immediately preceding Payment Date,
is equal to or greater than 22%.
"Class B Principal Distribution Test" means, as to any Payment Date, each
of the Average Sixty-Day Delinquency Ratio Test, the Average Thirty-Day
Delinquency Ratio Test, the Class B Principal Balance Test, the Cumulative
Realized Losses Test and the Current Realized Losses Test.
"Class B-1 Adjusted Principal Balance" means, as of any Payment Date, the
Class B-1 Principal Balance as of that Payment Date minus the Class B-1
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"Class B-1 Cross-over Date" means the Payment Date on which the Class B-1
Principal Balance (after giving effect to the distributions of principal on the
Class B-1 Notes on such Payment Date) is reduced to zero.
"Class B-1 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class B-1 Noteholders on such Payment Date pursuant to
Sections 8.02(c)(4), (8) and (9) of the Indenture.
"Class B-1 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class B-1 Interest Amount, (b) any Unpaid Class B-1 Interest
Shortfall, (c) any Class B-1 Formula Liquidation Loss Interest Amount, and (d)
the Class B-1 Formula Principal Distribution Amount.
"Class B-1 Formula Liquidation Loss Interest Distribution Amount" means,
as to any Payment Date, the sum of (a) the Class B-1 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class B-1 Liquidation Loss Interest
Shortfall, if any.
"Class B-1 Formula Principal Distribution Amount" means, as to any Payment
Date on or before the Class B-1 Cross-over Date, the lesser of (a) the Class B
Formula Principal Distribution Amount plus, on the Class M-2 Cross-over Date,
the Senior Formula Principal Distribution Amount less the Class M Principal
Distribution Amount or (b) the Class B-1 Principal Balance; and, on any Payment
Date after the Class B-1 Cross-over Date, zero.
"Class B-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class B-1 Interest Rate on the Class B-1 Adjusted Principal
Balance for such Payment Date.
"Class B-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class B-1 Notes on such Payment Date pursuant to Section 8.02(c)(4) of the
Indenture is less than the sum of the Class B-1 Interest Amount plus the Unpaid
Class B-1 Interest Shortfall for such Payment Date.
"Class B-1 Interest Rate" means 8.99% per annum, computed on the basis of
a year of 360 days consisting of twelve 30-day months.
1-5
"Class B-1 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding the first Payment
Date) at the Class B-1 Interest Rate on the Class B-1 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class B-1 Liquidation Loss Interest Shortfall" means, as to any Payment
Date, the amount, if any, by which the Class B-1 Formula Liquidation Loss
Interest Distribution Amount exceeds any amount distributed to Class B-1 Note on
such Payment Date pursuant to Section 8.02(c)(9) of the Indenture.
"Class B-1 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class B-1 Principal Balance (after giving effect to
all distributions of principal on the Class B-1 Notes on such Payment Date) and
(b) the excess, if any, of the Aggregate Liquidation Loss Principal Amount over
the Class B-2 Principal Balance (after giving effect to all distributions of
principal on the Class B-2 Notes on such Payment Date).
"Class B-1 Notes" means the Class B-1 Notes issued by the Trust pursuant
to the Indenture.
"Class B-1 Principal Balance" means, as to any Payment Date, the Original
Class B-1 Principal Balance less all amounts distributed to Holders of Class B-1
Notes on prior Payment Dates on account of principal pursuant to Section
8.02(c)(8) of the Indenture.
"Class B-1 Principal Distribution Amount" means, as to any Payment Date,
the lesser of (a) the Amount Available remaining after distribution of amounts
described in Sections 6.06(a)(i) through (vii), and (b) the Class B-1 Formula
Principal Distribution Amount.
"Class B-2 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class B-2 Noteholders on such Payment Date pursuant to
Section 8.02(c)(10) of the Indenture.
"Class B-2 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class B-2 Interest Amount, (b) any Unpaid Class B-2 Interest
Shortfall, (c) the Class B-2 Formula Principal Distribution Amount, and (d) the
Class B-2 Liquidation Loss Principal Amount, if any (but in no event more than
is necessary to reduce the Class B-2 Principal Balance to zero).
"Class B-2 Formula Principal Distribution Amount" means, as to any Payment
Date on or after the Class B-1 Cross-over Date, the lesser of (a) the Class B
Formula Principal Distribution Amount less, on the Class B-1 Cross-over Date,
the Class B-1 Principal Distribution Amount, and (b) the Class B-2 Principal
Balance.
"Class B-2 Interest Amount" means, as to any Payment Date, an amount equal
to one month's interest (or, with respect to the first Payment Date, interest
from and including the Closing Date to but excluding the first Payment Date) at
the Class B-2 Interest Rate on the Class B-2 Principal Balance for such Payment
Date.
1-6
"Class B-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class B-2 Certificates on such Payment Date pursuant to Section 8.02(c)(10)
of the Indenture is less than the sum of the Class B-2 Interest Amount plus the
Unpaid Class B-2 Interest Shortfall for such Payment Date.
"Class B-2 Interest Rate" means 10% per annum, computed on the basis of a
360-day year consisting of twelve 30-day months.
"Class B-2 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class B-2 Principal Balance (after giving effect to
all distributions of principal on the Class B-2 Notes on such Payment Date) and
(b) the Aggregate Liquidation Loss Principal Amount.
"Class B-2 Notes" means the Class B-2 Notes issued by the Trust pursuant
to the Indenture.
"Class B-2 Principal Balance" means, as to any Payment Date, the Original
Class B-2 Principal Balance less all amounts distributed to Holders of Class B-2
Notes on prior Payment Dates on account of principal pursuant to Section
8.02(c)(10) of the Indenture.
"Class M Formula Principal Distribution Amount" means, as to any Payment
Date before the Class A Cross-over Date or after the Class M-2 Cross-over Date,
zero; and, as to any Payment Date on or after the Class A Cross-over Date and on
or before the Class M-2 Cross-over Date, the lesser of (a) the Senior Formula
Principal Distribution Amount less, on the Class A Cross-over Date, the Class A
Principal Distribution Amount, and (b) the Class M Principal Balance.
"Class M Principal Balance" means, as to any Payment Date, the sum of the
Class M-1 Principal Balance and the Class M-2 Principal Balance.
"Class M Principal Distribution Amount" means, as to any Payment Date, the
lesser of (a) the Amount Available remaining after distribution of amounts
described in Sections 6.06(a)(i) through (vi), and (b) the Class M Formula
Principal Distribution Amount.
"Class M-1 Adjusted Principal Balance" means, as of any Payment Date, the
Class M-1 Principal Balance as of that Payment Date minus the Class M-1
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"Class M-1 Cross-over Date" means the Payment Date on which the Class M-1
Principal Balance (after giving effect to the distributions of principal on the
Class M-1 Notes on such Payment Dates) is reduced to zero.
"Class M-1 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class M-1 Noteholders on such Payment Date pursuant to
Sections 8.02(c)(2), (6) and (9) of the Indenture.
"Class M-1 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class M-1 Interest Amount, (b) any Unpaid Class M-1 Interest
Shortfall, (c) any Class M-1
1-7
Formula Liquidation Loss Interest Amount, and (d) the Class M-1 Formula
Principal Distribution Amount.
"Class M-1 Formula Liquidation Loss Interest Distribution Amount" means,
as to any Payment Date, the sum of (a) the Class M-1 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class M-1 Liquidation Loss Interest
Shortfall, if any.
"Class M-1 Formula Principal Distribution Amount" means, as to any Payment
Date before the Class A Cross-over Date or after the Class M-1 Cross-over Date,
zero; and, as to any Payment Date on or after the Class A Cross-over Date and on
or before the Class M-1 Cross-over Date, the lesser of (a) the Senior Formula
Principal Distribution Amount less, on the Class A Cross-over Date, the Class A
Principal Distribution Amount, and (b) the Class M-1 Principal Balance.
"Class M-1 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class M-1 Interest Rate on the Class M-1 Adjusted Principal
Balance for such Payment Date.
"Class M-1 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class M-1 Notes on such Payment Date pursuant to Section 8.02(c)(2) of the
Indenture is less than the sum of the Class M-1 Interest Amount and the Unpaid
Class M-1 Interest Shortfall for such Payment Date.
"Class M-1 Interest Rate" means a per annum rate of interest equal to
7.43%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
"Class M-1 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding the first Payment
Date) at the Class M-1 Interest Rate on the Class M-1 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class M-1 Liquidation Loss Interest Shortfall" means, as to any Payment
Date, the amount, if any, by which the Class M-1 Formula Liquidation Loss
Interest Distribution Amount exceeds any amount distributed to Class M-1
Noteholders on such Payment Date pursuant to Section 8.02(c)(9) of the
Indenture.
"Class M-1 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class M-1 Principal Balance (after giving effect to
all distributions of principal on the Class M-1 Notes on such Payment Date) and
(b) the excess, if any, of the Aggregate Liquidation Loss Principal Amount over
the aggregate of the Class M-2 Principal Balance and the Class B Principal
Balance (after giving effect to all distributions of principal on the Class M-2
and Class B Notes on such Payment Date).
"Class M-1 Notes" means the Class M-1 Notes issued by the Trust pursuant
to the Indenture.
1-8
"Class M-1 Principal Balance" means, as to any Payment Date, the Original
Class M-1 Principal Balance less all amounts distributed to Holders of Class M-1
Notes on prior Payment Dates on account of principal pursuant to Section 8.02(c)
of the Indenture.
"Class M-1 Principal Distribution Amount" means as to any Payment Date the
amount paid to the Class M-1 Noteholders under Section 8.02 (c) (6) of the
Indenture.
"Class M-2 Adjusted Principal Balance" means, as of any Payment Date, the
Class M-2 Principal Balance as of that Payment Date minus the Class M-2
Liquidation Loss Principal Amount (if any) as of the prior Payment Date.
"Class M-2 Cross-over Date" means the Payment Date on which the Class M-2
Principal Balance (after giving effect to the distributions of principal on the
Class M-2 Notes on such Payment Date) is reduced to zero.
"Class M-2 Distribution Amount" means, as to any Payment Date, the sum of
the amounts paid to Class M-2 Noteholders on such Payment Date pursuant to
Sections 8.02(c)(2), (7) and (9) of the Indenture.
"Class M-2 Formula Distribution Amount" means, as to any Payment Date, the
sum of (a) the Class M-2 Interest Amount, (b) any Unpaid Class M-2 Interest
Shortfall, (c) any Class M-2 Formula Liquidation Loss Interest Amount, and (d)
the Class M-2 Formula Principal Distribution Amount.
"Class M-2 Formula Liquidation Loss Interest Distribution Amount" means,
as to any Payment Date, the sum of (a) the Class M-2 Liquidation Loss Interest
Amount, if any, and (b) the Unpaid Class M-2 Liquidation Loss Interest
Shortfall, if any.
"Class M-2 Formula Principal Distribution Amount" means, as to any Payment
Date before the Class M-1 Cross-over Date or after the Class M-2 Cross-over
Date, zero; and, as to any Payment Date on or after the Class M-1 Cross-over
Date and on or before the Class M-2 Cross-over Date, the lesser of (a) the
Senior Formula Principal Distribution Amount less, on the Class M-1 Cross-over
Date, the Class M-1 Principal Distribution Amount, and (b) the Class M-2
Principal Balance.
"Class M-2 Interest Amount" means, with respect to any Payment Date, an
amount equal to one month's interest (or, with respect to the first Payment
Date, interest from and including the Closing Date to but excluding the first
Payment Date) at the Class M-2 Interest Rate on the Class M-2 Adjusted Principal
Balance.
"Class M-2 Interest Carryover Shortfall" means, with respect to any
Payment Date, the amount, if any, by which the amount distributed to Holders of
the Class M-2 Notes on such Payment Date pursuant to Section 8.02(c)(2) of the
Indenture is less than the sum of the Class M-2 Interest Amount and the Unpaid
Class M-2 Interest Shortfall for such Payment Date.
"Class M-2 Interest Rate" means a per annum rate of interest equal to
8.16%, calculated on the basis of a year of 360 days consisting of twelve 30-day
months.
1-9
"Class M-2 Liquidation Loss Interest Amount" means, as to any Payment
Date, an amount equal to one month's interest (or, as to the first Payment Date,
interest from and including the Closing Date to but excluding the first Payment
Date) at the Class M-2 Interest Rate on the Class M-2 Liquidation Loss Principal
Amount (if any) for the immediately preceding Payment Date.
"Class M-2 Liquidation Loss Interest Shortfall" means, as to any Payment
Date, the amount, if any, by which the Class M-2 Formula Liquidation Loss
Interest Distribution Amount exceeds any amount distributed to Class M-2
Noteholders on such Payment Date pursuant to Section 8.02(c)(9) of the
Indenture.
"Class M-2 Liquidation Loss Principal Amount" means, as to any Payment
Date, the lesser of (a) the Class M-2 Principal Balance (after giving effect to
all distributions of principal on the Class M-2 Notes on such Payment Date) and
(b) the excess, if any, of the Aggregate Liquidation Loss Principal Amount over
the Class B Principal Balance (after giving effect to all distributions of
principal on the Class B Notes on such Payment Date).
"Class M-2 Notes" means the Class M-2 Notes issued by the Trust pursuant
to the Indenture.
"Class M-2 Principal Balance" means, as to any Payment Date, the Original
Class M-2 Principal Balance less all amounts distributed to Holders of Class M-2
Notes on prior Payment Dates on account of principal pursuant to Section 8.02(c)
of the Indenture.
"Class M-2 Principal Distribution Amount" means, as to any Payment Date,
the amount paid to Class M-2 Noteholders under Section 8.02 (c) (7) of the
Indenture.
"Class Percentage Interest" means, as to any Note or Certificate, the
percentage interest evidenced thereby in distributions made on the related
Class, such percentage interest being equal to the percentage (carried to eight
places) obtained from dividing the denomination of such Note or Certificate by
the aggregate denomination of all Notes or Certificates of the related Class
(which equals the Original Class A-1 Principal Balance in the case of a Class
A-1 Note, the Original Class A-2 Principal Balance in the case of a Class A-2
Note, the Original Class M-1 Principal Balance in the case of a Class M-1 Note,
the Original Class M-2 Principal Balance in the case of a Class M-2 Note, the
Original Class B-1 Principal Balance in the case of a Class B-1 Note or the
Original Class B-2 Principal Balance in the case of a Class B-2 Note). The
aggregate Class Percentage Interest for each Class of Notes or Certificates
shall equal 100%.
"Class Principal Balance" means, as to any date, the Class A-1 Principal
Balance, the Class A-2 Principal Balance, the Class M-1 Principal Balance, the
Class M-2 Principal Balance, the Class B-1 Principal Balance or the Class B-2
Principal Balance, as appropriate.
"Closing Date" means December 30, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Security" means, with respect to any Contract, (i) the
mortgage, deed of trust or security deed granted by or on behalf of the related
Obligor with respect thereto, including the lien
1-10
on the related real property, (ii) all other security interests or liens and
property subject thereto from time to time purporting to secure payment of such
Contract, whether pursuant to the agreement giving rise to such Contract or
otherwise, together with all financing statements signed by the Obligor
describing any collateral securing such Contract, (iii) all rights the Company
may have against the originator of the Contract if other than the Company, (iv)
all rights under hazard insurance, if applicable, on the property described in
the Contract, (v) all rights in any title insurance policy with respect to a
Contract and (vi) all guarantees, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment of such
Contract whether pursuant to the agreement giving rise to such Contract or
otherwise, and (vii) all records in respect of such Contract.
"Collected Funds" means, as to any Payment Date, an amount equal to (a)
the sum of (i) the amount on deposit in the Collection Account as of the close
of business on the last day of the related Due Period (exclusive of any amounts
deposited therein pursuant to Sections 6.05, 8.01 or 8.02 of this Agreement),
and (ii) any amounts required to be deposited in the Collection Account on or
before the Business Day immediately preceding such Payment Date pursuant to
Section 5.09, reduced by (b) the sum as of the close of business on the last day
of the related Due Period of (i) the Amount Held for Future Distribution and
(ii) amounts permitted to be withdrawn by the Trustee from the Collection
Account pursuant to clauses (b) - (e), inclusive, of Section 6.03.
"Collection Account" means the account established and maintained pursuant
to Section 6.01.
"Computer Tape" means the computer tape generated by the Company which
provides information relating to the Contracts and which was used by the Company
in selecting the Contracts, and includes the master file and the history file.
"Contract File" means, as to each Contract, (a) the original copy of the
Contract which is comprised of the related contract and/or promissory note,
endorsed to the Indenture Trustee or in blank, (b) the original or a copy of the
mortgage, deed of trust or security deed or similar evidence of a lien on the
related improved property and evidence of due recording of such mortgage, deed
of trust or security deed, if available, (c) if such Contract was originated by
a contractor or lender other than the Company, the original or a copy of an
assignment of the mortgage, deed of trust or security deed by the contractor or
lender to the Company, (d) an assignment of the mortgage, deed of trust or
security deed to the Indenture Trustee or in blank, and (e) originals of any
extension, modification or waiver agreement(s).
"Contract Interest Rate" means, with respect to any Contract, the annual
rate of interest specified in that Contract.
"Contracts" means, collectively, the Home Improvement Contracts and the
Home Equity Contracts.
"Corporate Trust Office" means with respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the Closing Date
is located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration; the telecopy
1-11
number for the Corporate Trust Office of the Owner Trustee on the date of the
execution of this Agreement is 000-000-0000; with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at U.S. Bank Trust National Association, 000 Xxxx
Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000 Attention: Corporate Trust Department;
the telecopy number for the Corporate Trust Office of the Indenture Trustee on
the date of execution of this Agreement is 000-000-0000.
"Counsel for the Company" means Xxxxxx and Xxxxxx, P.A., or other legal
counsel for the Company acceptable to the Note Insurer.
"Cumulative Realized Losses" means, as to any Payment Date, the sum of the
Realized Losses for that Payment Date and each preceding Payment Date since the
Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied" for
any Payment Date, that the Cumulative Realized Loss Ratio as of such Payment
Date is less than or equal to 13%.
"Cumulative Realized Loss Ratio" means, for any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the Cumulative Realized
Losses for that Payment Date, and the denominator of which is the Cut-off Date
Pool Principal Balance.
"Current Realized Losses Test" means, to be considered "satisfied" for any
Payment Date, that the Current Realized Loss Ratio for such Payment Date is less
than or equal to 5%.
"Current Realized Loss Ratio" means, as to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate Realized
Losses for such Payment Date and each of the two immediately preceding Payment
Dates, multiplied by four, and the denominator of which is the arithmetic
average of the Pool Scheduled Principal Balance of as of the third preceding
Payment Date and the Pool Scheduled Principal Balance of as of such Payment
Date.
"Cut-off Date" means December 1, 1998 (or the date of origination, if
later).
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
Date Principal Balances of the Contracts.
"Cut-off Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due prior thereto.
"Defaulted Contract" means a Contract with respect to which the Servicer
commenced foreclosure proceedings, made a sale of such Contract to a third party
for foreclosure or enforcement, or as to which there was a Delinquent Payment
180 or more days past due.
"Delinquent Payment" means, as to any Contract, with respect to any Due
Period, any payment or portion of a payment of principal or interest that was
originally scheduled to be made during such Due Period under such Contract
(after giving effect to any reduction in the principal amount deemed owed on
such Contract by the Obligor) and was not received or applied during such
1-12
Due Period, whether or not any payment extension permitted under Section 5.06(f)
has been granted by the Servicer.
"Determination Date" means the third Business Day prior to each Payment
Date during the term of this Agreement.
"Due Date" means, as to any Contract, the date of the month on which the
scheduled monthly payment for such Contract is due.
"Due Period" means a calendar month during the term of this Agreement.
"Electronic Ledger" means the electronic master record of installment sale
contracts, home equity loans and promissory notes of the Company.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) an
account or accounts the deposits in which are fully insured by either the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC; (iii) a
trust account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Indenture Trustee, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the capital and surplus of the bank holding company) of not less than
$50,000,000 and the securities of such depository institution (or, if such
depository institution is a subsidiary of a bank holding company system and such
depository institution's securities are not rated, the securities of the bank
holding company) shall have a credit rating from Standard & Poor's (if rated by
Standard & Poor's) and Moody's (if rated by Moody's) in one of its generic
credit rating categories which signifies investment grade; or (iv) an account
that will not cause either of the Rating Agencies to downgrade or withdraw their
then-current ratings assigned to the Notes (without regard to the Note Insurance
Policy), as confirmed in writing by the Rating Agencies.
"Eligible Institution" means any depository institution (which may be the
Owner Trustee, the Indenture Trustee or an Affiliate of either) organized under
the laws of the United States or any State, the deposits of which are insured to
the full extent permitted by law by the Bank Insurance Fund (currently
administered by the Federal Deposit Insurance Corporation), which is subject to
supervision and examination by federal or state authorities and whose short-term
deposits have been rated A-1 by Standard & Poor's and P-1 by Moody's or whose
unsecured long-term debt has been rated in one of the two highest rating
categories by Standard & Poor's and Moody's in the case of unsecured long-term
debt, or who shall otherwise be acceptable to the Rating Agencies.
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed by, the
United States of America, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association having the highest credit rating
then available from Moody's and Standard & Poor's, or any agency or
instrumentality of the United States of America the obligations of
1-13
which are backed by the full faith and credit of the United States of
America and which are noncallable;
(ii) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or any
Affiliate of the Indenture Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any State
thereof and subject to supervision and examination by federal and/or state
authorities, so long as, at the time of such investment or contractual
commitment providing for such investment, the commercial paper or other
short-term deposits of such depository institution or trust company (or,
in the case of a depository institution which is the principal subsidiary
of a holding company, the commercial paper or other short-term debt
obligations of such holding company) are rated at least A-1+ by Standard &
Poor's and at least P-1 by Moody's;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then available
from Moody's and Standard & Poor's and whose only investments are in
securities described in clauses (i) and (ii) above if the Indenture
Trustee has taken possession of any certificate evidencing the shares or,
if uncertificated, there is an appropriate book entry notation showing the
Indenture Trustee as the owner of the shares;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) above if the
Indenture Trustee has taken possession of any certificate evidencing the
securities or, if uncertificated, there is an appropriate book entry
notation showing the Indenture Trustee as the owner of the securities;
(v) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or
any State thereof which have a credit rating of at least AAA by Standard &
Poor's and at least Aaa from Moody's at the time of such investment;
provided, however, that securities issued by any particular corporation
will not be Eligible Investments to the extent that investment therein
will cause the then outstanding principal amount of securities issued by
such corporation and held as part of the corpus of the Trust to exceed 10%
of amounts held in the Collection Account;
(vi) commercial paper having a rating of at least A-1+ from Standard
& Poor's and at least P-1 by Moody's at the time of such investment or
pledge as a security; and
(vii) any other investment approved by the Note Insurer in advance
and in writing.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
1-14
Each of the Indenture Trustee and the Owner Trustee may trade with itself
or an Affiliate in the purchase or sale of such Eligible Investments.
"Eligible Servicer" means the Company or a Person designated as an
approved seller-servicer by Xxxxxx Mae or Xxxxxxx Mac and otherwise qualified to
act as servicer of the Contracts under applicable Federal and State laws and
regulations, and which services not less than an aggregate of $100,000,000 in
outstanding principal amount of home improvement contracts and promissory notes,
manufactured housing conditional sales contracts and installment loan agreements
and home equity loans.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or any
similar replacement bond, meeting the requirements of Section 5.09, as such bond
relates to Contracts comprising a portion of the corpus of the Trust.
"Final Scheduled Payment Date" has the meaning given in the Indenture.
"Formula Principal Distribution Amount" means, with respect to any Payment
Date, the sum of the Group 1 Formula Principal Distribution Amount and the Group
2 Formula Principal Distribution Amount, provided that the Formula Principal
Distribution Amount for the Distribution Date in August 2028 shall be the Note
Principal Balance.
"Group 1 Contract" means a Contract identified as such on the List of
Contracts.
"Group 2 Contract" means a Contract identified as such on the List of
Contracts.
"Group 1 Formula Principal Distribution Amount" means, as of any Payment
Date, the sum of the following amounts with respect to the related Due Period,
in each case computed in accordance with the method specified in the related
Group 1 Contract:
(i) all scheduled payments of principal due on each outstanding
Group 1 Contract during the related Due Period as specified in the
amortization schedule at the time applicable thereto (after adjustments
for previous Partial Principal Prepayments and after any adjustment to
such amortization schedule by reason of any bankruptcy of an Obligor or
similar proceeding or any moratorium or similar waiver or grace period);
plus
1-15
(ii) the Scheduled Principal Balance of each Group 1 Contract which,
during the related Due Period, was purchased by the Company pursuant to
this Agreement on account of a breach of a representation or warranty;
plus
(iii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received on Group 1 Contracts during the related Due
Period; plus
(iv) the aggregate Scheduled Principal Balance of all Group 1
Contracts that became Liquidated Contracts during the related Due Period;
plus the amount of any reduction in the outstanding principal balance of
any Group 1 Contract during such Due Period ordered as a result of a
bankruptcy or similar proceeding involving the related Obligor; plus
(v) any amount described in clauses (i) through (iv) above that was
not previously distributed because of an insufficient amount of funds
available in the Collection Account if (1) the Payment Date occurs on or
after the Payment Date on which the Class B-2 Principal Balance has been
reduced to zero, or (2) such amount was not covered by a Guaranty Payment
and corresponding reduction in the Class B Principal Balance.
"Group 2 Formula Principal Distribution Amount" means, as of any Payment
Date, the sum of the following amounts with respect to the related Due Period,
in each case computed in accordance with the method specified in the related
Group 2 Contract:
(i) all scheduled payments of principal due on each outstanding
Group 2 Contract during the related Due Period as specified in the
amortization schedule at the time applicable thereto (after adjustments
for previous Partial Principal Prepayments and after any adjustment to
such amortization schedule by reason of any bankruptcy of an Obligor or
similar proceeding or any moratorium or similar waiver or grace period);
plus
(ii) the Scheduled Principal Balance of each Group 2 Contract which,
during the related Due Period, was purchased by the Company pursuant to
this Agreement on account of a breach of a representation or warranty;
plus
(iii) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received on Group 2 Contracts during the related Due
Period; plus
(iv) the aggregate Scheduled Principal Balance of all Group 2
Contracts that became Liquidated Contracts during the related Due Period;
plus the amounts of any reduction in the outstanding principal balance of
a Group 2 Contract during such Due Period ordered as a result of a
bankruptcy or similar proceeding involving the related Obligor; plus
(v) any amount described in clauses (i) through (iv) above that was
not previously distributed because of an insufficient amount of funds
available in the Collection Account if (1) the Payment Date occurs on or
after the Payment Date on which the Class B-2 Principal Balance has been
reduced to zero, or (2) such amount was not covered by a Guaranty Payment
and corresponding reduction in the Class B Principal Balance.
1-16
"Guaranty Payment" means, as of any Payment Date, the amount, if any, by
which (A) the Class B-2 Formula Distribution Amount on such Payment Date exceeds
(B) the remainder of (x) the sum of the Collected Funds as of that Payment Date
plus any amounts on deposit in the Collection Account as of that Payment Date
pursuant to Sections 8.01 or 8.02 of this Agreement, minus (y) the amounts to be
distributed from the Collection Account on that Payment Date pursuant to clauses
(i) through (x) of Section 6.06(a).
"Holder" means the person in whose name a Note is registered on the Note
Register.
"Home Equity Contract" means each closed-end home equity loan described in
the List of Contracts and to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, any and all related mortgages, deeds of
trust and security deeds and any and all rights to receive payments which are
due pursuant thereto on or after the Cut-off Date.
"Home Improvement Contracts" means each retail installment sale contract
and promissory note described in the List of Contracts and to be assigned and
conveyed by the Company to the Trust, and includes, without limitation, any and
all related mortgages, deeds of trust and security deeds and any and all rights
to receive payments which are due pursuant thereto on or after the Cut-off Date.
"Indemnification Agreement" means the Indemnification Agreement dated as
of December 16, 1998 among the Note Insurer, the Seller, the Trust and the
Underwriters.
"Indenture" means the Indenture, dated as of December 1, 1998, between the
Trust and U.S. Bank Trust National Association, as Indenture Trustee, as the
same may be amended and supplemented from time to time.
"Indenture Trustee" means the Person acting as Trustee under the
Indenture, its successors in interest and any successor Trustee under the
Indenture.
"Independent" means, when used with respect to any specified Person,
Xxxxxx and Xxxxxx, P.A., or any Person who (i) is in fact independent of the
Company and the Servicer, (ii) does not have any direct financial interest or
any material indirect financial interest in the Company or the Servicer or in an
Affiliate of either and (iii) is not connected with the Company or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate shall be furnished to the Trustee,
such opinion or certificate shall state that the signatory has read this
definition and is Independent within the meaning set forth herein.
"Insurance Agreement" means the Insurance and Indemnity Agreement dated as
of December 1, 1998, among the Trust, the Seller and the Note Insurer, as such
agreement may be amended from time to time.
"Insured Payment" means as to any Payment Date, the lesser of (a) the
Shortfall or (b) the amount deposited in the Policy Payments Account pursuant to
Section 6.08.
1-17
"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by The Chase
Manhattan Bank at its principal office in the City of New York, as its prime or
base lending rate (any change in such rate of interest to be effective on the
date such change is announced by The Chase Manhattan Bank) plus 3%, and (ii) the
per annum rate equal to 6.62% and (b) the maximum rate permissible under
applicable usury or similar laws limiting interest rates. The Late Payment Rate
shall be computed on the basis of the actual number of days elapsed over a year
of 360 days.
"Limited Guaranty" means the obligation of the Company to make Guaranty
Payments pursuant to Section 6.05.
"Liquidated Contract" means with respect to any Due Period, either
(1) a Defaulted Contract as to which the Servicer has received from
the Obligor, or a third party purchaser of the Contract, all amounts which
the Servicer reasonably and in good faith expects to recover from or on
account of such Contract, or
(2) a Contract as to which there was a Delinquent Payment 180 or
more days past due (without regard to any extension given by the Servicer
under Section 5.06(f));
provided, however, that any Contract which the Company is obligated to
repurchase pursuant to Section 3.05, and did so repurchase shall be deemed not
to be a Liquidated Contract; and provided, further, that with respect to Due
Periods beginning on or after August 2027, a Liquidated Contract also means any
Contract as to which the Servicer has commenced foreclosure proceedings or made
a sale of the Contract to a third party for foreclosure or enforcement.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Contract, including, without limitation, legal fees
and expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including insurance proceeds) received
in connection with the liquidation of Defaulted Contracts, whether through
repossession, foreclosure sale or otherwise.
"List of Contracts" means the list identifying each Contract constituting
part of the corpus of the Trust, which list (a) identifies each Group 1 and
Group 2 Contract, (b) sets forth as to each Contract (i) the Cut-off Date
Principal Balance, (ii) the amount of monthly payments due from the Obligor,
(iii) the Contract Interest Rate and (iv) the maturity date, and (c) which is
attached to the Assignment.
"Moody's" means Xxxxx'x Investors Services, Inc., or any successor
thereto; provided that, if Moody's no longer has a rating outstanding on any
Class of Notes, then references herein to "Moody's" shall be deemed to refer to
the NRSRO then rating any Class of the Notes (or, if more than one such NRSRO is
then rating any Class of the Notes, to such NRSRO as may be designated
1-18
by the Servicer), and references herein to ratings by or requirements of Xxxxx'x
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Monthly Report" has the meaning assigned in Section 5.14.
"Monthly Servicing Fee" means, as of any Payment Date (a) on which the
Company is acting as Servicer, one-twelfth of the product of 0.75% and the Pool
Scheduled Principal Balance and (b) on which the Company is not acting as
Servicer, any amount agreed to by the Indenture Trustee, the Note Insurer and
the successor Servicer; provided that only that portion of the Monthly Servicing
Fee that does not exceed one-twelfth of the product of 0.75% and the Pool
Scheduled Principal Balance for the immediately preceding Payment Date shall be
paid pursuant to Section 6.06(a)(i) and any balance shall be paid pursuant to
Section 6.06(a)(xiv).
"Net Liquidation Loss" means, as to a Liquidated Contract, the difference
between (a) the Repurchase Price of such Contract, and (b) the Net Liquidation
Proceeds with respect to such Liquidated Contract, where such difference is a
positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, the
proceeds received, or, for Contracts which become Liquidated Contracts pursuant
to the last proviso in the definition of "Liquidated Contract," the estimated
proceeds to be received, as of the last day of the Due Period in which such
Contract became a Liquidated Contract, from the Obligor, from a third party
purchaser of the Contract, under insurance or otherwise, net of Liquidation
Expenses.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(b).
"Note Insurance Policy" means the financial guaranty insurance policy
(number 50763-N) dated December 30, 1998 issued by the Note Insurer to the
Indenture Trustee for the benefit of the Holders of the Class A-1 Notes and
Class A-2 Notes pursuant to which the Note Insurer guarantees the Scheduled
Payments.
"Note Insurer" Financial Security Assurance Inc., or any successor
thereto, as issuer of the Note Insurance Policy.
"Note Insurer Default" means the existence and continuance of any of the
following:
(a) the Note Insurer fails to make a payment required under the Note
Insurance Policy in accordance with its terms; or
(b) the Note Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the
benefit of its creditors or (iii) had an order for relief entered against
it under the United States Bankruptcy Code, the New York State Insurance
Law or any other similar federal or
1-19
state law relating to insolvency, bankruptcy, rehabilitation, liquidation,
or reorganization that is final and nonappealable.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"Note Majority" means, as to each Class of Notes, Holders of Notes
representing a majority of the Class Principal Balance of such Class, provided
that with respect to the Class A Notes, Note Majority means the Note Insurer if
there is at the time of determination no continuing Note Insurer Default.
"Note Pool Factor" means, with respect to any Payment Date and each Class
of Notes, an eight-digit decimal figure equal to the outstanding principal
balance of such Class of Notes as of such Payment Date (after giving effect to
all distributions on such date) divided by the Original Class Principal Balance
of such Class of Notes.
"Note Principal Balance" means, as of any Payment Date, the sum of the
Class A-1 Principal Balance, the Class A-2 Principal Balance, the Class M-1
Principal Balance, the Class M-2 Principal Balance, the Class B-1 Principal
Balance and the Class B-2 Principal Balance.
"Notes" means the Class A-1 Notes, Class A-2 Notes, Class M-1 Notes, Class
M-2 Notes, Class B-1 Notes or Class B-2 Notes.
"NRSRO" means any nationally recognized statistical rating organization.
"MN UCC" means the Uniform Commercial Code as in effect in the State of
Minnesota.
"Obligor" means a Person who is indebted under a Contract.
"Officer's Certificate" means a certificate signed by the Chairman of the
Board, President or any Vice President of the Company and delivered to the Owner
Trustee and/or the Indenture Trustee as applicable.
"Opinion of Counsel" means a written opinion of counsel, who may, except
as expressly provided herein, be salaried counsel for the Company, acceptable to
the Indenture Trustee, the Owner Trustee, the Note Insurer and the Company.
"Original Class A-1 Principal Balance" means $245,280,000.
"Original Class A-2 Principal Balance" means $99,645,000.
"Original Class M-1 Principal Balance" means $24,075,000.
"Original Class M-2 Principal Balance" means $31,500,000.
"Original Class B-1 Principal Balance" means $24,750,000.
1-20
"Original Class B-2 Principal Balance" means $24,750,000.
"Original Class Principal Balance" means, with respect to any Class, the
Original Class A-1 Principal Balance, the Original Class A-2 Principal Balance,
the Original Class M-1 Principal Balance, the Original Class M-2 Principal
Balance, the Original Class B-1 Principal Balance or the Original Class B-2
Principal Balance, as appropriate.
"Original Note Principal Balance" means the sum of the Original Class A-1
Principal Balance, Original Class A-2 Principal Balance, Original Class M-1
Principal Balance, Original Class M-2 Principal Balance, Original Class B-1
Principal Balance and Original B-2 Principal Balance.
"Owner Trustee" means Wilmington Trust Company, acting not individually
but solely as trustee, or its successor in interest, and any successor appointed
as provided in the Trust Agreement.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Collection Account pursuant to the proviso in Section 3.05(a).
"Payment Date" means the fifteenth day of each calendar month during the
term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing on January 15, 1999.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Policy Payments Account" means the policy payment account maintained by
the Indenture Trustee pursuant to Section 6.08(b) hereof.
"Pool Factor" means, as to any Payment Date, a percentage derived from a
fraction, the numerator of which is the Note Principal Balance and the
denominator of which is the Cut-off Date Pool Principal Balance for such Payment
Date.
"Pool Scheduled Principal Balance" means, as of any Payment Date, the
aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the related Due Period.
"Premium Amount" means, as to any Payment Date, an amount equal to 0.18%
per annum of the Class A Principal Balance.
"Principal Prepayment" means a payment or other recovery of principal on a
Contract (exclusive of Liquidation Proceeds) which is received in advance of its
scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled Payment Date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
1-21
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Rating Agencies" means Standard & Poor's and Xxxxx'x.
"Realized Losses" means, as to any Payment Date, the aggregate Net
Liquidation Losses for all Contracts that became Liquidated Contracts during the
immediately preceding Due Period.
"Record Date" means the Business Day immediately preceding the related
Payment Date.
"Reimbursement Amount" means, as of any Payment Date, the sum of (x)(i)
all Insured Payments previously paid to the Indenture Trustee by the Note
Insurer and not previously repaid to the Note Insurer pursuant to Section
6.06(a)(vi) plus (ii) interest accrued on each such Insured Payment not
previously repaid calculated at the Late Payment Rate and (y)(i) any amounts
then due and owing to the Note Insurer under the Insurance Agreement (including,
without limitation, any unpaid Premium Amount relating to such Payment Date or
an earlier Payment Date) as certified in writing by the Note Insurer to the
Servicer and the Indenture Trustee, plus (ii) interest on such amounts at the
Late Payment Rate.
"Related Documents" means the Trust Agreement, the Indenture, the
Administration Agreement, the Insurance Agreement, the Indemnification
Agreement, the Note Insurance Policy, the Certificate, the Notes, the Custodial
Agreement, and the Underwriting Agreement. The Related Documents executed by any
party are referred to herein as "such party's Related Documents," "its Related
Documents" or by a similar expression.
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05 or which becomes a Liquidated Contract, an amount equal
to (a) the remaining principal amount outstanding on such Contract, plus (b)
interest at the Contract Interest Rate on such Contract from the end of the Due
Period with respect to which the Obligor last made a scheduled payment through
the date of such repurchase or liquidation.
"Responsible Officer" means, with respect to the Owner Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Owner Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers, respectively, or to whom a corporate trust
matter is referred because of knowledge of, familiarity with, and authority to
act with respect to a particular matter.
"Scheduled Payments" means, as to any Payment Date, the sum of (a) the
Class A Interest Amount less the Class A Portion of any Civil Relief Interest
Shortfall, (b) any Class A Principal Deficiency Amount and (c) without
duplication, on the Final Scheduled Payment Date for the Class A-1 Notes or the
Class A-2 Notes, the Class A-1 Principal Balance or Class A-2 Principal Balance,
respectively.
1-22
"Scheduled Principal Balance" means, with respect to any Contract and any
Payment Date or the Cut-off Date, the principal balance of such Contract as of
the Due Date in the Due Period immediately preceding such Payment Date or
Cut-off Date, as the case may be, as specified in the amortization schedule at
the time relating thereto (before any adjustment to such amortization schedule
by reason of any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to any
previous Partial Principal Prepayments and to the payment of principal due on
such Due Date and irrespective of any delinquency in payment by, or extension
granted to, the related Obligor. If for any Contract the Cut-off Date is the
date of origination of the Contract, its Scheduled Principal Balance as of the
Cut-off Date is the principal balance of the Contract on its date of
origination.
"Securities" means the Notes and the Certificate.
"Securityholders" means the Noteholders and the Certificateholder.
"Seller" means Green Tree Financial Corporation.
"Senior Formula Principal Distribution Amount" means, as to any Payment
Date, the Senior Percentage of the Formula Principal Distribution Amount plus
the Class B Floor Reduction Amount.
"Senior Percentage" means:
(a) as to any Payment Date prior to the Class B Cross-over Date,
100%;
(b) as to any Payment Date on or after the Class B Cross-over Date
but on or prior to the Class M-2 Cross-over Date, and on which any Class B
Principal Distribution Test is not satisfied, 100%;
(c) as to any Payment Date on or after the Class B Cross-over Date
but on or prior to the Class M-2 Cross-over Date, and on which each Class
B Principal Distribution Test is satisfied, a fraction, expressed as a
percentage, the numerator of which is the sum of the Class A Principal
Balance and the Class M Principal Balance as of such Payment Date, and the
denominator of which is the Pool Scheduled Principal Balance as of the
immediately preceding Payment Date; and
(d) as to any Payment Date after the Class M-2 Cross-over Date, 0%.
"Service Transfer" has the meaning assigned in Section 7.01.
"Servicer" means the Company until any Service Transfer hereunder and
thereafter means the new servicer appointed pursuant to Article VII.
"Servicer Termination Event" has the meaning assigned in Section 7.01.
"Servicer Termination Test" means, to be considered "satisfied" on any
Payment Date, that (a) the Average Sixty-Day Delinquency Ratio does not exceed
7.5%, (b) the sum of the Realized
1-23
Losses for the preceding twelve Payment Dates does not exceed 7.5% of the Pool
Scheduled Principal Balance as of the first Payment Date in such 12-month
period, and (c) the Cumulative Realized Loss Ratio does not exceed the following
ratio:
Payment Date Ratio
------------ -----
On or before December 1999 8.0%
After December 1999 and on or 12.0%
before December 2000
After December 2000 and on or 15.0%
before December 2001
After December 2001 and on or 18.0%
before December 2002
After December 2002 21.0%
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"Shortfall" means, as to any Payment Date, the amount, if any, by which
the Scheduled Payments exceed that portion of the Collected Funds, plus any
amounts deposited in the Collection Account pursuant to Sections 8.01 and 8.02,
available for deposit in the Note Distribution Account in respect of the Class A
Notes pursuant to Sections 6.06(iv) and (v).
"Sixty-Day Delinquency Ratio" means, as to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Contracts that were delinquent 60 days or more as of
the end of the prior Due Period (including Contracts in respect of which the
related real estate has been foreclosed upon but is still in inventory), and the
denominator of which is the Pool Scheduled Principal Balance as of such Payment
Date.
"Standard & Poor's" means Standard & Poor's Ratings Service, or any
successor thereto; provided that if Standard & Poor's no longer has a rating
outstanding on any Class of Notes, then references herein to "Standard & Poor's"
shall be deemed to refer to the NRSRO then rating any Class of the Notes (or, if
more than one such NRSRO is then rating any Class of the Notes, to such NRSRO as
may be designated by the Servicer), and references herein to ratings by or
requirements of Standard & Poor's shall be deemed to have the equivalent
meanings with respect to ratings by or requirements of such NRSRO.
"Supplementary Principal Distribution Test" means, to be considered
"satisfied" for any Payment Date, that the Cumulative Realized Loss Ratio does
not exceed the following ratio:
1-24
Payment Date Ratio
------------ -----
On or before December 1999 8.0%
After December 1999 and
on or before December 2000 12.0%
After December 2000 17.0%
"Supplementary Principal Distribution Amount" means, on any Payment Date
on which the Supplementary Principal Distribution Test is not satisfied, an
amount equal to the lesser of (a) the Class A Principal Balance or (b) the
Amount Available (excluding any Guaranty Payment) remaining after distribution
of amounts described in Sections 6.06(a)(i) through (xii).
"Thirty-Day Delinquency Ratio" means, as to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Contracts that were delinquent 30 days or more as of
the end of the prior Due Period (including Contracts in respect of which the
related real estate has been foreclosed upon but is still in inventory), and the
denominator of which is the Pool Scheduled Principal Balance as of such Payment
Date.
"Trust" means Green Tree Home Improvement and Home Equity Loan Trust
1998-F.
"Trust Accounts" means the Collection Account, the Note Distribution
Account, the Undelivered Contract Account and the Certificate Distribution
Account.
"Trust Agreement" means the Trust Agreement dated as of December 1, 1998
between the Company and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Fund" means the property conveyed to the Trust pursuant to Section
2.01(a).
"Undelivered" means, with respect to a Contract and any date of
determination, a Contract identified on the exception report attached to the
Acknowledgment delivered by the Indenture Trustee under Section 6.01(k) of the
Indenture on the Closing Date as a Contract as to which the Indenture Trustee
(a) did not receive the related contract or promissory note as of the Closing
Date and (b) has not received the related contract or promissory note and
remitted payment for it to the Company pursuant to Section 6.12.
"Undelivered Contract Account" means the account so designated,
established and maintained pursuant to Section 6.01(d).
"Underwriters" means Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
and Xxxxxx Brothers Inc.
"Underwriting Agreement" means the Underwriting Agreement dated as of
December 16, 1998 between the Company and the Underwriters relating to the Class
A Notes.
1-25
"Unpaid Class A Interest Shortfall" means, as to any Payment Date, the sum
of the Unpaid Class A-1 Interest Shortfall and the Unpaid Class A-2 Interest
Shortfall.
"Unpaid Class A-1 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class A-1 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class A-1 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class A-1 Notes on
account of any Unpaid Class A-1 Interest Shortfall pursuant to Section
8.02(c)(1) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-1
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class A-2 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class A-2 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class A-2 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class A-2 Notes on
account of any Unpaid Class A-2 Interest Shortfalls pursuant to Section
8.02(c)(1) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class A-2
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class B-1 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class B-1 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class B-1 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class B-1 Notes on
account of any Unpaid Class B-1 Interest Shortfall pursuant to Section
8.02(c)(4) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class B-1
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class B-1 Liquidation Loss Interest Shortfall" means, with respect
to any Payment Date, the amount, if any, of the Class B-1 Liquidation Loss
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class B-1 Interest
Rate.
"Unpaid Class B-2 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class B-2 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class B-2 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class B-2 Notes on
account of any Unpaid Class B-2 Interest Shortfall pursuant to Section
8.02(c)(10) of the Indenture on such immediately prior Payment Date, plus
accrued interest (to the extent payment thereof is legally permissible) at the
Class B-2 Interest Rate on such remainder from such immediately prior Payment
Date to the current Payment Date.
"Unpaid Class M-1 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class M-1 Interest Carryover
Shortfall, if any, for the immediately prior
1-26
Payment Date, plus (y) the Unpaid Class M-1 Interest Shortfall determined as of
such immediately prior Payment Date, minus (z) all amounts distributed to the
Holders of Class M-1 Notes on account of any Unpaid Class M-1 Interest Shortfall
pursuant to Section 8.02(c)(2) of the Indenture on such immediately prior
Payment Date, plus accrued interest (to the extent payment thereof is legally
permissible) at the Class M-1 Interest Rate on such remainder from such
immediately prior Payment Date to the current Payment Date.
"Unpaid Class M-1 Liquidation Loss Interest Shortfall" means, with respect
to any Payment Date, the amount, if any, of the Class M-1 Liquidation Loss
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class M-1 Interest
Rate.
"Unpaid Class M-2 Interest Shortfall" means, as to any Payment Date, the
amount, if any, of the remainder of (x) the Class M-2 Interest Carryover
Shortfall, if any, for the immediately prior Payment Date, plus (y) the Unpaid
Class M-2 Interest Shortfall determined as of such immediately prior Payment
Date, minus (z) all amounts distributed to the Holders of Class M-2 Notes on
account of any Unpaid Class M-2 Interest Shortfall pursuant to Section
8.02(c)(3) of the Indenture on such immediately prior Payment Date, plus accrued
interest (to the extent payment thereof is legally permissible) at the Class M-2
Interest Rate on such remainder from such immediately prior Payment Date to the
current Payment Date.
"Unpaid Class M-2 Liquidation Loss Interest Shortfall" means, with respect
to any Payment Date, the amount, if any, of the Class M-2 Liquidation Loss
Interest Shortfall for the prior Payment Date, plus one month's interest thereon
(to the extent payment thereof is legally permissible) at the Class M-2 Interest
Rate.
1-27
ARTICLE II
TRANSFER OF CONTRACTS
SECTION 2.01. Transfer of Contracts.
(a) Subject to the terms and conditions of this Agreement, the Company
hereby irrevocably and unconditionally transfers, assigns, sets over and
otherwise conveys to the Trust by execution of an Assignment substantially in
the form of Exhibit A hereto all right, title and interest of the Company in and
to (1) the Contracts (including, without limitation, the Collateral Security),
and all moneys payable thereon or in respect to the Contracts, including any
liquidation proceeds therefrom but excluding payments due on the Contracts prior
to the Cut-off Date, (2) the Errors and Omissions Protection Policy as such
policy relates to the Contracts, (3) all items contained in the Contract Files,
(4) the Trust Accounts and all funds on deposit therein from time to time and
all investments and proceeds thereof (including all income thereon), and (5) all
proceeds and products of the foregoing.
(b) Although the parties intend that the conveyance pursuant to this
Agreement of the Company's right, title and interest in and to the Contracts
shall constitute a purchase and sale and not a pledge of security for loans from
the Certificateholders and/or the Noteholders, if such conveyance is deemed to
be a pledge of security for loans from the Certificateholders, the Noteholders
or any other Persons (the "Secured Obligations"), the parties intend that the
rights and obligations of the parties to the Secured Obligations shall be
established pursuant to the terms of this Agreement and that the Company shall
be deemed to have granted to the Trust, and the Company does hereby grant to the
Trust, a perfected first-priority security interest in the items designated in
Section 2.01(a)(1) through 2.01(a)(5) above, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement shall constitute a security
agreement under applicable law. If the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person under any
Certificate, any Note or the Secured Obligations, the security interest created
hereby shall continue in full force and effect and the Owner Trustee shall be
deemed to be the collateral agent for the benefit of such Person.
SECTION 2.02. Conditions to Acceptance by Owner Trustee.
As conditions to the Owner Trustee's execution and delivery of the Notes
on behalf of the Trust and the execution, authentication and delivery of the
Certificates on behalf of the Trust on the Closing Date, the Owner Trustee on
behalf of the Trust shall have received the following on or before the Closing
Date:
(a) The List of Contracts, certified by the Chairman of the Board,
President or any Vice President of the Company (which certification may be
part of the Assignment delivered pursuant to Section 2.02(f)).
(b) A letter from PriceWaterhouseCoopers LLP or another nationally
recognized accounting firm, stating that such firm has reviewed the Group
1 Contracts and the Initial (as defined in the prospectus relating to the
Notes) Group 2 Contracts on a statistical sampling
2-1
basis and, based on such sampling, concluding that, except with respect to
those Contracts so specified in the letter, such Contracts conform in all
material respects to the List of Contracts, to a confidence level of
97.5%, with an error rate generally not in excess of 1.8%.
(c) Copies of resolutions of the board of directors of the Company
or of the executive committee of the board of directors of the Company
approving the execution, delivery and performance of this Agreement, its
Related Documents and the transactions contemplated hereunder, certified
in each case by the secretary or an assistant secretary of the Company.
(d) Officially certified recent evidence of due incorporation and
good standing of the Company under the laws of the State of Delaware.
(e) Evidence of filing of UCC-1 financing statements (a) with the
Secretary of State of Minnesota, executed by the Company as debtor, naming
the Trust as secured party and describing the Contracts as collateral and
(b) with the Secretary of State of Minnesota and Delaware executed by the
Trust as debtor, naming the Indenture Trustee as secured party and
describing the Indenture Collateral as collateral.
(f) An executed copy of the Assignment.
(g) Evidence of continued coverage of the Company under the Errors
and Omissions Protection Policy.
(h) Evidence of deposit in the Collection Account of all funds
received with respect to the Contracts prior to the Closing Date which
were due on or after the Cut-off Date, together with an Officer's
Certificate to the effect that such amount is correct.
(i) An Officer's Certificate confirming that the Company's internal
audit department has reviewed the original or a copy of each Contract and
each Contract File, that each Contract and Contract File conforms in all
material respects with the List of Contracts and that each Contract File
is complete in all material respects, except to the extent permitted by
this Agreement.
(j) An executed copy of each of the Insurance Agreement, the Note
Insurance Policy and the other Related Documents.
(k) Evidence of the deposit in the Undelivered Contract Account of
an amount equal to the aggregate of the Cut-off Date Principal Balances of
the Undelivered Contracts.
(l) An executed copy of the Indenture Trustee's Acknowledgment
delivered under Section 6.01(k) of the Indenture.
(m) Such other documents and certificates as the Trust may request.
2-2
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company makes the following representations and warranties, effective
as of the Closing Date, on which the Trust will rely in accepting the Contracts
and the other Trust Property in trust and on which the Owner Trustee relies in
executing and delivering, on behalf of the Trust, the Certificates and the
Notes, and on which the Note Insurer relies in issuing the Note Insurance
Policy. The repurchase obligation of the Company set forth in Section 3.05
constitutes the sole remedy available to the Trust, the Owner Trustee, the
Indenture Trustee, and the Securityholders for a breach of a representation or
warranty of the Company set forth in Sections 3.02, 3.03 and 3.04 of this
Agreement or in the Officer's Certificate delivered pursuant to Section 2.02(i)
of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Company and
Covenants of the Company. The representations and warranties set forth in this
Section 3.01 shall survive delivery by the Company of the Contracts and the
Contract Files. As promptly as practicable, but in any event, within 60 days of
its discovery or its receipt of notice from any Person of a material breach of
any representation or warranty in this Section 3.01, the Company shall cure such
breach in all material respects; provided, however, that if the Company can
establish to the reasonable satisfaction of the Note Insurer that it is
diligently pursuing remedial action, then the cure period may be extended for an
additional 90 days with the written approval of the Note Insurer.
(a) Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Company.
(b) Authorization; Binding Obligations. The Company has the power and
authority to make, execute, deliver and perform this Agreement and its Related
Documents and all of the transactions contemplated under this Agreement and
thereunder and to sell and assign the Trust Property to be sold and assigned to
the Trust by it and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and its Related Documents.
When executed and delivered, this Agreement and its Related Documents will
constitute the legal, valid and binding obligations of the Company enforceable
in accordance with their terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies.
(c) No Consent Required. The Company is not required to obtain the consent
of any other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
3-1
(d) No Violations. The execution, delivery and performance by the Company
of this Agreement and its Related Documents and the fulfillment of their terms
will not violate any provision of any existing law or regulation or any order or
decree of any court or the Certificate of Incorporation or Bylaws of the
Company, or constitute a material breach of any mortgage, indenture, contract or
other agreement to which the Company is a party or by which the Company may be
bound.
(e) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Company threatened, against the Company or any of its
properties or with respect to this Agreement, the Related Documents, or the
Securities which, if adversely determined, would in the opinion of the Company
have a material adverse effect on the transactions contemplated by this
Agreement and Related Documents.
(f) Licensing. The Company is duly registered as a finance company in each
state in which Contracts were originated, to the extent such registration is
required by applicable law.
(g) Chief Executive Office. The chief executive office of the Company is
at 1100 Landmark Towers, 000 Xx. Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx 00000-0000.
(h) Absolute Sale. The Company intends that the transfer of Contracts and
the Collateral Security constitute a complete and absolute sale, removing the
Contracts and the Collateral Security from the Company's estate, for purposes of
Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code, as amended.
(i) No Default. The Company is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect the condition (financial or other) or operations of the Company or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under its other Related Documents. The Company is
not in default under any agreement involving financial obligations or on any
outstanding obligation which would materially adversely impact the financial
condition or operations of the Company or legal documents associated with the
transaction contemplated by this Agreement or the other Related Documents.
(j) No Material Adverse Change. To the best knowledge of the Company,
there has been no material adverse change in any information submitted by the
Company in writing to the Note Insurer with respect to the transactions
contemplated by this Agreement (unless such information was subsequently
supplemented in writing).
(k) Non-consolidation. For so long as Green Tree Second GP Inc. ("GTGP")
is the Certificateholder, the Company covenants that:
(i) it will at all times hold out to the public, including the
respective creditors of the Company and GTGP, is a separate entity from
the other. The Company and GTGP will not share a common logo. The Company
will not hold out or consider GTGP as a department or division of the
Company.
3-2
(ii) Other than the payment of certain of the organizational
expenses of GTGP by the Company, GTGP will be responsible for the payment
of all its losses, obligations and expenses, and it will be adequately
capitalized to conduct its business.
(iii) All transactions and dealings between the Company and GTGP
will be on such terms and conditions as would be generally available to
entities unaffiliated with the Company in comparable transactions. All
such transactions have been and will be made only with prior approval of
GTGP's Board of Directors, at arm's length, in good faith, and without the
intent to hinder, delay or defraud creditors of either entity, and
transfers between the Company and GTGP will not be made if the party
making the transfer is insolvent or would be rendered insolvent by the
transfer.
(iv) Following the formation of the Trust, the Company will disclose
all material transactions associated with the transaction in
communications to its shareholders and in public announcements which will
disclose the separate corporate identity of GTGP and that the assets of
GTGP will not be available for payment of creditors' claims in the event
of the insolvency of the Company.
(v) GTGP will comport itself in a manner consistent with the factual
assumptions contained in the "nonconsolidation opinion" of Xxxxxx and
Xxxxxx dated December 30, 1998 rendered in connection with the issuance of
the Notes.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
(a) List of Contracts. The information set forth in the List of Contracts
is true, complete and correct as of its date.
(b) Payments. No scheduled payment due under the Contract was delinquent
over 59 days as of the Cut-off Date.
(c) Costs Paid and No Waivers. The terms of the Contract have not been
waived, altered or modified in any respect, except by instruments or documents
identified in the Contract File. All costs, fees and expenses incurred in
making, closing and perfecting the lien of the Contract have been paid. The
subject real property has not been released from the lien of such Contract.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Contract is not subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
3-3
(f) Insurance Coverage. The Company has been named as an additional
insured party under any hazard insurance on the property described in the
Contract, to the extent required by the Company's underwriting guidelines, which
coverage represents not less than the least of (i) the outstanding principal
balance of the Contract (together, in the case of a junior mortgage loan, with
the outstanding principal balance of all liens senior thereto), (ii) the minimum
amount required to compensate for damage or loss to the related real property on
a replacement cost basis, or (iii) the full insurable value of the related real
property. If upon origination of the Contract, the property securing the
Contract was in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards (and if flood
insurance was required by federal regulation and such flood insurance has been
made available in the locale where the property is located), the property is
covered by a flood insurance policy of the nature and in an amount which is
consistent with the servicing standard set forth in Section 5.02.
(g) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract pursuant to this Agreement, or pursuant to transfers of the
Securities, unlawful or render the Contract unenforceable.
(h) Compliance with Law. At the date of origination of the Contract, all
requirements of any federal and state laws, rules and regulations applicable to
the Contract, including, without limitation, usury, truth in lending and equal
credit opportunity laws, have been complied with, and the Company shall for at
least the period of this Agreement, maintain in its possession, available for
the Owner Trustee's inspection, and shall deliver to the Owner Trustee upon
demand, evidence of compliance with all such requirements.
(i) Contract in Force. The Contract has not been satisfied or subordinated
in whole or in part or rescinded, and the real property securing the Contract
has not been released from the lien of the Contract in whole or in part.
(j) Valid Lien. Each Contract has been duly executed and delivered by the
Obligor, and the lien created thereby has been duly recorded, or has been
delivered to the appropriate governmental authority for recording and will be
duly recorded within 180 days and constitutes a valid and perfected first,
second, third or fourth priority lien on the real estate described in such
Contract.
(k) Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal capacity to
execute the Contract.
(l) Good Title. The Company is the sole owner of the Contract and has the
authority to sell, transfer and assign such Contract to the Trust under the
terms of this Agreement. There has been no assignment, sale or hypothecation of
the Contract by the Company except the usual past hypothecation of the Contract
in connection with the Company's normal banking transactions in the conduct of
its business, which hypothecation terminates upon sale of the Contract to the
Trust. The Company has good and marketable title to the Contract, free and clear
of any encumbrance, equity, loan, pledge, charge, claim, lien or encumbrance of
any type and has full right to transfer the Contract to the Trust.
3-4
(m) No Defaults. There is no default, breach, violation or event
permitting acceleration existing under the Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract
(except payment delinquencies permitted by clause (b) above). The Company has
not waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above.
(n) No Liens. There are, to the best of the Company's knowledge, no liens
or claims which have been filed for work, labor or materials affecting the
Collateral Security securing the Contract which are or may be liens prior to, or
equal or coordinate with, the lien of the Contract.
(o) Equal Installments. Each Contract has a fixed Contract Interest Rate
and provides for substantially level monthly payments which fully amortize the
loan over its term.
(p) Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
(q) One Original. There is only one original executed Contract, which
Contract has been delivered to the Trust or its custodian on or before the
Closing Date. Each Contract has been stamped to reflect the assignment of such
Contract to the Trustee or its Custodian on or before the Closing Date.
(r) Genuine Documents. All documents submitted are genuine, and all other
representations as to the Contract, including the List of Contracts, are true
and correct. Any copies of documents provided by the Company are accurate and
complete (except that, with respect to any Contract that was originated by a
contractor or lender other than the Company, the Company makes such
representation and warranty only to the best of the Company's knowledge).
(s) Origination. Each Home Improvement Contract was originated by a home
improvement contractor in the ordinary course of such contractor's business or
was originated by the Company directly. Each Home Equity Contract was originated
by a home equity lender in the ordinary course of such lender's business or was
originated by the Company directly.
(t) Underwriting Guidelines. The Contract was originated or purchased in
accordance with the Company's then-current underwriting guidelines.
(u) Good Repair. The property described in the Contract is, to the best of
the Company's knowledge, free of damage and in good repair.
(v) No Government Contracts. No Obligor is the United States government or
an agency, authority, instrumentality or other political subdivision of the
United States government.
(w) Consolidation of Advances. Any advances made after the date of
origination of the Contract but prior to the Cutoff Date have been consolidated
with the outstanding principal amount secured by the related mortgage, and the
secured principal amount, as consolidated, bears a single
3-5
interest rate and single repayment term reflected on the List of Contracts. The
consolidated principal amount does not exceed the original principal amount of
the Contract. The Contract does not obligate the Servicer to make future
advances to the Obligor at the option of the Obligor.
(x) Condemnation. There is no proceeding pending or threatened for the
total or partial condemnation of the real property that is described in the
Contract, nor is such a proceeding currently occurring.
(y) Encroachments. Any improvements which were included for the purposes
of determining the appraised value of any real property securing the Contract
are wholly within the boundaries and building restriction lines of such real
property, and no improvements on adjoining properties encroach upon such real
property.
(z) Zoning. No improvement located on or part of any real property that is
described in the Contract is in violation of any applicable zoning law or
regulation, and all inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the property and, with
respect to the use and occupancy of the same, including but not limited to
certificates of occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities and such property is lawfully occupied
under the applicable law.
(aa) Deeds of Trust. If the Contract constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in the Contract, and no fees or
expenses are or will become payable by the Indenture Trustee to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the related Obligor.
(bb) Remedies. The Contract contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the related property of the benefits of the security,
including (i) in the case of a mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption, other than any applicable redemption rights
available to the related Obligor, which would materially interfere with the
right to sell the related property at a trustee's sale or the right to foreclose
the related mortgage.
(cc) Appraisal. The Contract was, to the extent required by the Company's
underwriting guidelines, originated based upon a full appraisal, which included
an interior inspection of the subject property by a qualified appraiser, duly
appointed by the Company, who had no interest, direct or indirect in the related
real property or in any loan made on the security thereof, and whose
compensation is not affected by the approval or disapproval of the Contract.
(dd) Hazardous Substances. The Company has no actual knowledge that there
exist any hazardous substances, hazard wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on any real property described in the
Contract.
3-6
(ee) Ground Lease. With respect to any real property described in the
Contract subject to a ground lease (i) the current ground lessor has been
identified and all ground rents which have previously become due and owing have
been paid, (ii) the ground lease term extends, or is automatically renewable,
for at least five years beyond the maturity date of the Contract, (iii) the
ground lease has been duly executed and recorded, (iv) the amount of the ground
rent and any increases therein are clearly identified in the lease and are for
predetermined amounts at predetermined times, (v) the ground rent payment is
included in the Obligor's monthly payment as an expense item in determining the
qualification of the borrower for the Contract, (vi) the Company has the right
to cure defaults on the ground lease, and (vii) the terms and conditions of the
leasehold do not prevent the free and absolute marketability of the property.
(ff) Defaults on Prior Liens. The Company has not received notice of
default of any prior mortgage loan secured by any real property described in the
Contract which default has not been cured by a party other than the Company.
(gg) Certain Advances. The Company has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of any real property described in the Contract or the Obligor, directly or
indirectly, for the payment of any amount required by any Contract.
(hh) Review of the Contract File. The Company has reviewed all of the
documents constituting the Contract File and has made such inquiries as it deems
necessary to make and confirm the accuracy of the representations set forth
herein.
(ii) Knowledge of Certain Facts. The Company has no knowledge of any
circumstances or conditions not reflected in the representations set forth
herein, or in the Contract File with respect to the Contract, the related real
property or the related Obligor which, in the Company's opinion, could
reasonably be expected to affect materially and adversely the value of related
real property, the marketability of the Contract, or cause the Contract to
become delinquent or otherwise in default.
(jj) Manufactured Home. The Contract is not a loan in respect of a
manufactured home or the land on which a manufactured home or manufactured home
will be placed.
(kk) No Errors, Omissions, Etc. No error, omission, misrepresentation,
negligence, fraud or similar occurrence with respect to the Contract has taken
place on the part of any person, including without limitation the obligor, any
appraiser, any builder or developer, or any other party involved in the
origination of the Contract or in the application of any insurance in relation
to the Contract.
(ll) Servicing. The Contract has been serviced in accordance with all
applicable laws and, to the best of the Company's knowledge, no fraud or
misrepresentation was committed by any Person in connection therewith.
(mm) Inspection. Upon completion of all home improvements in excess of
$5,000, the real property securing such Contract was inspected by the Company or
its agents.
3-7
(nn) No Bankruptcies. The real property described in the Contract has not
been subject to any bankruptcy proceeding or foreclosure proceeding to which the
Obligor was a party, and the Obligor has not filed for protection under
applicable bankruptcy laws. There is no homestead or other exemption available
to the Obligor which would interfere with the right to sell the real property at
a trustee's sale or the right to foreclose the related mortgage. The Obligor has
not notified the Company, and the Company has no knowledge of, any relief
requested or allowed to the Obligor under the Soldier's and Sailors' Civil
Relief Act of 1940, as amended.
(oo) Certain Disclosure Statements. Each Obligor has executed a statement
to the effect that it has received all disclosure materials required by
applicable law with respect to the making of fixed rate mortgage loans and
rescission materials with respect to home improvement loans, and such statement
will be retained.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
(a) Amounts. The aggregate principal amounts payable by Obligors under the
Contracts as of the Cut-off Date equal the Cut-off Date Pool Principal Balance.
(b) Characteristics. The Contracts will have the following
characteristics: (i) 100% are secured by a mortgage, deed of trust or security
deed on the related real estate; (ii) none has a remaining maturity of more than
360 months; (iii) none has a final scheduled payment date later than November
2028; (iv) none has a Contract Interest Rate less than 6.99%; (v) none was
originated before March 1980; and (vi) none contains a provision for the
extension of the original term of the related note.
(c) Group 1 Contracts. The original principal balance of each Group 1
Contract did not exceed (i) $227,150, if secured by a first lien or (ii) 50% of
the aggregate principal balance of the prior liens, if secured by a junior lien.
(d) Geographic Concentrations. By Cut-off Date Principal Balance, 10.81%
of the Contracts are secured by property located in California, 7.28% in New
York, 6.43% in Florida, 5.51% in Illinois, and 5.10% in Virginia. No other state
represents more than 5% of the aggregate Cut-off Date Principal Balances of the
Contracts. No more than 1% of the Contracts by Cut-off Date Principal Balance
are secured by property located in an area with the same five-digit zip code.
(e) Computer Tape. The Computer Tape made available by the Company was
complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Contracts.
(f) Marking Records. The Company has caused the portions of the Electronic
Ledger relating to the Contracts to be clearly and unambiguously marked to
indicate that such Contracts constitute part of the Trust and are owned by the
Trust in accordance with the terms of the trust created hereunder.
3-8
(g) No Adverse Selection. Except for the effect of the representations and
warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Contracts.
(h) Not Principally Real Estate Secured, etc. With respect to at least 50%
of the Contracts in the aggregate: (a) the fair market value of the interest in
the real property securing each such Contract is less than 80% of the adjusted
issue price of such Contract at the time the obligation was originated; and (b)
substantially all of the proceeds of each such Contract were not used to
acquire, improve or protect an interest in real property that, at the
origination date, was the only security for such Contract.
(i) Non-Owner Occupied. As of the Cut-off Date, no more than 0.06% and
0.05% of the aggregate Scheduled Principal Balances of the Group 1 Contracts and
Group 2 Contracts, respectively, are secured by real property that is non-owner
occupied property (i.e., investor-owned and vacation property).
(j) Ground Leases. As of the Cut-off Date, the aggregate Scheduled
Principal Balances of all Contracts subject to ground leases does not exceed 1%
of the Cut-off Date Pool Scheduled Principal Balance.
(k) Income Verification. No more than 1.05% and 0.52% of the aggregate
Scheduled Principal Balances of the Group 1 Contracts and Group 2 Contracts,
respectively, was originated under any non-income verification program of the
Company.
SECTION 3.04. Representations and Warranties Regarding the Contract
Files.
(a) Possession. Immediately prior to the Closing Date, the Company will
have possession of each original Contract and the related Contract File and
there are not and there will not be any custodial agreements in effect that
materially and adversely affect the rights of the Company to make, or cause to
be made, any delivery required hereunder.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files by the Company pursuant to this Agreement is
not subject to the bulk transfer or any similar statutory provisions in effect
in any applicable jurisdiction.
(c) Delivery. On or before January 15, 1999, the Company shall have
delivered to the Indenture Trustee the related contract or promissory note,
endorsed to the Indenture Trustee or in blank, for each Contract that was an
Undelivered Contract on the Closing Date and on or before March 1, 1999 the
Company shall have delivered the complete Contract File for each Contract to the
Indenture Trustee (or its custodian).
SECTION 3.05. Repurchase of Contracts for Breach of Representations and
Warranties.
(a) The Company shall repurchase a Contract, at its Repurchase Price, not
later than the last day of the Due Period prior to the Due Period that is 90
days after the day on which the Company, the Servicer, the Note Insurer, the
Owner Trustee or the Indenture Trustee first discovers,
3-9
or the Company or the Servicer should have discovered, a breach of a
representation or warranty of the Company set forth in Sections 3.02, 3.03 or
3.04 of this Agreement or in the Officer's Certificate delivered pursuant to
Section 2.02(i) that materially adversely affects the interest of the Trust or
the Securityholders in such Contract and which breach has not been cured;
provided, however, that (i) in the event that a party other than the Company
first becomes aware of such a breach, such discovering party shall notify the
Company in writing within five Business Days of the date of such discovery
(although the failure of a party to give such notice shall not relieve the
Company of its repurchase obligation hereunder), (ii) with respect to any
Contract incorrectly described on the List of Contracts with respect to unpaid
principal balance, which the Company would otherwise be required to repurchase
pursuant to this Section, the Company may, in lieu of repurchasing such
Contract, deposit in the Collection Account no later than the first
Determination Date that is 90 or more days from the date of such discovery cash
in an amount sufficient to cure such deficiency or discrepancy, plus interest,
at the Contract Interest Rate, on the amount of such deficiency, from the
Cut-off Date to the date of deposit, (iii) a breach of the representation or
warranty set forth in Section 3.04(c) shall be conclusively deemed to materially
and adversely affect the interests of the Trust in the affected Contract(s) and
(iv) any repurchase of Contracts as a result of the breach of a representation
and warranty set forth in Section 3.03 shall be without adverse selection of
Contracts, as determined by the Note Insurer. Any such cash so deposited shall
be accounted for as a collection of principal or interest on such Contract,
according to the nature of the deficiency or discrepancy. Notwithstanding any
other provision of this Agreement, the obligation of the Company under this
Section shall not terminate upon a Service Transfer pursuant to Article VII.
(b) Upon receipt by the Trust by deposit in the Collection Account of the
Repurchase Price under subsection (a) above, and upon receipt of a certificate
of a Servicing Officer in the form attached hereto as Exhibit B, the Indenture
Trustee shall release its security interest in such Contract and the Owner
Trustee on behalf of the Trust shall convey and assign to the Company all of the
Securityholders' right, title and interest in the repurchased Contract without
recourse, representation or warranty, except as to the absence of liens, charges
or encumbrances created by or arising as a result of actions of the Trust.
(c) The Company shall defend and indemnify the Owner Trustee, the Trust,
the Indenture Trustee, the Note Insurer and the Securityholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, arising out of any claims which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any representation set forth in Sections 3.02, 3.03 or 3.04
of this Agreement or in the Officer's Certificate delivered pursuant to Section
2.02(i) of this Agreement.
3-10
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
(a) The Trust appoints the Indenture Trustee to maintain custody of the
Contract Files for the Contracts, as further specified in Section 6.01(k) of the
Indenture.
(b) The Company has delivered to the Indenture Trustee the original copy
of each Contract that is not an Undelivered Contract, and within 60 days of the
Closing Date the Company shall deliver to the Indenture Trustee (if it has not
previously done so) with respect to each Contract an endorsement of the
Contract, an assignment in recordable form of each mortgage, deed of trust or
security deed securing the Contract, and the remainder of the Contract File for
each Contract.
(c) The Company has delivered to the Indenture Trustee and the Note
Insurer an Opinion of Counsel to the effect that the execution and recording of
the assignments of the mortgages, deeds of trust and security deeds securing the
Contracts is not necessary, in any jurisdiction other than the State of
Maryland, to effect the assignment to the Indenture Trustee of the Company's
lien on the real property securing each Contract. The Company will, or will
cause the Indenture Trustee, at the Company's expense, to file in the
appropriate recording offices within 90 days of the Closing Date, each mortgage,
deed of trust and security deed that encumbers real property located in
Maryland.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Company shall cause the UCC-1
financing statements referred to in Section 2.02(e) to be filed. The Servicer on
behalf of the Trust shall cause to be filed all necessary continuation
statements of the UCC-1 financing statements. From time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Securityholders' interests in the
Contracts, the Collateral Security and their proceeds against all other persons,
including, without limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer instruments and
the making of notations on or taking possession of all records or documents of
title. The Servicer will maintain the first priority perfected security interest
of the Trust in each Contract so long as the related Contract is property of the
Trust.
SECTION 4.03. Name Change or Relocation.
(a) During the term of this Agreement, the Company shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Owner Trustee, the Indenture Trustee, the Note
Insurer and the Servicer. In addition, following any such change in the name,
identity, structure or location of the chief executive office of the Company,
the Company shall give written notice of any such change to Standard & Poor's
and Moody's.
4-1
(b) If any change in the Company's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause the security interest evidenced by any such financing or
continuation statement or notice of lien to become unperfected (whether
immediately or with lapse of time), the Company, no later than five days after
the effective date of such change, shall file, or cause to be filed, such
amendments or financing statements as may be required to preserve, perfect and
protect the Securityholders' interests in the Contracts, including the
Collateral Security and all proceeds thereof.
SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Company will maintain its chief
executive office in one of the States of the United States, except Tennessee.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Securityholders' right, title and interest in and to the
Contracts, including the Collateral Security and all proceeds thereof.
4-2
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer, service
and make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Servicer may delegate duties under this Agreement to any of the
Servicer's Affiliates. In addition, the Servicer may at any time perform the
specific duty of foreclosing mortgage liens through subcontractors who are in
such business. The Servicer may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to each of the Trust,
the Indenture Trustee, the Note Insurer and the Rating Agencies of the use of
any such subcontractors; and provided further that no such delegation of duties
by the Servicer shall relieve the Servicer of its responsibility with respect
thereto. The Owner Trustee, on behalf of the Trust and at the request of a
Servicing Officer, shall furnish the Servicer with any powers of attorney or
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Company hereby appoints
itself the Servicer until such time as any Service Transfer shall be effected
under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care required consistent with the highest degree of skill and care
that the Servicer exercises with respect to similar contracts serviced by the
Servicer; provided, however, that notwithstanding the foregoing, the Servicer
shall not release or waive the right to collect the unpaid balance on any
Contract.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder, maintain
such books of account and other records as will enable the Trust and the
Indenture Trustee to determine the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Trust, the Note Insurer and Indenture Trustee and their authorized agents
reasonable access during normal business hours to the Servicer's records
relating to the Contracts and will cause its personnel to assist in any
examination of such records by the Trust, the Note Insurer and Indenture Trustee
or their authorized agents. The examination referred to in this Section will be
conducted in a manner which does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations. Without otherwise limiting
the scope of the examination the Trust, the Note Insurer and Indenture Trustee
may make, the Trust, the Note Insurer and Indenture Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Electronic Ledger and records
5-1
relating thereto for conformity to Monthly Reports prepared pursuant to Section
5.14 and compliance with the standards represented to exist as to each Contract
in this Agreement.
The Servicer shall provide to any Securityholder such access to the
records relating to the Contracts only in such cases where the Servicer is
required by applicable statutes or regulations, whether applicable to the
Servicer or to such Securityholder, to permit such Securityholder to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section. Any
Securityholder, by its acceptance of a Certificate or Note (or by acquisition of
its beneficial interest therein), as applicable, shall be deemed to have agreed
to keep confidential and not to use for its own benefit any information obtained
by it pursuant to this Section, except as may be required by applicable law.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by the Trust, the Indenture Trustee and the Note Insurer.
(c) On or before the ninth Business Day of each month, the Servicer will
provide to the Indenture Trustee and the Note Insurer a Computer Tape setting
forth a list of all the outstanding Contracts and the outstanding principal
balance of each such Contract as of the end of the next preceding Due Period.
SECTION 5.05. Collections.
(a) The Servicer shall pay into the Collection Account as promptly as
practicable (not later than the next Business Day) following receipt thereof all
payments from Obligors and Net Liquidation Proceeds (other than late payment
penalty fees, extension fees and assumption fees, which shall be retained by the
Servicer as additional compensation for servicing the Contracts, and any
payments that were due prior to the Cut-off Date, which shall be remitted to the
Company).
(b) If the Servicer so directs, the institution maintaining the Collection
Account shall, in the name of the Indenture Trustee in its capacity as such,
invest the amounts in the Collection Account in Eligible Investments that mature
not later than one Business Day prior to the next succeeding Payment Date. Once
such funds are invested, such institution shall not change the investment of
such funds. All income and gain from such investments shall be added to the
Collection Account and distributed on such Payment Date pursuant to Section
6.06(a). The Company, the Note Insurer and the Indenture Trustee shall in no way
be liable for losses on amounts invested in accordance with the provisions
hereof. The Servicer shall deposit in the Collection Account an amount equal to
any net loss on such investments immediately as realized. Funds in the
Collection Account not so invested must be insured to the extent permitted by
law by the Federal Deposit Insurance Corporation.
5-2
SECTION 5.06. Enforcement.
(a) The Servicer shall, consistent with customary servicing procedures and
the terms of this Agreement, act with respect to the Contracts in such manner as
will maximize the receipt of principal and interest on such Contracts and
Liquidation Proceeds with respect to Liquidated Contracts.
(b) In accordance with the standard of care specified in Section 5.02, the
Servicer may, in its own name, if possible, or as agent for the Trust, commence
proceedings for the foreclosure of any real estate securing a Contract, or may
take such other steps that in the Servicer's reasonable judgment will maximize
Liquidation Proceeds with respect to the Contract, including, for example, the
sale of the Contract to a third party for foreclosure or enforcement and, in the
case of any default on a related prior mortgage loan, the advancing of funds to
correct such default and the advancing of funds to pay off a related prior
mortgage loan, which advances are Liquidation Expenses that will be reimbursed
to the Servicer out of related Liquidation Proceeds before the related Net
Liquidation Proceeds are deposited in the Collection Account. The Servicer shall
also deposit in the Collection Account any Net Liquidation Proceeds received in
connection with any Contract which became a Liquidated Contract in a prior Due
Period.
(c) The Servicer may xxx to enforce or collect upon Contracts, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Contract, the act of commencement shall be
deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Owner Trustee on behalf of the Trust shall, at the Servicer's
expense, take such steps as the Servicer deems necessary to enforce the
Contract, including bringing suit in its name or the names of the
Securityholders.
(d) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. Without limitation of the foregoing, in exercising
recourse rights, the Servicer is authorized on behalf of the Trust to reassign
the Contract or to resell the related real property to the person against whom
recourse exists at the price set forth in the document creating the recourse.
(e) So long as the Company is the Servicer, the Servicer may grant to the
Obligor on any Contract any rebate, refund or adjustment out of the Collection
Account that the Servicer in good faith believes is required because of
prepayment in full of the Contract. The Servicer will not permit any rescission
or cancellation of any Contract.
(f) So long as the Company is the Servicer, the Servicer may, consistent
with its customary servicing procedures and consistent with Section 5.02, grant
to the Obligor on any Contract an extension of payments due under such Contract,
provided that Obligors may not be solicited for extensions and no more than one
extension of payments under a Contract may be granted in any twelve-month
period. The Servicer may not permit the extension of any payment beyond August
2027.
5-3
(g) The Servicer shall enforce any due-on-sale clause in a Contract if
such enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related real property the Servicer shall use its best
efforts to obtain an assumption agreement in connection therewith.
(h) Any provision of this Agreement to the contrary notwithstanding, the
Servicer shall not agree to the modification or waiver of any provision of a
Contract, if such modification or waiver, when aggregated with all previous
modifications or waivers of the provisions of Contracts, would cause any Notes
to be treated as having been exchanged for other Notes in a taxable exchange
under Section 1001 of the Code or any proposed, temporary or final Treasury
Regulations issued thereunder.
SECTION 5.07. Satisfaction of Contracts.
Upon payment in full on any Contract, the Servicer will notify the Trust,
the Indenture Trustee, the Note Insurer and the Company (if the Company is not
the Servicer) on the next succeeding Payment Date by certification of a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payments which are required to
be deposited in the Collection Account pursuant to Section 5.05 have been so
deposited). The Servicer is authorized to execute an instrument in satisfaction
of such Contract and to do such other acts and execute such other documents as
the Servicer deems necessary to discharge the Obligor thereunder and eliminate
the lien on the related real property. The Servicer shall determine when a
Contract has been paid in full; to the extent that insufficient payments are
received on a Contract credited by the Servicer as prepaid or paid in full and
satisfied, the shortfall shall be paid by the Servicer out of its own funds.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its duties
hereunder, including all fees and expenses incurred in connection with the
enforcement of Contracts (including enforcement of Defaulted Contracts and
foreclosure of liens securing such Contracts) shall be paid by the Servicer and
the Servicer shall not be entitled to reimbursement hereunder, except that the
Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Contract for Liquidation Expenses incurred by it. The Servicer shall not incur
such Liquidation Expenses unless it determines in its good faith business
judgment that incurring such expenses will increase the Net Liquidation Proceeds
on the related Contract.
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section 5.09,
the Servicer shall cause to be maintained with respect to each Contract, hazard
insurance (excluding flood insurance coverage) if such Contract is secured by a
first priority mortgage, deed of trust or security deed or the initial balance
of such Contract exceeds $30,000, issued by a company authorized to issue such
policies in the state in which the related real property is located and in an
amount which is not less
5-4
than the maximum insurable value of such real property or the principal balance
due from the Obligor on the related Contract, whichever is less; provided,
however, that the amount of coverage provided by each insurance policy shall be
sufficient to avoid the application of any co-insurance clause contained
therein; and provided, further, that such insurance policies may provide for
customary deductible amounts. Each insurance policy caused to be maintained by
the Servicer shall contain a standard loss payee clause in favor of the Servicer
and its successors and assigns.
(b) The Servicer shall keep in force throughout the term of this Agreement
(i) a policy or policies of insurance covering errors and omissions for failure
to maintain insurance as required by this Agreement and (ii) a fidelity bond.
Such policy or policies and such fidelity bond shall be in such form and amount
as is generally customary among Persons which service a portfolio of retail
installment sales contracts and home equity loan agreements having an aggregate
principal amount of $100,000,000 or more and which are generally regarded as
servicers acceptable to institutional investors.
SECTION 5.10. [RESERVED]
SECTION 5.11. Deposit of Funds.
So long as the Company is Servicer, any collections in respect of
Contracts collected by the Company shall, prior to the deposit thereof in the
Collection Account pursuant to Section 5.05, be held in bank accounts entitled
substantially as follows: "[name of depository], as agent for U.S. Bank Trust
National Association and other trustees and Green Tree Financial Corporation, as
their interests may appear."
SECTION 5.12. Retitling; Lien Holder.
(a) If, at any time, a Service Transfer has occurred and the Company is no
longer the Servicer and the new Servicer is unable to foreclose upon the related
real estate because the title document for such real property does not show such
Servicer or the Indenture Trustee as the holder of an interest in such real
property, such Servicer shall take all necessary steps to apply for a
replacement document showing it or the Indenture Trustee as a holder of an
interest in the real property.
(b) In order to facilitate the Servicer's actions, as described in
subsection (a) of this Section, the Company will provide the Servicer with any
necessary power of attorney permitting it to foreclose upon such related real
estate. If the Servicer is still unable to foreclose upon the real estate, the
Company will take all actions necessary to act with the Servicer to foreclose
upon the real estate.
5-5
SECTION 5.13. [RESERVED].
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer.
(a) No later than 1:00 p.m. (Minnesota time) on each Determination Date,
the Servicer shall deliver to the Trust, the Indenture Trustee, the Paying
Agent, the Note Insurer, the Company (if the Company is not the Servicer), the
Rating Agencies and the Note Insurer a "Monthly Report," substantially in the
form of Exhibit C hereto.
(b) Each Monthly Report pursuant to Section 5.14(a) shall be accompanied
by a certificate of a Servicing Officer substantially in the form of Exhibit D,
certifying the accuracy of the Monthly Report and that no Servicer Termination
Event or event that with notice or lapse of time or both would become a Servicer
Termination Event has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
(c) The Company and (if different from the Company) the Servicer shall, on
request of the Trust, the Indenture Trustee, either of the Rating Agencies, the
Note Insurer or a Securityholder, furnish the Trust, the Indenture Trustee, the
Rating Agencies, the Note Insurer or a Securityholder such underlying data as
may be reasonably requested.
SECTION 5.15. Annual Report of Accountants.
On or before March 31 of each year, commencing March 31, 1999, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
make available to the Trust, the Indenture Trustee, the Note Insurer, Standard &
Poor's and Moody's a report stating that such firm has examined selected
documents and records relating to the servicing of home improvement contracts
and promissory notes and home equity loans, including the Contracts covered by
this Agreement, in accordance with the Mortgage Bankers Association of America's
Uniform Single Attestation Program for Mortgage Bankers, or any successor
uniform program, and that, on the basis of such examination, such servicing has
been conducted in compliance with the minimum servicing standards identified
therein, except for such significant exceptions or errors in records that, in
the opinion of such firm, generally accepted auditing standards requires it to
report.
SECTION 5.16. Certain Duties of the Servicer Under the Trust Agreement.
The Servicer shall, and hereby agrees that it will, monitor the Trust's
compliance with all applicable provisions of state and federal securities laws,
notify the Trust and the Administrator of any actions to be taken by the Trust
necessary for compliance with such laws and prepare on behalf of the Trust and
the Administrator all notices, filings or other documents or instruments
required to be filed under such laws.
SECTION 5.17. [RESERVED]
5-6
SECTION 5.18. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Trust, the Indenture Trustee, the
Note Insurer and the Rating Agencies, on or before March 31 (or 90 days after
the end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 1999, an officer's certificate signed by an authorized
officer of the Servicer, dated as of December 31 (or other applicable date) of
the immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as shall
have elapsed from the Closing Date to the date of the first such certificate)
and of its performance under this Agreement has been made under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Company or the Servicer shall deliver to the Trust, the Indenture
Trustee, the Servicer, the Note Insurer or the Company (as applicable) and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than 2 Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 7.01.
SECTION 5.19. [RESERVED]
SECTION 5.20. Maintenance of Lien Interests in Real Property.
(a) Consistent with the policies and procedures required by this Agreement
or as directed by the Note Insurer, the Indenture Trustee or their respective
counsel, the Servicer shall take such steps as are necessary to maintain
perfection of the lien interest created by each Contract in the related real
property on behalf of the Trust, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements,
mortgages, deeds of trust, and continuation statements as are necessary to
maintain the security interest granted by the Obligors under the respective
Contracts. In the event that the assignment of a Contract to the Trust is
insufficient, without a notation on the related real estate's certificate of
title, or without fulfilling any additional administrative requirements under
the laws of the state in which the real estate is located, to perfect a security
interest in the related real estate in favor of the Trust, the Servicer hereby
agrees that the Servicer's designation as the secured party on the certificate
of title is in its capacity as agent of the Trust.
(b) Upon the occurrence of a Servicer Termination Event, the Trust and the
Servicer shall take or cause to be taken such action as may, in the opinion of
the Note Insurer, the Indenture Trustee, their respective counsel or counsel to
the Trust, be necessary to perfect or re-perfect the lien interests in the real
estate securing the Contracts in the name of the Trust by amending the title
documents of real estate or by such other reasonable means as may, in the
opinion of the Note Insurer, the Indenture Trustee, their respective counsel or
counsel to the Trust, be necessary or prudent. The Servicer hereby agrees to pay
all expenses related to such perfection or re-perfection and to take all action
necessary therefor.
5-7
SECTION 5.21. Covenants, Representations, and Warranties of Servicer. By
its execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants on which the Trust relies in accepting
the Contracts and issuing the Notes and the Certificates and on which the
Indenture Trustee relies in authenticating the Notes, the Note Insurer relies in
issuing the Note Insurance Policy, and the Owner Trustee relies in
authenticating the Certificates.
(a) Liens in Force. The real estate securing each Contract shall not be
released in whole or in part from the lien interest granted by the Contract,
except upon payment in full of the Contract or as otherwise contemplated herein;
(b) No Impairment. The Servicer shall do nothing to impair the rights of
the Trust, the Indenture Trustee, the Note Insurer, or the Securityholders in
the Contracts, the Note Insurance Policy or the other Trust Property; and
(c) No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Contract, except in accordance with Section 5.06.
SECTION 5.22. Purchase of Contracts Upon Breach of Covenant. Upon
discovery by any of the Servicer, Note Insurer, the Trust or the Indenture
Trustee of a breach of any of the covenants set forth in Section 5.20(a) or
5.21, the party discovering such breach shall give prompt written notice to the
others; provided, however, that the failure to give any such notice shall not
affect any obligation of the Servicer. Not later than the last day of the Due
Period that is 90 days after its discovery or receipt of notice of any breach of
any such covenant which materially and adversely affects the interests of the
Securityholders or the Trust in any Contract (including any Liquidated
Contract), the Servicer shall, unless it shall have cured such breach in all
material respects, purchase from the Trust the Contract affected by such breach
and pay the related Repurchase Price. It is understood and agreed that the
obligation of the Servicer to purchase any Contract (including any Liquidated
Contract) with respect to which such a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against the
Servicer for such breach available to the Securityholders, the Trust, the Note
Insurer, or the Indenture Trustee on behalf of the Noteholders; provided,
however, that the Servicer shall indemnify the Owner Trustee, the Trust, the
Indenture Trustee, the Note Insurer, and the Securityholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third party claims arising out of the events or facts giving rise to
such breach.
5-8
ARTICLE VI
DISTRIBUTIONS; TRUST ACCOUNTS; LIMITED GUARANTY;
STATEMENTS TO SECURITYHOLDERS
SECTION 6.01. Trust Accounts.
(a) The Servicer shall establish the Collection Account in the name of the
Indenture Trustee for the benefit of the Securityholders and the Note Insurer.
The Collection Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(b) The Servicer shall establish the Note Distribution Account in the name
of the Indenture Trustee for the benefit of the Noteholders and the Note
Insurer. The Note Distribution Account shall be an Eligible Account and
initially shall be a segregated trust account established with the Indenture
Trustee and maintained with the Indenture Trustee.
(c) The Servicer shall establish the Certificate Distribution Account in
the name of the Owner Trustee for the benefit of the Certificateholders. The
Certificate Distribution Account shall be an Eligible Account and initially
shall be a segregated trust account established with the Indenture Trustee and
maintained with the Indenture Trustee, so long as the Indenture Trustee is
acting as Paying Agent under Section 3.9 of the Trust Agreement.
(d) The Servicer shall establish the Undelivered Contract Account on
behalf of the Trust, which must be an Eligible Account, and shall deposit
therein the amount received from the Company pursuant to Section 2.02(k). The
Undelivered Contract Account shall be an Eligible Account and shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(e) All amounts held in the Collection Account, the Note Distribution
Account and the Undelivered Contract Account (but not the Certificate
Distribution Account) shall, to the extent permitted by applicable laws, rules
and regulations, be invested, as directed by the Servicer, in Eligible
Investments that mature not later than one Business Day prior to the Payment
Date for the Due Period to which such amounts relate. Any such written direction
shall certify that any such investment is authorized by this Section 6.01(e).
Such investments in Eligible Investments shall be made in the name of the
Indenture Trustee on behalf of the Note Insurer and the Trust, and such
investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Collection Account, the Note Distribution Account or
the Undelivered Contract Account shall be made in Eligible Investments held by a
financial institution with respect to which (a) such institution has noted the
Indenture Trustee's interest therein by book entry or otherwise and (b) a
confirmation of the Indenture Trustee's interest has been sent to the Indenture
Trustee by such institution, provided that such Eligible Investments are (i)
specific certificated securities (as such term is used in MN UCC ss.
336.8-313(1)(d)(i)), and (ii) either (A) in the possession of such institution
or (B) in the possession of a clearing corporation (as such term is used in MN
UCC ss. 336.8-313(1)(g)) in New York or Minnesota, registered in the name of
such clearing corporation, not endorsed for collection or surrender or any other
purpose not involving transfer, not containing any evidence of a right or
6-1
interest inconsistent with the Indenture Trustee's security interest therein,
and held by such clearing corporation in an account of such institution. Subject
to the other provisions hereof, the Indenture Trustee shall have sole control
over each such investment and the income thereon, and any certificate or other
instrument evidencing any such investment, if any, shall be delivered directly
to the Indenture Trustee or its agent, together with each document of transfer,
if any, necessary to transfer title to such investment to the Indenture Trustee
in a manner which complies with this Section 6.01. All interest, dividends,
gains upon sale and other income from, or earnings on, investments of funds in
the Collection Account, the Note Distribution Account and the Undelivered
Contract Account shall be deposited in the Collection Account and distributed on
the next Payment Date pursuant to Section 6.06. The Servicer shall deposit in
the applicable Collection Account, the Note Distribution Account and the
Undelivered Contract Account an amount equal to any net loss on such investments
immediately as realized.
SECTION 6.02. Collection Account Deposits.
(a) Collections. The Servicer shall remit directly to the Collection
Account (no later than the next Business Day as specified in Section 5.05) all
payments by or on behalf of the Obligors on the Contracts and all Liquidation
Proceeds received by the Servicer.
(b) [Reserved].
(c) Repurchased Contracts. The Company shall deposit in the Collection
Account the Repurchase Price for each Contract repurchased by it under Section
3.05. The Servicer shall deposit in the Collection Account the Repurchase Price
for each Contract repurchased by it under Section 5.22.
SECTION 6.03. Permitted Withdrawals.
The Indenture Trustee may, from time to time as provided herein, make
withdrawals from the Collection Account of amounts deposited in said account
that are attributable to the Contracts only for the following purposes:
(a) to make payments in the amounts and in the manner provided for
in Section 6.06;
(b) to pay to the Company with respect to each Contract or property
acquired in respect thereof that has been repurchased pursuant to Section
3.05, all amounts received thereon and not required to be distributed to
Noteholders or Certificateholders as of the date on which the related
Scheduled Principal Balance or Repurchase Price is determined;
(c) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement is
permitted pursuant to Section 5.08;
(d) to withdraw any amount deposited in the Collection Account that
was not required to be deposited therein; or
6-2
(e) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(e).
Since, in connection with withdrawals pursuant to clauses (a) and (b), the
Company's or the Servicer's entitlement thereto is limited to collections or
other recoveries on the related Contract, the Servicer shall keep and maintain a
separate accounting, on a Contract by Contract basis, for the purpose of
justifying any withdrawal from the Collection Account pursuant to such clauses.
SECTION 6.04. [RESERVED]
SECTION 6.05. Limited Guaranty.
(a) No later than the Determination Date prior to each Payment Date, the
Servicer (if other than the Company) shall notify the Company of the amount of
the Guaranty Payment (if any) for such Payment Date. Not later than the Business
Day preceding each Payment Date, the Company shall deposit the Guaranty Payment,
if any, for such Payment Date into the Collection Account.
(b) The obligations of the Company under this Section shall not terminate
upon or otherwise be affected by a Service Transfer pursuant to Article VII of
this Agreement.
(c) The obligation of the Company to provide the Limited Guaranty under
this Agreement shall terminate on the Final Scheduled Payment Date.
(d) The obligation of the Company to make the Guaranty Payments described
in subsection (a) above shall be unconditional and irrevocable. The Company
acknowledges that its obligation to make the Guaranty Payments described in
subsection (a) above shall be deemed a guaranty by the Company of that portion
of the Obligors' obligations under the Contracts that is allocable to the Class
B-2 Noteholders.
(e) If the Company fails to make a Guaranty Payment in whole or in part,
the Company shall promptly notify the Owner Trustee, and the Owner Trustee shall
promptly notify the Rating Agencies.
SECTION 6.06. Distributions.
(a) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Monthly Report delivered
pursuant to Section 5.14) to make the following deposits and distributions by
11:00 a.m. (Minnesota time), to the extent of the Amount Available for such
Payment Date and in the following order of priority, provided that any Insured
Payment shall be distributed solely to the Class A-1 and Class A-2 Noteholders
and any Guaranty Payment shall be distributed solely to the Class B-2
Noteholders:
(i) Servicing Fee. If the Company or an Affiliate is not the
Servicer, then to the Servicer, the Monthly Servicing Fee for the related
Due Period (not to exceed 1/12 of 0.75% of the Pool Scheduled Principal
Balance);
6-3
(ii) Premium Amount. After payment of the amounts specified in
clause (i) above, the Premium Amount to the Note Insurer;
(iii) [Reserved].
(iv) Note Interest. After payment of the amounts specified in clause
(i) and (ii) above, to the Note Distribution Account, the sum of the Class
X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B-1 Interest Amounts and
any Unpaid Class X-0, Xxxxx X-0, Class M-1, Class M-2 and Class B-1
Interest Shortfalls;
(v) Class A Principal Distribution Amount. After payment of the
amounts specified in clauses (i) through (iv) above, to the Note
Distribution Account, the Class A Principal Distribution Amount;
(vi) Reimbursement Amount. After payment of the amounts specified in
clauses (i) through (v) above, the Reimbursement Amount to the Note
Insurer;
(vii) Class M Principal Distribution Amount. After payment of the
amounts specified in clauses (i) through (vi) above, to the Note
Distribution Account, the Class M Principal Distribution Amount;
(viii)Class B-1 Principal Distribution Amount. After payment of the
amounts specified in clauses (i) through (vii) above, to the Note
Distribution Account the Class B-1 Principal Distribution Amount;
(ix) Liquidation Loss Interest. After payment of the amounts
specified in clauses (i) through (viii) above, to the Note Distribution
Account the sum of the Class M-1, Class M-2, and Class B-1 Liquidation
Loss Interest Amounts and Unpaid Class M-1, Class M-2, Class B-1
Liquidation Loss Interest Shortfalls;
(x) Class B-2 Interest. After payment of the amounts specified in
clauses (i) through (ix) above, to the Note Distribution Account, the sum
of the Class B-2 Interest Amount and any Unpaid Class B-2 Interest
Shortfall;
(xi) Class B-2 Principal. After payment of the amounts specified in
clauses (i) through (x) above, to the Note Distribution Account, the Class
B-2 Principal Distribution Amount;
(xii) Monthly Servicing Fee. After payment of the amounts specified
in clauses (i) through (xi) above, to the Company, if the Servicer, the
Monthly Servicing Fee;
(xiii)Supplementary Principal Distribution Amount. After payment of
the amounts specified in clauses (i) through (xii) above, to the Note
Distribution Account the Supplementary Principal Distribution Amount;
6-4
(xiv) Additional Monthly Servicing Fee. After payment of the amounts
specified in clauses (i) through (xiii), above to the Servicer (if not the
Company or an Affiliate) any portion of the Monthly Servicing Fee in
excess of 1/12 of the product of 0.75% and the Pool Scheduled Principal
Balance; and
(xv) Certificate Distribution Amount. After payment of the amounts
specified in clauses (i) through (xiv) above, to the Certificate
Distribution Account the remaining Amount Available.
(b) Guaranty Payments. On each Payment Date the Servicer shall instruct
the Indenture Trustee to distribute to the Note Distribution Account any
Guaranty Payment deposited in the Collection Account pursuant to Section 6.05.
SECTION 6.07. Statements to Securityholders.
(a) On each Payment Date, the Indenture Trustee shall include with each
distribution to each Noteholder, and the Paying Agent shall include with each
distribution to each Certificateholder (with a copy to the Owner Trustee), a
statement (which statement shall also be provided to each Rating Agency and the
Note Insurer) based on information in the Monthly Report delivered on the
related Determination Date pursuant to Section 5.14, setting forth the following
information:
(i) the amount of such distribution to Holders of each Class of
Notes allocable to interest, separately identifying any Unpaid Class A-1
Interest Shortfall, Unpaid Class A-2 Interest Shortfall, Unpaid Class M-1
Interest Shortfall, Unpaid Class M-2 Interest Shortfall, Unpaid Class B-1
Interest Shortfall and Unpaid Class B-2 Interest Shortfall included in
such distribution and any remaining Unpaid Class A-1 Interest Shortfall,
Unpaid Class A-2 Interest Shortfall, Unpaid Class M-1 Interest Shortfall,
Unpaid Class M-2 Interest Shortfall, Unpaid Class B-1 Interest Shortfall
and Unpaid Class B-2 Interest Shortfall;
(ii) the Class A-1 Interest Carryover Shortfall, the Class A-2
Interest Carryover Shortfall, the Class M-1 Interest Carryover Shortfall,
the Class M-2 Interest Carryover Shortfall, the Class B-1 Interest
Carryover Shortfall and the Class B-2 Interest Carryover Shortfall, if
any, for such Payment Date;
(iii) the amount of such distribution to Holders of each Class of
Notes allocable to principal, separately identifying the Group 1 Formula
Principal Distribution Amount, the Group 2 Formula Principal Distribution
Amount, and the amount, if any, by which the Class A, Class M and Class B
Principal Distribution Amounts, respectively, exceed the respective Class
A, Class M and Class B Formula Principal Distribution Amounts;
(iv) the Class A-1 Principal Balance, the Class A-2 Principal
Balance, the Class M-1 Principal Balance, the Class M-2 Principal Balance,
the Class B-1 Principal Balance and the Class B-2 Principal Balance after
giving effect to the distribution of principal on such Payment Date;
(v) the amount, if any, of the Guaranty Payment on such Payment
Date;
6-5
(vi) the amount of the Monthly Servicing Fee with respect to such
Due Period;
(vii) the Certificate Distribution Amount;
(viii)the Pool Scheduled Principal Balance for such Payment Date;
(ix) the Note Pool Factor for each Class after giving effect to the
distribution of principal on such Payment Date;
(x) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days, (b) 60-89 days, and (c) 90 or more days;
(xi) the number and aggregate Scheduled Principal Balance of
Contracts that became Defaulted Contracts during the related Due Period;
(xii) the number and aggregate Scheduled Principal Balance of
Defaulted Contracts as of the last day of the related Due Period;
(xiii)the number and aggregate Scheduled Principal Balance of
Contracts that became Liquidated Contracts during the related Due Period
and the related Net Liquidation Losses;
(xiv) the number and aggregate principal balance of Contracts (x) in
foreclosure, (y) as to which foreclosure of the related real property lien
was completed during the related Due Period, exclusive of any such
Contracts that are Liquidated Contracts and (z) foreclosed upon and in the
Servicer's inventory ;
(xv) information relating to the satisfaction or non-satisfaction of
the Class B Principal Distribution Test, Servicer Termination Test and
Supplementary Principal Distribution Test; and
(xvi) the amount of any payment by the Note Insurer under the Note
Insurance Policy and any reimbursement paid to the Note Insurer.
In the case of information furnished pursuant to clauses (i) through (iv)
above, the amounts shall be expressed as a dollar amount per $1,000 denomination
of Note or per Note with a 1% Percentage Interest.
(b) The Indenture Trustee shall inform any of the Noteholders,
Certificateholders, Underwriters, Rating Agencies or Note Insurer inquiring by
telephone of the information contained in the most recent Monthly Report.
(c) Certificateholders may obtain copies of the statements delivered by
the Owner Trustee pursuant to subsection (a) above upon written request to the
Owner Trustee at the Corporate Trust Office (together with a certification that
such Person is a Certificateholder and payment of any expenses associated with
the distribution thereof). Noteholders may obtain copies of the statements
6-6
delivered by the Indenture Trustee pursuant to subsection (a) above upon written
request to the Indenture Trustee at its Corporate Trust Office (together with a
certification that such Person is a Noteholder and payment of any expenses
associated with the distribution thereof).
SECTION 6.08. Claims Upon Policy.
(a) If, any Monthly Report delivered to the Indenture Trustee pursuant to
Section 5.14 discloses a Shortfall, the Indenture Trustee shall, promptly on the
Business Day it receives the Monthly Report, give notice to the Note Insurer of
the amount of the Shortfall. In the event that a payment becomes due pursuant to
the terms of the Note Insurance Policy, the Indenture Trustee shall submit a
Notice (in the form attached to such Note Insurance Policy) in accordance with
the terms of the Note Insurance Policy.
(b) The Indenture Trustee shall establish a separate special purpose trust
account for the benefit of the Holders of the Class A Notes and the Note Insurer
(the "Policy Payments Account") over which the Indenture Trustee shall have
exclusive control and sole right of withdrawal. The Indenture Trustee shall
deposit any amount paid under the Note Insurance Policy in the Policy Payments
Account and distribute such amount only for purposes of payment to the Holders
of the Class A Notes of the Scheduled Payments for which a claim was made and
such amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Seller, the Indenture Trustee or the Trust. Amounts paid under
the Note Insurance Policy shall be transferred to the Note Distribution Account
in accordance with the next succeeding paragraph and disbursed by the Indenture
Trustee to Holders of the Class A Notes in accordance with Section 8.02(c) of
the Indenture. It shall not be necessary for such payments to be made by checks
or wire transfers separate from the checks or wire transfers used to pay the
Insured Payments with other funds available to make such payment. However, the
amount of any payment of principal of or interest on the Class A Notes to be
paid from funds transferred from the Policy Payments Account shall be noted as
provided in paragraph (c) below in the Register and in the statement to be
furnished to Class A Noteholders pursuant to Section 6.07. Funds held in the
Policy Payments Account shall not be invested by the Indenture Trustee.
On any Payment Date with respect to which a claim has been made under the
Note Insurance Policy, the amount of funds received by the Indenture Trustee as
a result of any claim under the Note Insurance Policy, to the extent required to
make the Scheduled Payments on such Payment Date, shall be withdrawn from the
Policy Payments Account and deposited in the Note Distribution Account and
applied by the Indenture Trustee, together with the other funds to be withdrawn
from the Note Distribution Account, directly to the payment in full of the
Scheduled Payments due on the Class A Notes. Funds received by the Indenture
Trustee as a result of any claim under the Note Insurance Policy shall be
deposited by the Indenture Trustee in the Policy Payments Account and used
solely for payment to the Holders of the Class A Notes and may not be applied to
satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Indenture Trustee or the Trust. Any funds remaining in the Policy Payments
Account on the first Business Day following a Payment Date shall be remitted to
the Note Insurer, pursuant to the instructions of the Note Insurer, by the end
of such Business Day.
6-7
(c) The Indenture Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Class A Note from moneys
received under the Note Insurance Policy. The Note Insurer shall have the right
to inspect such records at reasonable times during normal business hours upon
one Business Day's prior notice to the Indenture Trustee.
(d) The Indenture Trustee shall promptly notify the Note Insurer and the
Fiscal Agent (as defined in the Note Insurance Policy) of any proceeding or the
institution of any action, of which an authorized officer of the Indenture
Trustee has actual knowledge, seeking the avoidance as a preferential transfer
under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Notes. Each
Holder of a Class A Note by its purchase of such Note, the Servicer and the
Indenture Trustee hereby agree that, the Note Insurer (so long as no Note
Insurer Default exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim, including without limitation, (i) the direction of any appeal
of any order relating to such Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Note Insurer shall be subrogated to the
rights of the Servicer, the Indenture Trustee and each Holder of a Class A Note
in the conduct of any such Preference Claim, including, without limitation, all
rights of any party to an adversary proceeding action with respect to any court
order issued in connection with any such Preference Claim.
(e) The Indenture Trustee shall, at the time it provides notice to the
Note Insurer, notify, by mail to the Class A Noteholders that, in the event the
any such Noteholder's scheduled payment is avoided as a preferential transfer,
such Noteholder will be entitled to payment pursuant to the terms of the Note
Insurance Policy, a copy of which shall be made available through the Indenture
Trustee, or the Fiscal Agent, if any, and the Indenture Trustee shall furnish to
the Note Insurer or its Fiscal Agent, if any, its records evidencing the
payments of principal of and interest on the Class A Notes, if any, which have
been made by the Indenture Trustee and subsequently recovered from Class A
Noteholders, and the dates on which such payments were made.
(f) The Indenture Trustee shall, upon retirement of the Class A Notes,
furnish to the Note Insurer a notice of such retirement, and, upon the
retirement of the Class A Notes and the expiration of the term of the Note
Insurance Policy, surrender the Note Insurance Policy to the Note Insurer for
cancellation.
SECTION 6.09. Effect of Payments by the Note Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect
to principal of or interest on any of the Class A Notes which is made with
moneys received pursuant to the terms of the Note Insurance Policy shall not be
considered payment of such Notes from the Trust and shall not result in the
payment of or the provision for the payment of the principal of or interest on
such Notes within the meaning of Section 6.06. The Servicer and the Owner
Trustee acknowledge, and each Holder by its acceptance of a Class A Note agrees,
that without the need for any further action on the part of the Note Insurer,
the Seller, the Servicer, the Indenture Trustee or the Paying Agent (a) to the
extent the Note Insurer makes payments, directly or indirectly, on account of
principal of or interest on any Class A Notes to the Holder of such Class A
Notes, the Note Insurer will be fully subrogated to the rights of such
Noteholders to receive such principal and interest from the Trust and
6-8
(b) the Note Insurer shall be paid such principal and interest but only from the
sources and in the manner provided herein for the payment of such principal and
interest.
The Indenture Trustee and the Servicer shall cooperate in all respects
with any reasonable request by the Note Insurer for action to preserve or
enforce the Note Insurer's rights or interests under this Agreement without
limiting the rights or affecting the interests of the Class A Noteholders as
otherwise set forth therein.
SECTION 6.10. Notices to the Note Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Noteholders
shall also be sent to the Note Insurer.
SECTION 6.11. Rights of the Note Insurer To Exercise Rights of
Noteholders.
By accepting its Note, each Class A Noteholder agrees that unless a Note
Insurer Default exists and until payment in full of the Class A Notes and all
amounts owing to the Note Insurer under the Insurance Agreement, the Note
Insurer shall have the right to exercise all rights of the Class A Noteholders
as specified under this Agreement without any further consent of the Class A
Noteholders.
SECTION 6.12. Withdrawals From Undelivered Contract Account. Amounts on
deposit in the Undelivered Contract Account shall be withdrawn by the Indenture
Trustee as follows:
(a) If the Company delivers the related Contract for an Undelivered
Contract to the Indenture Trustee on or before January 14, 1999, the
Indenture Trustee shall withdraw an amount equal to 100% of the Cut-off
Date Principal Balance of such Contract and pay such amount to or upon the
order of the Company.
(b) The Company shall give the Indenture Trustee telephonic notice
of its intended delivery of such Contracts. The Indenture Trustee will use
reasonable efforts to process the Contracts and remit any amount payable
for them to the Company in a timely manner.
(c) On January 29, 1999, the Indenture Trustee shall deposit into
the Collection Account any amounts remaining in the Undelivered Contract
Account. Any amount so deposited shall constitute the payment of the
Repurchase Price for the related Undelivered Contract(s).
6-9
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Servicer Termination Event.
(a) Subject to Section 7.09, the Note Insurer or the Indenture Trustee
(with the prior written consent of the Note Insurer, or, except in the case of
item (vi) below, the Noteholders, with the consent of the Note Insurer, may
remove the Servicer (such removal being herein called a "Service Transfer") upon
the occurrence of any of the following events (each a "Servicer Termination
Event"):
(i) The Servicer shall (A) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or similar entity with
respect to itself or its property, (B) admit in writing its inability to
pay its debts generally as they become due, (C) make a general assignment
for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent,
(E) commence a voluntary case under the federal bankruptcy laws of the
United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding or (F) take corporate
action for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Servicer an
order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if
such proceeding is being contested by the Servicer in good faith, the same
shall (A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or pending and
unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of its
material obligations hereunder and shall continue in default thereof for a
period of thirty (30) days (one (1) Business Day in the case of a delay in
making a payment required of the Servicer under this Agreement), or the
Servicer shall fail to deliver the Monthly Report on any Determination
Date, after the earlier of (A) actual knowledge of an officer of the
Servicer or (B) receipt of notice from the Indenture Trustee or the Note
Insurer of said failure; provided, however, that if the Servicer can
demonstrate to the reasonable satisfaction of the Note Insurer that it is
diligently pursuing remedial action, then the cure period may be extended
with the written approval of the Note Insurer; or
7-1
(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 5.21 which materially
and adversely affects the interests of the Noteholders or the Note Insurer
for a period of sixty (60) days after the earlier of the Servicer's
discovery or receipt of notice thereof; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the Note
Insurer that it is diligently pursuing remedial action, then the cure
period may be extended with the written approval of the Note Insurer; or
(v) The merger, consolidation or other combination of the Servicer
with or into any other entity, unless (A) the Servicer or an Affiliate of
the Servicer is the surviving entity of such combination or (B) the
surviving entity (I) is servicing at least $300,000,000 of home equity
loans that are similar to the Contracts, (II) has equity of not less than
$10,000,000 (as determined in accordance with generally acceptable
accounting principles), (III) is consented to by the Note Insurer (such
consent not to be unreasonably withheld) and (IV) agrees to assume the
Servicer's obligations thereunder; or
(vi) The failure of the Servicer (except the Indenture Trustee in
its capacity as successor Servicer) to satisfy the Servicer Termination
Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall act as servicer under this Agreement, subject to the right of removal set
forth in subsection (a) hereof, for an initial period commencing on the date on
which such Servicer Termination Event occurred and ending on the last day of the
calendar quarter in which such Servicer Termination Event occurred, which period
may be extended by the Note Insurer in its sole discretion for a succeeding
quarterly period on December 31, March 31, June 30 and September 30 of each year
as provided below (each such quarterly period for which the Servicer shall be
designated to act as servicer hereunder, a "Term of Service"); provided that
nothing in this Section 7.01(a) shall prohibit the Note Insurer or the Indenture
Trustee from removing the Servicer pursuant to Section 7.01(a). Notwithstanding
the foregoing, the Note Insurer may, in its sole discretion, extend the period
for which the Servicer is to act as such for a period in excess of one quarter
(provided such extension shall be an additional one or more quarters), but any
such extension shall be revocable at any time by the Note Insurer upon written
notice delivered to the Indenture Trustee and the Servicer at least fifteen days
prior to the expiration of the related quarterly period.
(c) The Servicer agrees to use its best efforts to inform the Indenture
Trustee of any materially adverse information regarding the Servicer's servicing
activities that comes to the attention of the Note Insurer from time to time.
(d) The Servicer shall not resign from the obligations and duties hereby
imposed on it, except upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Servicer so causing such a conflict being of a type and nature carried on
by the Servicer at the date of this Agreement. Any such determination permitting
the resignation of the Servicer shall be evidenced by an opinion of counsel
acceptable to the Indenture Trustee and the Note Insurer at the expense of the
Servicer to such effect which shall be delivered to the Indenture Trustee and
the Note Insurer.
7-2
(e) Notwithstanding any other provision in this Agreement, no removal or
resignation of the Servicer shall become effective until the Indenture Trustee
or a successor Servicer shall have assumed the Servicer's responsibilities and
obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, or expiration of its term
of service without renewal, the Servicer at its own expense also shall promptly
deliver or cause to be delivered to a successor servicer or the Indenture
Trustee all the books and records (including, without limitation, records kept
in electronic form) that the Servicer has maintained for the Contracts,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in the Servicer's
possession.
(g) Any collections then being held by the Servicer prior to its removal
and any collections received by the Servicer after removal or resignation shall
be endorsed by it to the Indenture Trustee and remitted directly and immediately
to the Indenture Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, or expiration of its term
of service without renewal, the Indenture Trustee shall, at the direction of the
Note Insurer, and may, if a Note Insurer Default exists and is continuing or the
Note Insurer's rights have been terminated as described in Section 11.21(b) of
the Indenture, (i) solicit bids for a successor servicer as described below or
(ii) appoint the Backup Servicer (or such other Person as may be designated by
the Note Insurer) as Servicer. If the Indenture Trustee solicits bids for a
successor Servicer, the Indenture Trustee agrees to act as Backup Servicer
during the solicitation process and shall assume all duties of the Servicer
(except as otherwise provided in this Agreement). The Indenture Trustee shall,
if it is unable to obtain a qualifying bid and is prevented by law from acting
as Servicer, appoint, or petition a court of competent jurisdiction to appoint,
any housing and home finance institution, bank or mortgage servicing institution
which has been designated as an approved seller-servicer by Xxxxxx Xxx or
Xxxxxxx Mac for first and second lien home equity loans and having equity of not
less than $15,000,000 (or such lower level as may be acceptable to the Note
Insurer), as determined in accordance with generally accepted accounting
principles and acceptable to the Note Insurer as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. The compensation of any successor
Servicer (other than the Indenture Trustee in its capacity as successor
Servicer) so appointed shall be the Monthly Servicing Fee, provided, however,
that if the Indenture Trustee becomes the successor Servicer it shall receive as
its compensation the same compensation paid to the Servicer immediately prior to
the Servicer's removal or resignation.
(i) In the event the Indenture Trustee solicits bids as provided above,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above. Such public announcement shall specify that
the successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Section 5.08. Within thirty days after any such public announcement, the
Indenture Trustee shall negotiate and effect the sale, transfer and assignment
of the servicing rights and responsibilities hereunder to the qualified party
approved by the Note Insurer submitting the highest satisfactory bid as to the
price it will pay to obtain
7-3
servicing. The Indenture Trustee shall deduct from any sum received by the
Indenture Trustee from the successor to the Servicer in respect of such sale,
transfer and assignment all costs and expenses of any public announcement and of
any sale, transfer and assignment of the servicing rights and responsibilities
hereunder. After such deductions, the remainder of such sum less any amounts due
the Indenture Trustee or the Trust from the Servicer shall be paid by the
Indenture Trustee to the Servicer at the time of such sale, transfer and
assignment to the Servicer's successor.
(j) The Indenture Trustee and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession, including the notification to all Obligors of the transfer of
servicing. The Servicer agrees to cooperate with the Indenture Trustee and any
successor Servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Indenture
Trustee or such successor Servicer, as applicable, all documents and records
reasonably requested by it to enable it to assume the Servicer's functions
hereunder and shall promptly also transfer to the Indenture Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the Collection Account by the Servicer or which are
thereafter received with respect to the Contracts. Neither the Indenture Trustee
nor any other successor Servicer shall be held liable by reason of any failure
to make, or any delay in making, any distribution hereunder or any portion
thereof caused by (i) the failure of the Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Servicer. If the Servicer
resigns or is replaced hereunder, or its term of service expires without
renewal, the Servicer agrees to reimburse the Trust, the Noteholders and the
Note Insurer for the costs and expenses associated with the transfer of
servicing to the replacement Servicer.
(k) The Indenture Trustee or any other successor Servicer, upon assuming
the duties of Servicer hereunder, shall at the expense of the previous Servicer
immediately record all assignments of Contracts not previously recorded in the
name of the Indenture Trustee or as directed by the Note Insurer.
SECTION 7.02. [RESERVED]
SECTION 7.03. [RESERVED]
SECTION 7.04. Notification to Securityholders.
(a) Promptly following the occurrence of any Servicer Termination Event,
the Servicer shall give written notice thereof to the Indenture Trustee, the
Trust, the Note Insurer, the Rating Agencies and the Obligors, to the extent
required by law.
(b) Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Owner Trustee on
behalf of the Trust shall give written notice thereof to the Rating Agencies,
the Note Insurer, and the Certificateholders at their respective addresses
appearing on the Certificate Register and the Indenture Trustee shall give
written notice thereof to Noteholders at their respective addresses appearing in
the Note Register.
7-4
(c) The Owner Trustee on behalf of the Trust shall give written notice to
the Rating Agencies at least 30 days prior to the date upon which any Eligible
Servicer (other than the Indenture Trustee) is to assume the responsibilities of
Servicer pursuant to Section 7.01, naming such successor Servicer.
(d) The Indenture Trustee shall give notice to the Note Insurer, the
Noteholders, the Owner Trustee, the Seller, and the Rating Agencies of the
occurrence of any event described in Section 7.01(a) of which the Indenture
Trustee is aware.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the Indenture Trustee or new Servicer may
notify Obligors to make payments directly to the new Servicer that are due under
the Contracts after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Company pursuant to Article IX and Sections 3.05 and 5.22) other than
those relating to the management, administration, servicing or collection of the
Contracts.
SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.01, if the Collection Account
shall be maintained with the Servicer and a Servicer Termination Event shall
occur and be continuing, the Servicer shall, after five days' written notice
from the Indenture Trustee or the Note Insurer, or in any event within ten days
after the occurrence of the Servicer Termination Event, establish an Eligible
Account with an institution other than the Servicer and promptly transfer all
funds in the Collection Account to such new account, which shall thereafter be
deemed the Collection Account for the purposes hereof.
SECTION 7.07. Limits on Liability.
The Servicer will be liable to the Trust, the Owner Trustee, the Indenture
Trustee, the Note Insurer and the Securityholders only to the extent of the
obligations specifically undertaken by the Servicer under this Agreement and
will have no other obligations or liabilities hereunder. Neither the Servicer
nor any of its directors, officers, employees or agents will have any liability
to the Trust, the Owner Trustee, the Indenture Trustee or the Securityholders
(except as explicitly provided in this Agreement) for any action taken, or for
refraining from taking any action, pursuant to this Agreement, other than any
liability that would otherwise be imposed by reason of the Servicer's
7-5
breach of this Agreement or willful misfeasance, bad faith or negligence
(including errors in judgment) in the performance of its duties, or by reason of
reckless disregard of obligations and duties under this Agreement or any
violation of law.
SECTION 7.08. Waiver of Past Defaults.
The Note Insurer or a Note Majority of each Class may, on behalf of all
Holders of Notes, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Termination Event
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
7-6
ARTICLE VIII
TERMINATION
SECTION 8.01. Company's or Servicer's Repurchase Option.
(a) Subject to the conditions in subsection (b) below, the Company, the
Note Insurer, or the Servicer may repurchase all of the Contracts and all real
property acquired in respect of any Contract remaining in the Trust at a price
equal to the greatest of:
(i) the sum of (x) 100% of the principal balance of each Contract
(other than any Contract as to which title to the underlying real property
has been acquired and whose fair market value is included pursuant to
clause (y) below), plus (y) the fair market value of such acquired real
property (as determined by the Company);
(ii) the aggregate fair market value (as determined by the Company)
of all of the assets of the Trust (but in no event more than the amount
sufficient to pay all principal and interest outstanding on the
Securities, plus any unpaid fees and expenses of the Indenture Trustee and
the Owner Trustee); or
(iii) the aggregate Note Principal Balance;
plus, one month's interest at the applicable Contract Interest Rate on the
Scheduled Principal Balance of each Contract.
(b) The purchase by the Company or the Servicer of all of the Contracts
pursuant to Section 8.01(a) shall be at the option of the Company, or the
Servicer or the Note Insurer on any Payment Date, but shall be conditioned upon
(1) the Pool Scheduled Principal Balance, as of the end of the Due Period
immediately preceding such Payment Date, aggregating an amount equal to or less
than 10% of the Cut-off Date Pool Principal Balance, (2) the Company, the Note
Insurer or the Servicer having provided the Indenture Trustee and the Owner
Trustee and the Depository (if any) with at least 30 days' written notice (which
may be given prior to the end of the Due Period referred to in clause (1)
above), (3) the Company or the Servicer (as applicable) shall have delivered to
the Indenture Trustee and the Owner Trustee an unqualified Opinion of Counsel
stating that payment of the purchase price to the Securityholders will not
constitute a voidable preference or fraudulent transfer under the United States
Bankruptcy Code, and (4) unless the Note Insurer otherwise agrees in writing,
all Reimbursement Amounts owed to the Note Insurer shall have been paid in full.
In the event the notice described in the preceding sentence is given in
connection with the Company's election to purchase the Contracts, the Company
shall deposit in the Collection Account on the related Payment Date in
immediately available funds an amount equal to the above-described purchase
price and the Indenture Trustee shall distribute the amounts so deposited in
accordance with Section 6.06. Upon certification to the Indenture Trustee by a
Servicing Officer, following such final deposit, the Indenture Trustee shall
promptly release to the Company the Contract Files for the remaining Contracts,
and the Indenture Trustee and Owner Trustee on behalf of the Trust shall execute
all assignments, endorsements and other instruments necessary to effectuate such
transfer.
8-1
SECTION 8.02. Liquidation of Trust Estate.
Upon any sale of the assets of the Trust pursuant to Section 10.03 of the
Indenture or Section 9.2 of the Trust Agreement, the Trust shall instruct the
Indenture Trustee or the Owner Trustee, as the case may be, to deposit the
proceeds from such sale after all payments and reserves therefrom have been made
in the Collection Account. On the Payment Date on which such proceeds are
deposited in the Collection Account (or, if such proceeds are not so deposited
on a Payment Date, on the Payment Date immediately following such deposit), the
Trust shall instruct the Indenture Trustee to distribute such funds, together
with all other amounts available, in accordance with the terms of Section
6.06(a).
8-2
ARTICLE IX
INDEMNITIES
SECTION 9.01. Company's Indemnities.
The Company will defend and indemnify the Trust, the Owner Trustee, the
Indenture Trustee, the Note Insurer (including the paying agent and any other
agents of the Owner Trustee, the Note Insurer and the Indenture Trustee), and
the Securityholders against any and all costs, expenses, losses, damages, taxes,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation of any third-party claims arising out of or resulting
from (i) the origination of any Contract (including but not limited to truth in
lending requirements) or the servicing of such Contract prior to its transfer to
the Trust (but only to the extent such cost, expense, loss, damage, tax, claim
or liability is not provided for by the Company's repurchase of such Contract
pursuant to Section 3.05), (ii) the use or ownership of any real property
related to a Contract by the Company or the Servicer or any Affiliate of either,
or (iii) the Company's or the Trust's violation of federal or state securities
laws in connection with the offering and sale of the Securities. Notwithstanding
any other provision of this Agreement, the obligation of the Company under this
Section shall not terminate upon a Service Transfer pursuant to Article VII,
except that the obligation of the Company under this Section shall not relate to
the actions of any subsequent Servicer after a Service Transfer.
SECTION 9.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Owner Trustee, Indenture Trustee, the
Note Insurer or the Securityholders under or as a result of this Agreement and
the transactions contemplated hereby and, to the maximum extent permitted and
valid under mandatory provisions of law, the Trust, the Owner Trustee, Indenture
Trustee, the Note Insurer and the Securityholders expressly disclaim such
assumption.
SECTION 9.03. Servicer's Indemnities.
The Servicer shall defend and indemnify the Trust, the Owner Trustee, the
Indenture Trustee (including the Paying Agent and any other agents of the Owner
Trustee, the Note Insurer and the Indenture Trustee) and the Securityholders
against any and all costs, expenses, losses, damages, taxes, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation, in respect of any action taken or omitted to be taken by the
Servicer with respect to any Contract. This indemnity shall survive any Service
Transfer (but the original Servicer's obligations under this Section 9.03 shall
not relate to any actions of any subsequent Servicer after a Service Transfer)
and any payment of the amount owing under, or any repurchase by the Company of,
any such Contract.
9-1
SECTION 9.04. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Company or the Servicer has made any indemnity payments pursuant to this Article
and the recipient thereafter collects any of such amounts from others, the
recipient will repay such amounts collected to the Company or the Servicer, as
the case may be, without interest.
9-2
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Duties.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee payable to it. The Servicer shall not resign from the obligations
and duties hereby imposed on it except upon determination that the performance
of its duties hereunder is no longer permissible under applicable law or is in
material conflict by reason of applicable law with any other activities carried
on by it. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel for the Servicer to such effect
addressed and delivered to the Trust, the Indenture Trustee and the Note
Insurer. No such resignation shall become effective until the Indenture Trustee
or a successor servicer shall have assumed the responsibilities and obligations
of the Servicer in accordance with Sections 7.01.
Notwithstanding the foregoing:
(a) Any person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be the successor of the
Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or
surviving Person to the Servicer shall satisfy the criteria set forth in
the definition of Eligible Servicer. The Servicer shall promptly notify
Standard & Poor's, Moody's and the Note Insurer of any such merger to
which it is a party.
(b) The Servicer may, with the consent of the Note Insurer, delegate
duties under this Agreement to any of the Servicer's Affiliates. In
addition, the Servicer may at any time perform the specific duty of
foreclosing real property liens through subcontractors who are in the
business of servicing home improvement contracts and promissory notes or
home equity loans, and may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to the Trust and
the Indenture Trustee and each of Standard & Poor's and Moody's, and
provided further that no such delegation of duties by the Servicer shall
relieve the Servicer of its responsibility with respect thereto.
SECTION 10.02. Assignment or Delegation by Company.
Except as specifically authorized hereunder, the Company may not convey
and assign or delegate any of its rights or obligations hereunder absent the
prior written consent of the Note Insurer or, if a Note Insurer Event of Default
exists, a Note Majority of each Class of Notes and a Certificate Majority, and
any attempt to do so without such consent shall be void. It is understood that
the foregoing does not prohibit the pledge or assignment by the Company of any
right to payment pursuant to Article VI.
10-1
Notwithstanding the foregoing, any person into which the Company may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Company shall be a party, or any Person succeeding
to the business of the Company, shall be the successor of the Company hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Company shall promptly notify Standard & Poor's and Moody's of any such merger
to which it is a party.
SECTION 10.03. Amendment.
(a) This Agreement may be amended from time to time by the Company, the
Servicer and the Trust, with the prior written consent of the Indenture Trustee
and the Note Insurer but without the consent of any of the Securityholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, including, without limitation, to add or amend any provision as
required by Standard & Poor's, Moody's, or any other nationally recognized
statistical rating organization in order to improve or maintain the rating of
any Class of Notes or the Certificates, provided, however, that such action
shall not, as evidenced by an Opinion of Counsel for the Company, adversely
affect in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the Company,
the Servicer and the Trust with the prior written consent of the Indenture
Trustee and the Note Insurer and with the consent of the Holders of Notes
representing a majority of the aggregate Outstanding Amount of the Notes (which
consent of any Holder of a Note given pursuant to this Section or pursuant to
any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Note and of any Note issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon the Note) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Holders of
Notes; provided, however, no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Contracts or distributions required to be made on any Note or the
Class A-1 Interest Rate, Class A-2 Interest Rate, Class M-1 Interest Rate, Class
M-2 Interest Rate, Class B-1 Interest Rate or Class B-2 Interest Rate, (b) amend
any provisions of Section 6.06 in such a manner as to affect the priority of
payment of interest, principal or premium to Noteholders, or (c) reduce the
aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Notes then Outstanding, and
provided further, that the Rating Agency Condition has been satisfied.
(c) Concurrently with the solicitation of any consent pursuant to this
Section 10.03, the Indenture Trustee shall furnish written notification to
Standard & Poor's and Moody's of such solicitation. Promptly after the execution
of any amendment pursuant to this Section 10.03, the Indenture Trustee shall
furnish written notification of the substance of such amendment to Standard &
Poor's, Moody's and each Securityholder.
(d) It shall not be necessary for the consent of Securityholders under
this Section 10.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent
10-2
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Securityholders
shall be subject to such reasonable requirements as the Indenture Trustee may
prescribe.
(e) Each of the Owner Trustee and Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects its own rights, duties
or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section, the Owner
Trustee and Indenture Trustee shall be entitled to receive an unqualified
Opinion of Counsel to the Servicer to the effect that such amendment is
authorized or permitted by the Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 10.03, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Securityholder hereunder shall be bound thereby.
SECTION 10.04. Notices.
All communications and notices pursuant hereto to the Servicer, the
Company, the Trust, the Owner Trustee, the Indenture Trustee, Standard & Poor's,
Moody's and the Note Insurer shall be in writing and delivered (by facsimile or
other means) or mailed to it at the appropriate following address:
If to the Company or the Servicer:
Green Tree Financial Corporation
1100 Landmark Towers
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Chief Financial Officer
Telecopier Number: (000) 000-0000
If to the Trust or Owner Trustee:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Telecopier Number: 000-000-0000
10-3
If to the Indenture Trustee:
U.S. Bank Trust National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Corporate Trust Administration, Structured Finance
Telecopier Number: (000) 000-0000
If to Standard & Poor's:
Standard & Poor's Ratings Services
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset-Backed Surveillance
Telecopier Number: (000) 000-0000
If to Moody's:
Xxxxx'x Investors Services, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Extension Mortgage Group
Telecopier Number: (000) 000-0000
If to Note Insurer:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Re: Green Tree Home Improvement
and Home Equity Loan Trust 1998-F
Loan-Backed Notes
Confirmation: (000) 000-0000
Telecopy Nos.: (000) 000-0000, (000) 000-0000
(in each case in which notice or other communication to the
Note Insurer refers to a Servicer Termination Event, a claim
on the Note Insurance Policy or with respect to which failure
on the part of the Note Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice
or other communication should also be sent to the attention of
each of the General Counsel and the Head-Financial Group of
the Note Insurer and shall be marked on the outside "URGENT
MATERIAL ENCLOSED")
10-4
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Securityholder shall
be in writing and delivered or mailed at the address shown in the Note Register
or the Certificate Register, as applicable.
SECTION 10.05. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement.
This Agreement may not be modified, amended, waived or supplemented except as
provided herein.
SECTION 10.06. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 10.07. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
SECTION 10.08. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of Green Tree Home Improvement
and Home Equity Loan Trust 1998-F under the Trust Agreement, in the exercise of
the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Trust is made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company but is made and intended for the purpose
for binding only the Trust, (c) nothing herein contained shall be construed as
creating any liability on Wilmington Trust Company, individually or personally,
to perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Trust under this Agreement or the other Related Documents.
SECTION 10.09. The Note Insurer.
Any right conferred to the Note Insurer hereunder shall be suspended and
shall run to the benefit of the Class A Noteholders during any period in which
there exists a Note Insurer Default; provided, that the right of the Note
Insurer to receive the Premium Amount shall not be suspended
10-5
if such Note Insurer Default was a default other than a default under clause (a)
of the definition thereof. At such time as the Notes are no longer outstanding
hereunder and the Note Insurer has received all Reimbursement Amounts, the Note
Insurer's rights hereunder shall terminate.
SECTION 10.10. Third Party Rights.
The Seller, the Issuer, the Servicer, and the Securityholders agree that
the Note Insurer shall be deemed a third-party beneficiary of this Agreement as
if it were a party hereto. The Seller, the Issuer, the Servicer, and the
Securityholders agree that the Indenture Trustee shall be deemed a third-party
beneficiary of this Agreement as if it were a party hereto.
SECTION 10.11. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of Green Tree Home
Improvement and Home Equity Loan Trust 1998-F, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
issuer under this Agreement or any other related documents.
10-6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 30th
day of December, 1998.
ISSUER:
GREEN TREE HOME IMPROVEMENT AND HOME
EQUITY LOAN TRUST 1998-F
By WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By:_____________________________
Name:___________________________
Title:__________________________
SELLER AND SERVICER:
GREEN TREE FINANCIAL CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
Acknowledged and Accepted:
U.S. BANK TRUST NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture
Trustee
By:_____________________________
Name:___________________________
Title:__________________________
By:_____________________________
Name:______________________
Title:_____________________
10-7
EXHIBIT A
FORM OF ASSIGNMENT
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1998 between Green Tree Financial Corporation (the
"Company") and Green Tree Home Improvement and Home Equity Loan Trust 1998-F,
the Company does hereby transfer, assign, set over and otherwise convey to the
Trust all right, title and interest of the Company in (i) the home improvement
contracts and promissory notes and home equity loans (collectively, the
"Contracts") identified in the List of Contracts, a copy of which is attached
hereto, including, without limitation, all related Collateral Security, all
liens and security interests created thereby and any and all rights to receive
payments which are due pursuant thereto from and after the Cut-off Date, but
excluding any rights to receive payments which were due pursuant thereto prior
to the Cut-off Date, (ii) the Errors and Omissions Protection Policy as such
policy relates to the Contracts, (iii) all items contained in the Contract
Files, (iv) the Trust Accounts and all funds on deposit therein from time to
time and all investments and proceeds thereof (including all income thereon),
and (v) all proceeds in any way derived from any of the foregoing. Capitalized
terms used herein but not defined herein have the meanings assigned to them in
the Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this ____ day of December, 1998.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
A - 1
EXHIBIT B
FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS
GREEN TREE FINANCIAL CORPORATION
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Company"); he is duly authorized to
execute and deliver this certificate on behalf of the Servicer pursuant to
Section 3.05 of the Sale and Servicing Agreement (the "Agreement"), dated as of
December 1, 1998 between the Company and Green Tree Home Improvement and Home
Equity Loan Trust 1998-F (the "Trust") (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement):
1. The Contracts on the attached schedule are to be repurchased by
the [Company] [Servicer] on the date hereof pursuant to Section [3.05]
[5.22] of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to Section [3.05] [5.22] of the Agreement, be
assigned by the Trust to the [Company] [Servicer].
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day of
December, 1998.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
B - 1
EXHIBIT C
FORM OF MONTHLY REPORT
GREEN TREE HOME IMPROVEMENT AND HOME EQUITY LOAN TRUST 1998-F
Payment Date: ________
1. Amount Available ________
2. Note Insurance Policy
(a) Shortfall ________
(b) Insured Payment ________
3. Monthly Servicing Fee (if Green Tree is not the Servicer)
(up to 1/12 of 0.75% of Pool Scheduled Principal Balance) ________
4. Premium Amount ________
Interest
--------
Class A
-------
5. Class A-1 Interest Rate (6.62%)
6. Class A-1 Interest Amount ________
7. Unpaid Class A-1 Interest Shortfall ________
8. Class A-1 Interest paid ________
9. Class A-1 Interest Carryover Shortfall ________
10. Class A-2 Interest Rate (6.62%)
11. Class A-2 Interest Amount ________
12. Unpaid Class A-2 Interest Shortfall ________
13. Class A-2 Interest paid ________
14. Class A-2 Interest Carryover Shortfall ________
Class M-1
15. Interest on Class M-1 Adjusted Principal Balance
(a) Class M-1 Adjusted Principal Balance ________
(b) Class M-1 Interest Rate (7.43%)
(c) Class M-1 Interest Amount ________
C-1
(d) Unpaid Class M-1 Interest Shortfall ________
(e) Class M-1 Interest paid ________
(f) Class M-1 Interest Carryover Shortfall ________
Class M-2
---------
16. Interest on Class M-2 Adjusted Principal Balance
(a) Class M-2 Adjusted Principal Balance ________
(b) Class M-2 Interest Rate (8.16%)
(c) Class M-2 Interest Amount ________
(d) Unpaid Class M-2 Interest Shortfall ________
(e) Class M-2 Interest paid ________
(f) Class M-2 Interest Carryover Shortfall ________
Class B-1
---------
17. Interest on Class B-1 Adjusted Principal Balance
(a) Class B-1 Adjusted Principal Balance ________
(b) Class B-1 Interest Rate (8.99%)
(c) Class B-1 Interest Amount ________
(d) Unpaid Class B-1 Interest Shortfall ________
(e) Class B-1 Interest paid ________
(f) Class B-1 Interest Carryover Shortfall ________
Principal
---------
18. Group I Formula Principal Distribution Amount
(a) Scheduled principal ________
(b) Principal Prepayments ________
(c) Liquidated Contracts ________
(d) Repurchases ________
(e) Previously undistributed (a)-(d) amounts ________
19. Group 2 Formula Principal Distribution Amount ________
(a) Scheduled principal ________
(b) Principal Prepayments ________
(c) Liquidated Contracts ________
(d) Repurchases ________
(e) Previously undistributed (a)-(d) amounts ________
20. Senior Percentage ________
C-2
21. Senior Formula Principal Distribution Amount ________
(a) Senior Percentage of Formula
Principal Distribution Amount plus ________
(b) Class B Floor Reduction Amount ________
Class A Principal
-----------------
22. Amount Available less prior distributions ________
23. Class A Formula Principal Distribution Amount ________
24. Class A Principal Distribution Amount1 ________
(a) Class A-1 principal paid ________
(b) Class A-2 principal paid ________
25. Class A Principal Balance (after distributions of principal on
current Payment Date) ________
(a) Class A-1 ________
(b) Class A-2 ________
Note Insurer
------------
26. Reimbursement Amount to Note Insurer ________
Class M-1 Principal
-------------------
27. Remaining Amount Available ________
28. Class M-1 Formula Principal Distribution Amount ________
29. Class M-1 Principal Distribution Amount ________
30. Class M-1 Principal Balance (after distributions of principal
on current Payment Date) ________
------------------
(1)If there is a Class A Principal Deficiency not covered by an Insured
Payment, the remaining Amount Available pro rata to the Class A-1 Notes and the
Class A-2 Notes based on their respective principal balances. If there is no
such Principal Deficiency and the Senior Formula Principal Distribution Amount
exceeds the remaining Amount Available, pro rata to the Class A-1 Notes and
Class A-2 Notes based on the amount that would have been distributed had the
remaining Amount Available been equal to the Senior Formula Principal
Distribution Amount. Otherwise, the Senior Percentage of the Group 1 Formula
Principal Distribution Amount to the Class A-1 Noteholders and the Senior
Percentage of the Group 2 Formula Principal Distribution Amount to the Class A-2
Noteholders, plus to the Class A-1 and Class A-2 Noteholders, its pro rata share
of any Class B Floor Reduction Amount, until either Class of Class A Notes has
been paid in full; and thereafter to the unpaid Class of Class A Notes until
paid in full, the Senior Formula Principal Distribution Amount.
C-3
Class M-2 Principal
-------------------
31. Remaining Amount Available ________
32. Class M-2 Formula Principal Distribution Amount ________
33. Class M-2 Principal Distribution Amount ________
34. Class M-2 Principal Balance (after distributions of principal
on current Payment Date) ________
Class B Principal Distribution Tests
------------------------------------
(tests must be satisfied on and after the
Payment Date occurring in January 2003)
35. Average Sixty-Day Delinquency Ratio Test
(a) Sixty-Day Delinquency Ratio for
current Payment Date ________
(b) Average Sixty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month
and two preceding months; may not exceed
4.5%) ________
36. Average Thirty-Day Delinquency Ratio Test
(a) Thirty-Day Delinquency Ratio for
current Payment Date ________
(b) Average Thirty-Day Delinquency Ratio Test
(arithmetic average of ratios for this month
and two preceding months; may not exceed
7.5%) ________
37. Cumulative Realized Losses Test
(a) Cumulative Realized Losses
for current Payment Date ________
(b) Cumulative Realized Loss Ratio (Cumulative
Realized Losses divided by Cut-off Date Pool
Principal Balance; may not exceed 13%) ________
38. Current Realized Losses Test
(a) Current Realized Losses
for current Payment Date ________
C-4
(b) Current Realized Loss Ratio (total Realized
Losses for most recent three months,
multiplied by 4, divided by arithmetic
average of Pool Scheduled Principal Balance
for third preceding Payment Date and for
current Payment Date; may not exceed 5.0%) ________
39. Class: B Principal Balance Test
Class B Principal Balance (before any
distributions on current Payment Date)
divided by Pool Scheduled Principal Balance
for prior Payment Date (must equal or exceed
22%) ________
40. Class B Percentage ________
Class B-1 Principal
-------------------
41. Amount Available less all prior
distributions ________
42. Class B-1 Formula Principal Distribution Amount ________
43. Class B-1 Principal Distribution Amount ________
44. Class B-1 Principal Balance (after distributions of
principal on current Payment Date) ________
Liquidation Loss Interest; Total Distribution
Class M-1
---------
45. (a) Amount Available less all prior distributions ________
(b) Class M-1 Formula Liquidation Loss Interest
Distribution Amount ________
(c) Amount applied to Unpaid Class M-1 Liquidation
Loss Interest Shortfall ________
(d) Remaining Unpaid Class M-1 Liquidation Loss
Interest Shortfall ________
46. Amount by which Class M-1 Formula Distribution Amount (lines
15(c) and (d), 28, 45(b)) exceeds Class M-1 Distribution
Amount (lines 15(e), 29, 45(c)) ________
C-5
Class M-2 Notes
---------------
47. (a) Amount Available less all prior
distributions ________
(b) Class M-2 Formula Liquidation Loss Interest
Distribution Amount ________
(c) Amount applied to Unpaid Class M-2 Liquidation
Loss Interest Shortfall ________
(d) Remaining Unpaid Class M-2 Liquidation Loss
Interest Shortfall ________
48. Amount by which Class M-2 Formula Distribution Amount (lines
16(c) and (d), 32, 47(b)) exceeds Class M-2 Distribution
Amount (lines 16(e), 33, 47(c)) ________
49. Class B-1
(a) Amount Available less all preceding distributions ________
(b) Class B-1 Formula Liquidation Loss Interest
Distribution Amount ________
(c) Amount applied to Unpaid Class B-1 Liquidation Loss
Interest Shortfall ________
(d) Remaining Unpaid Class B -1 Liquidation Loss
Interest Shortfall ________
50. Amount by which Class B-1 Formula Distribution Amount (lines
17(c) and (d), 42, 49(b)) exceeds Class X-0 Xxxxxxxxxxxx
Xxxxxx (xxxxx 00(x), 00, 00(x)) ________
Class B-2
---------
51. Amount Available less all prior distributions ________
Interest
52. (a) Class B-2 Interest Rate (10.08%)
(b) Class B-2 Interest Amount ________
(c) Unpaid Class B-2 Interest Shortfall ________
(d) Class B-2 interest paid ________
(e) Class B-2 Interest Carryover Shortfall ________
Principal
53. Amount Available after prior distributions ________
54. Class B-2 Formula Principal Distribution Amount ________
C-6
55. Class B-2 Liquidation Loss Principal Amount ________
56. Guaranty Payment ________
57. Class B-2 Principal Distribution Amount ________
58. Class B-2 Principal Balance
(after distributions of principal on current Payment Date) ________
59. Amount by which Class X-0 Xxxxxxx Xxxxxxxxxxxx Xxxxxx (xxxxx
00(x) and (c), 54 and 55) exceeds Class B-2 Distribution
Amount (lines 52(d) and 57)) ________
60. Monthly Servicing Fee
(if Company is Servicer) ________
Supplementary Principal Distribution
------------------------------------
Class A
-------
61. Supplementary Principal Distribution Amount ________
(a) Class A-1 ________
(b) Class A-1 Principal Balance (after of payment of (a)) ________
(c) Class A-2 ________
(d) Class A-2 Principal Balance (after payment of (c)) ________
62. Supplementary Principal Distribution Test; to be "satisfied,"
Cumulative Realized Loss Ratio (line 37(b)) may not exceed the
following ratio:
Payment Date Ratio
------------ -----
On or before December 1999 8.0%
After December 1999 and
on or before December 2000 12.0%
After December 2000 17.0%
63. Monthly Servicing Fee (portion, if any, in excess of 1/12 of
0.75% of Pool Scheduled Principal Balance; Company or
Affiliate not Servicer) ________
C-7
Certificate Distribution Amount
64. Amount Available remaining after prior distributions ________
Class A, Class M, Class B Notes
65. Pool Scheduled Principal Balance ________
66. Pool Factor ________
67. Note Pool Factor
Class A-1 ________
Class A-2 ________
Class M-1 ________
Class M-2 ________
Class B-1 ________
Class B-2 ________
68. Contracts delinquent by number and aggregate Scheduled
Principal Balance:
(a) 30 - 59 days ________
(b) 60 - 89 days ________
(c) 90 or more days ________
69. Defaulted Contracts, by number and Scheduled Principal Balance:
(a) That became Defaulted Contracts during related
Due Period ________
________
(b) As of last day of related Due Period ________
________
(c) That became Liquidated Contracts during related
Due Period ________
________
Net Liquidation Losses ________
(d) In foreclosure ________
________
(e) Foreclosure completed ________
during related Due Period ________
C-8
(f) Foreclosed upon and held by Servicer ________
________
70. Servicer Termination Test; to be "satisfied,"
(a) the Average Sixty-Day Delinquency Ratio may
not exceed 7.5%, ________
(b) the sum of the Realized Losses for the preceding
twelve Payment Dates may not exceed 7.5% of the Pool
Scheduled Principal Balance as of the first Payment
Date in such 12-month period, and ________
(c) the Cumulative Realized Loss Ratio (line 37(b)) may
not exceed the following ratio:
Payment Date Ratio
----------------------------- -----
On or before December 1999 8.0%
After December 1999 and on or 12.0%
before December 2000
After December 2000 and on or 15.0%
before December 2001
After December 2001 and on or 18.0%
before December 2002
After December 2002 21.0%
The amounts of principal and interest distributions set out above are
expressed as a dollar amount per Note with a 1% Class Percentage Interest or per
$1,000 denomination of Note or Certificate.
Please contact ____________________ of U.S. Bank Trust National
Association, ____________________ with any questions regarding this Statement or
your Distribution.
C-9
EXHIBIT D
FORM OF CERTIFICATE OF SERVICING OFFICER
GREEN TREE FINANCIAL CORPORATION
The undersigned certifies that he is a [title] of Green Tree Financial
Corporation, a Delaware corporation (the "Servicer"), and that as such he is
duly authorized to execute and deliver this certificate on behalf of the
Servicer pursuant to Section 5.14 of the Sale and Servicing Agreement (the
"Agreement") dated as of , 1998 between the Company and Green Tree Home
Improvement and Home Equity Loan Trust 1998-F (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:
1. The Monthly Report for the period from to attached to this
certificate is complete and accurate in accordance with the requirements
of Section 5.14 of the Agreement; and
2. As of the date hereof, no Servicer Termination Event or event
that with notice or lapse of time or both would become an Servicer
Termination Event has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this day of
December, 1998.
GREEN TREE FINANCIAL CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
D-1
