Exhibit 4.1
CONFORMED
CERTIFICATES FOR HOME EQUITY LOANS
SERIES 2002-A
POOLING AND SERVICING AGREEMENT
among
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller
and
CONSECO FINANCE CORP.
as Originator and Servicer
and
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
of
CONSECO FINANCE HOME EQUITY LOAN TRUST 2002-A
Dated as of January 1, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.............................................................................................2
SECTION 1.01. General....................................................................................2
SECTION 1.02. Specific Terms.............................................................................2
SECTION 1.03. Calculations..............................................................................49
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF LOANS.............................................................49
SECTION 2.01. Closing...................................................................................49
SECTION 2.02. Conditions to the Closing.................................................................50
SECTION 2.03. Conveyance of the Subsequent Loans........................................................51
SECTION 2.04. Acceptance by Trustee.....................................................................53
SECTION 2.05. REMIC Provisions..........................................................................54
SECTION 2.06. Seller Option to Substitute for Prepaid Loans.............................................60
ARTICLE III REPRESENTATIONS AND WARRANTIES.......................................................................61
SECTION 3.01. Representations and Warranties Regarding the Seller.......................................61
SECTION 3.02. Representations and Warranties Regarding Each Loan........................................63
SECTION 3.03. Additional Representations and Warranties.................................................66
SECTION 3.04. Representations and Warranties Regarding the Loans in the Aggregate.......................66
SECTION 3.05. Representations and Warranties Regarding the Loan Files...................................68
SECTION 3.06. Repurchases of Loans for Breach of Representations and Warranties.........................69
SECTION 3.07. No Repurchase Under Certain Circumstances.................................................71
SECTION 3.08. Certain Representations and Warranties Regarding Perfection of the Loans..................72
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS...........................................73
SECTION 4.01. Transfer of Loans.........................................................................73
SECTION 4.02. Costs and Expenses........................................................................74
ARTICLE V SERVICING OF LOANS.....................................................................................74
SECTION 5.01. Responsibility for Loan Administration....................................................74
SECTION 5.02. Standard of Care..........................................................................74
SECTION 5.03. Records...................................................................................74
SECTION 5.04. Inspection................................................................................74
SECTION 5.05. Certificate Account.......................................................................75
SECTION 5.06. Enforcement...............................................................................78
SECTION 5.07. Trustee to Cooperate......................................................................79
SECTION 5.08. Costs and Expenses........................................................................80
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SECTION 5.09. Maintenance of Insurance..................................................................80
SECTION 5.10. Merger or Consolidation of Servicer.......................................................81
SECTION 5.11. Advance Facility..........................................................................81
ARTICLE VI REPORTS AND TAX MATTERS...............................................................................83
SECTION 6.01. Monthly Reports...........................................................................83
SECTION 6.02. Officer's Certificate.....................................................................83
SECTION 6.03. Other Data................................................................................83
SECTION 6.04. Annual Report of Accountants..............................................................83
SECTION 6.05. Statements to Certificateholders and the Class R Certificateholder........................84
SECTION 6.06. Payment of Taxes..........................................................................86
ARTICLE VII SERVICE TRANSFER.....................................................................................87
SECTION 7.01. Events of Termination.....................................................................87
SECTION 7.02. Transfer..................................................................................88
SECTION 7.03. Trustee to Act; Appointment of Successor..................................................89
SECTION 7.04. Notification to Certificateholders and Class R Certificateholder..........................90
SECTION 7.05. Effect of Transfer........................................................................90
SECTION 7.06. Transfer of Certificate Account...........................................................91
ARTICLE VIII PAYMENTS............................................................................................91
SECTION 8.01. Monthly Payments..........................................................................91
SECTION 8.02. Advances..................................................................................92
SECTION 8.03. [Reserved]................................................................................92
SECTION 8.04. Permitted Withdrawals from the Certificate Account; Payments..............................92
SECTION 8.05. Reassignment of Repurchased and Replaced Loans............................................99
SECTION 8.06. Class R Certificateholder's Purchase Option; Increase in Class A-5 Interest Rate..........99
SECTION 8.07. Intermediate REMIC and Subsidiary REMIC Distributions....................................101
SECTION 8.08. Pre-Funding Account......................................................................104
SECTION 8.09. Yield Maintenance Reserve Funds..........................................................105
SECTION 8.10. Basis Risk Reserve Fund..................................................................106
SECTION 8.11. Allocation of Realized Loss Amounts......................................................107
ARTICLE IX THE CERTIFICATES AND THE CLASS R CERTIFICATE.........................................................108
SECTION 9.01. The Certificates and the Class R Certificate.............................................108
SECTION 9.02. Registration of Transfer and Exchange of Certificates and the Class R Certificate........109
SECTION 9.03. No Charge; Disposition of Void Certificates or Class R Certificate.......................114
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or Class R Certificate.................114
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SECTION 9.05. Persons Deemed Owners....................................................................115
SECTION 9.06. Access to List of Certificateholders' and Class R Certificateholder's Names and
Addresses................................................................................115
SECTION 9.07. Authenticating Agents....................................................................115
ARTICLE X INDEMNITIES...........................................................................................116
SECTION 10.01. Real Estate.............................................................................116
SECTION 10.02. Liabilities to Obligors.................................................................116
SECTION 10.03. Tax Indemnification.....................................................................116
SECTION 10.04. Servicer's Indemnities..................................................................116
SECTION 10.05. Operation of Indemnities................................................................117
SECTION 10.06. REMIC Tax Matters.......................................................................117
ARTICLE XI THE TRUSTEE..........................................................................................117
SECTION 11.01. Duties of Trustee.......................................................................117
SECTION 11.02. Certain Matters Affecting the Trustee...................................................118
SECTION 11.03. Trustee Not Liable for Certificates, Class R Certificate or Loans.......................120
SECTION 11.04. Trustee May Own Certificates............................................................120
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive Events of Termination.......120
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses.........................................120
SECTION 11.07. Eligibility Requirements for Trustee....................................................121
SECTION 11.08. Resignation or Removal of Trustee.......................................................121
SECTION 11.09. Successor Trustee.......................................................................122
SECTION 11.10. Merger or Consolidation of Trustee......................................................123
SECTION 11.11. Tax Returns.............................................................................123
SECTION 11.12. Obligor Claims..........................................................................123
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee...........................................124
SECTION 11.14. Trustee and U.S. Bancorp................................................................125
SECTION 11.15. Trustee Advances........................................................................125
ARTICLE XII MISCELLANEOUS.......................................................................................125
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties..................................125
SECTION 12.02. Conseco Finance Corp. and Seller Not to Engage in Certain Transactions with
Respect to the Trust......................................................................126
SECTION 12.03. Maintenance of Office or Agency.........................................................126
SECTION 12.04. Termination.............................................................................126
SECTION 12.05. Acts of Certificateholders and Class R Certificateholder................................129
SECTION 12.06. Assignment or Delegation by Company.....................................................130
SECTION 12.07. Amendment...............................................................................130
SECTION 12.08. Notices.................................................................................132
SECTION 12.09. Merger and Integration..................................................................133
SECTION 12.10. Headings................................................................................133
SECTION 12.11. Governing Law...........................................................................133
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Exhibit A -- Form of Class A-[1a][1b][2][3][4][5][IO] Certificate
Exhibit B -- Form of Class M-[1][2] Certificate
Exhibit C -- Form of Class B-[1][2] Certificate
Exhibit D -- Form of Assignment
Exhibit E -- Form of Certificate of Officer
Exhibit F -- Form of Opinion of Counsel for the Originator
Exhibit G -- Form of Trustee's Acknowledgment
Exhibit H -- Form of Certificate of Servicing Officer
Exhibit I -- Form of Class B-3I Certificate
Exhibit J-1 -- Form of Certificate Regarding Repurchased Loans
Exhibit J-2 -- Form of Certificate Regarding Repurchased Loans
Exhibit J-3 -- Form of Certificate Regarding Substitution for Prepaid Loans
Exhibit K -- Form of Representation Letter
Exhibit L -- List of Initial and Additional Loans
Exhibit M -- Form of Monthly Report
Exhibit N -- Form of Addition Notice
Exhibit O -- Form of Subsequent Transfer Instrument
Exhibit P -- Form of Officer's Certificate (Subsequent Transfer)
Exhibit Q -- Form of Class R Certificate
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AGREEMENT, dated as of January 1, 2002, among Conseco Finance
Securitizations Corp., a corporation organized and existing under the laws of
the State of Minnesota, as Seller (the "Seller"), Conseco Finance Corp., a
corporation organized and existing under the laws of the State of Delaware as
originator of the home equity loans described herein (the "Originator"), and as
Servicer (the "Servicer"), and U.S. Bank National Association (formerly known as
U.S. Bank Trust National Association), a national banking association organized
and existing under the laws of the United States, not in its individual capacity
but solely as Trustee (the "Trustee") of Conseco Finance Home Equity Loan Trust
2002-A (the "Trust").
WHEREAS, in the regular course of its business, Conseco Finance Corp.
purchases, originates and services home equity loans, which loans provide for
installment payments by or on behalf of the borrowers and grant mortgages, deeds
of trust or security deeds on certain real estate securing such loans;
WHEREAS, the Seller, in the ordinary course of its business, acquires
pools of home equity loans and other receivables from Conseco Finance Corp. and
arranges the securitization of those receivables;
WHEREAS, the Seller intends to sell the Certificates (as defined
herein), to be issued hereunder in thirteen classes (each, a "Class"), which,
together with the Class R Certificate (as defined herein), in the aggregate will
evidence the entire beneficial ownership interest in the Trust Fund (as defined
herein), consisting primarily of the Loans (as defined herein);
WHEREAS, the Seller, the Originator, the Servicer and the Trustee wish
to set forth the terms and conditions on which the Trustee, on behalf of the
Certificateholders (as defined herein) and Class R Certificateholder (as defined
herein) will acquire the Loans and the Servicer will service the Loans;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as provided herein:
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ARTICLE I
DEFINITIONS
SECTION 1.01. General. For the purpose of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
--------------
"Addition Notice" means, with respect to the transfer of Subsequent
Loans to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit N, which shall be given not later than five
Business Days prior to the related Subsequent Transfer Date, of the Seller's
designation of Subsequent Loans, as applicable, to be sold to the Trust and the
aggregate Cut-off Date Principal Balances of such Subsequent Loans.
"Additional Loan" means a Loan identified as such on the List of Loans
attached hereto as Exhibit L.
"Accrual Period" means with respect to any Payment Date, the period
from and including the prior Payment Date (or, with respect to the first Payment
Date, from and including the Closing Date) to but excluding such Payment Date.
"Adjusted Net WAC Cap Rate" means, for any Payment Date, the Net WAC
Cap Rate minus a fraction, expressed as a percentage, the numerator of which is
the sum of (a) the product of (x) the Class A-IO Interest Rate for such Payment
Date times (y) (i) the sum of the Subsidiary Interest Adjusted Principal Balance
of the (1) Class S-2(1) Interest through and including the January 2003 Payment
Date, (2) Class S-2(2) Interest through and including the June 2003 Payment
Date, (3) Class S-2(3) Interest through and including the January 2004 Payment
Date and (4) Class S-2(4) Interest through and including the July 2004 Payment
Date, and (ii) 0 after the July 2004 Payment Date, plus (b) the product of (x)
the Class X-IO Interest Rate for such Payment Date times (y) (i) the sum of the
Subsidiary Interest Adjusted Principal Balance of the Class S-3 Interest through
and including the August 2004 Payment Date, and (ii) 0 after the August 2004
Payment Date, and the denominator of which is the sum of the Subsidiary Interest
Principal Balance of the Class S-1, Class S-2 and Class S-3 Interests.
"Advance" means, with respect to any Payment Date, the amounts, if any,
deposited by the Servicer or the Trustee, as applicable, in the Certificate
Account for such Payment Date pursuant to Section 8.02.
"Advance Payment" means any payment by an Obligor in advance of the Due
Period in which it would be due under such Loan and which payment is not a
Principal Prepayment.
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"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificate Principal Balance" means the sum of the Class
A-1a, Class A-1b, Class A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class
M-2, Class B-1, Class B-2 and Class P Principal Balances.
"Agreement" means this Pooling and Servicing Agreement, as it may be
amended from time to time.
"Amount Available" means, for any Payment Date, an amount equal to:
(a) the sum of
(i) the amount on deposit in the Certificate Account as
of the close of business on the last day of the
related Due Period (other than any amounts therein
attributable to Prepayment Charges), plus
(ii) any Advances deposited in the Certificate Account
with respect to such Payment Date, minus
(b) the sum of
(i) the Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee from
the Certificate Account pursuant to clauses (ii)
through (v) of Section 8.04(a), and
(iii) any amounts on deposit in the Certificate Account as
of the close of business on the last day of the
related Due Period representing collections in
respect of Principal Prepayments in Full (other than
any amounts referred to in Section 2.06(vii)) on
Loans for which a substitution has been made in
accordance with Section 2.06.
provided that solely for purposes of Section 8.07(b), this
term shall be modified such that the parenthetical of clause
(a)(i) above shall not apply and such that clause (b)(ii)
above shall also include amounts withdrawn pursuant to Section
8.04(b)(ii); provided further that solely for purposes of
Section 8.07(a), this term as defined above shall be modified
to mean, for any Payment Date, all corresponding amounts
distributed pursuant to clauses (i) and (ii) of Section
8.07(b).
3
"Amount Held for Future Distribution" means, for any Payment Date, the
total of the amounts held in the Certificate Account in respect of the Loans on
the last day of the preceding Due Period on account of Advance Payments in
respect of such Due Period.
"Applicants" has the meaning assigned in Section 9.06.
"Authenticating Agent" means any authenticating agent appointed
pursuant to Section 9.07.
"Average Sixty-Day Delinquency Ratio Test" means, to be considered
"satisfied" for any Payment Date, that the arithmetic average of the Sixty-Day
Delinquency Ratio for the Loans for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 36.50% of the
Senior Enhancement Percentage for the Loans.
"Backup Servicer" means EMC Mortgage Corporation, a corporation located
at 000 Xxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, and any successor
thereto.
"Backup Servicing Agreement" means the backup servicing agreement
between the Backup Servicer and the Trust dated as of January 1, 2002.
"Backup Servicing Fee" means for any Payment Date, with respect to the
Loans, one-twelfth of the product of 0.05% and the Pool Scheduled Principal
Balance for the preceding Payment Date (or, in the case of the first Payment
Date, the Cut-off Date Pool Principal Balance).
"Balloon Loan" means a Loan that provides for the payment of the
unamortized principal balance of such Loan in a single payment at the maturity
of such Loan that is greater than the preceding monthly payments.
"Basis Risk Carryover Shortfall" means the Class A-1a Basis Risk
Carryover Shortfall, the Class A-1b Basis Risk Carryover Shortfall, the Class
A-2 Basis Risk Carryover Shortfall, the Class A-3 Basis Risk Carryover
Shortfall, the Class A-4 Basis Risk Carryover Shortfall, the Class A-5 Basis
Risk Carryover Shortfall, the Class M-1 Basis Risk Carryover Shortfall, the
Class M-2 Basis Risk Carryover Shortfall, the Class B-1 Basis Risk Carryover
Shortfall or the Class B-2 Basis Risk Carryover Shortfall, as applicable.
"Basis Risk Reserve Fund" means a separate trust account created and
maintained pursuant to Section 8.10 in the name of the Trust in an Eligible
Institution.
"Book-Entry Certificate" means any Certificate registered in the name
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than
4
(a) a Saturday or a Sunday, or
(b) another day on which banking institutions in the city in which
the Person taking action hereunder are authorized or obligated
by law, executive order, or governmental decree to be closed.
"Calculation Agent" means the Person who establishes LIBOR with respect
to each Interest Reset Period. The Calculation Agent shall be the Trustee unless
the Trustee is unable or unwilling so to act, in which case the Calculation
Agent shall be a financial institution appointed by the Seller.
"Certificate" means a Certificate for Home Equity Loans, Series 2002-A,
Class A-1a, Class A-1b, Class A-2, Class A-3, Class A-4, Class A-5, Class A-IO,
Class M-1, Class M-2, Class B-1, Class B-2, Class B-3I or Class P Certificate,
all (except the Class P Certificate) executed and delivered by the Trustee
substantially in the form of Exhibit A, B, C or I, as applicable, but does not
include the Class R Certificate.
"Certificate Account" means a separate trust account created and
maintained pursuant to Section 5.05 in the name of the Trust in an Eligible
Institution.
"Certificate Owner" means the person who is the beneficial owner of a
Book-Entry Certificate or, if Definitive Certificates have been issued,
Certificateholders.
"Certificate Register" means the register maintained pursuant to
Section 9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
Certificate or Class R Certificate is registered on the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request or
demand pursuant to this Agreement, any Certificate or Class R Certificate
registered in the name of the Originator or the Seller or any of their
Affiliates shall be deemed not to be outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite Percentage Interest necessary to effect any such consent, request,
waiver or demand has been obtained; provided, however, that, solely for the
purpose of determining whether the Trustee is entitled to rely upon any such
consent, waiver, request or demand, only Certificates or a Class R Certificate
which the Trustee knows to be so owned shall be so disregarded.
"Class A," "Class A-IO," "Class M," "Class B," `Class B-3I," "Class P"
or "Class R" means pertaining to Class A Certificates, Class A-IO Certificates,
Class M Certificates, Class B Certificates, Class B-3I Certificates, Class P
Certificate and/or Class R Certificate, as the case may be.
"Class A Certificates" means the Class A-1a, Class A-1b, Class A-2,
Class A-3, Class A-4 and Class A-5 Certificates, collectively.
5
"Class A Current Interest Amount" means, for any Payment Date, an
amount equal to the sum of one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding March 15,
2002) at (i) the Class A-1a Interest Rate on the Class A-1a Principal Balance,
(ii) the Class A-1b Interest Rate on the Class A-1b Principal Balance, (iii) the
Class A-2 Interest Rate on the Class A-2 Principal Balance, (iv) the Class A-3
Interest Rate on the Class A-3 Principal Balance, (v) the Class A-4 Interest
Rate on the Class A-4 Principal Balance, and (vi) the Class A-5 Interest Rate on
the Class A-5 Principal Balance, in each case to be calculated immediately prior
to such Payment Date.
"Class A Formula Principal Distribution Amount" means, for any Payment
Date, the excess of:
(a) the Class A Principal Balance immediately prior to such
Payment Date over
(b) the lesser of
(i) 59.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to scheduled
principal payments during the related Due Period and
unscheduled principal collections received during the
related Due Period), less the OC Floor.
"Class A Interest Carry Forward Amount" means, with respect to any
Payment Date, the excess, if any, of the Class A Current Interest Amount for
such Payment Date over the amount actually paid on the Class A Certificates in
respect of the Class A Current Interest Amount on such Payment Date.
"Class A Principal Balance" means, for any Payment Date, the sum of the
Class A-1a, Class A-1b, Class A-2, Class A-3, Class A-4 and Class A-5 Principal
Balances.
"Class A-1a Basis Risk Carryover Shortfall" means, for any Payment
Date, the excess, if any, of
(a) the amount of interest that the Class A-1a Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class A-1a Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class A-1a Certificates
received on such Payment Date based on the related Adjusted
Net WAC Cap Rate (but not in excess of 15.00% per annum).
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"Class A-1a Certificate" means any one of the Class A-1a Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A-1 and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-1a Distribution Amount" means, for any Payment Date, the
amount to be distributed to the Class A-1a Certificateholders pursuant to
Sections 8.04, 8.09 and 8.10 on such Payment Date.
"Class A-1a Interest Rate" means a floating rate per annum equal to the
lesser of (a) LIBOR plus the Class A-1a Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class A-1a Margin" means 0.25%.
"Class A-1a Principal Balance" means, for any Payment Date, the
Original Class A-1a Principal Balance less all amounts previously distributed to
Holders of Class A-1a Certificates in respect of principal.
"Class A-1b Basis Risk Carryover Shortfall" means, for any Payment
Date, the excess, if any, of
(a) the amount of interest that the Class A-1b Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class A-1b Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class A-1b Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class A-1b Certificate" means any one of the Class A-1b Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A-1 and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-1b Distribution Amount" means, for any Payment Date, the
amount to be distributed to the Class A-1b Certificateholders pursuant to
Sections 8.04, 8.09 and 8.10 on such Payment Date.
"Class A-1b Interest Rate" means a rate equal to the lesser of (a)
3.34% per annum, and (b) the Adjusted Net WAC Cap Rate.
"Class A-1b Principal Balance" means, for any Payment Date, the
Original Class A-1b Principal Balance less all amounts previously distributed to
Holders of Class A-1b Certificates in respect of principal.
7
"Class A-2 Basis Risk Carryover Shortfall" means, for any Payment Date,
the excess, if any, of
(a) the amount of interest that the Class A-2 Certificates would
have been entitled to receive on such Payment Date had the
Class A-2 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class A-2 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class A-2 Certificate" means any one of the Class A-2 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A-1 and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-2 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class A-2 Certificateholders pursuant to Sections 8.04
and 8.10 on such Payment Date.
"Class A-2 Interest Rate" means a rate equal to the lesser of (a) 4.69%
per annum, and (b) the Adjusted Net WAC Cap Rate.
"Class A-2 Principal Balance" means, for any Payment Date, the Original
Class A-2 Principal Balance less all amounts previously distributed to Holders
of Class A-2 Certificates in respect of principal.
"Class A-3 Basis Risk Carryover Shortfall" means, for any Payment Date,
the excess, if any, of
(a) the amount of interest that the Class A-3 Certificates would
have been entitled to receive on such Payment Date had the
Class A-3 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class A-3 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class A-3 Certificate" means any one of the Class A-3 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A-1 and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-3 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class A-3 Certificateholders pursuant to Sections 8.04
and 8.10 on such Payment Date.
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"Class A-3 Interest Rate" means a rate equal to the lesser of (a) 5.33%
per annum, and (b) the Adjusted Net WAC Cap Rate.
"Class A-3 Principal Balance" means, for any Payment Date, the Original
Class A-3 Principal Balance less all amounts previously distributed to Holders
of Class A-3 Certificates in respect of principal.
"Class A-4 Basis Risk Carryover Shortfall" means, for any Payment Date,
the excess, if any, of
(a) the amount of interest that the Class A-4 Certificates would
have been entitled to receive on such Payment Date had the
Class A-4 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class A-4 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class A-4 Certificate" means any one of the Class A-4 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A-1 and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-4 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class A-4 Certificateholders pursuant to Sections 8.04
and 8.10 on such Payment Date.
"Class A-4 Interest Rate" means a rate equal to the lesser of (a) 6.32%
per annum, and (b) the Adjusted Net WAC Cap Rate.
"Class A-4 Principal Balance" means, for any Payment Date, the Original
Class A-4 Principal Balance less all amounts previously distributed to Holders
of Class A-4 Certificates in respect of principal.
"Class A-5 Basis Risk Carryover Shortfall" means, for any Payment Date,
the excess, if any, of
(a) the amount of interest that the Class A-5 Certificates would
have been entitled to receive on such Payment Date had the
Class A-5 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class A-5 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class A-5 Certificate" means any one of the Class A-5 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form
9
set forth in Exhibit A-1 and evidencing an interest designated as a "regular
interest" in the Master REMIC for purposes of the REMIC Provisions.
"Class A-5 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class A-5 Certificateholders pursuant to Sections 8.04
and 8.10 on such Payment Date.
"Class A-5 Interest Rate" means a rate equal to the lesser of (a) 7.05%
per annum (or to the extent provided in Section 8.06(c), 7.55%), and (b) the
Adjusted Net WAC Cap Rate.
"Class A-5 Principal Balance" means, for any Payment Date, the Original
Class A-5 Principal Balance less all amounts previously distributed to Holders
of Class A-5 Certificates in respect of principal.
"Class A-IO Certificates" means the Class A-IO Certificates executed
and delivered by the Trustee and authenticated by the Certificate Registrar
substantially in the form set forth in Exhibit A-2 and evidencing an interest
designated as a "regular interest" in the Master REMIC for purposes of the REMIC
Provisions.
"Class A-IO Current Interest Amount" means, with respect to any Payment
Date, an amount equal to interest accrued during the related Accrual Period at
the Class A-IO Interest Rate on the Class A-IO Notional Amount for the preceding
Payment Date or, in the case of the first Payment Date, the Original Class A-IO
Notional Amount.
"Class A-IO Distribution Amount" means, for any Payment Date, the
amount to be distributed to the Class A-IO Certificateholder pursuant to Section
8.04 on such Payment Date.
"Class A-IO Interest Carry Forward Amount" means, with respect to any
Payment Date, the excess, if any, of the Class A-IO Current Interest Amount for
such Payment Date over the amount actually paid on the Class A-IO Certificates
in respect of the Class A-IO Current Interest Amount on such Payment Date.
"Class A-IO Interest Rate" means a rate per annum equal to 7.25% per
annum.
"Class A-IO Notional Amount" means, with respect to each Payment Date,
the lesser of (a) from and including the Closing Date through the December 2002
Payment Date, $211,000,000, from and including the January 2003 Payment Date
through the May 2003 Payment Date, $191,000,000, from and including the June
2003 Payment Date through the December 2003 Payment Date, $95,000,000, from and
including the January 2004 Payment Date through the June 2004 Payment Date,
$68,120,000, and for any Payment Date thereafter, $0, and (b) the Pool Scheduled
Principal Balance.
"Class B Certificates" means the Class B-1 and Class B-2 Certificates,
collectively.
10
"Class B-1 Allocated Realized Loss Amount" means, for any Payment Date,
that portion, if any, of the Realized Loss Amount for such Payment Date
allocated to the Class B-1 Certificates in accordance with Section 8.11(b).
"Class B-1 Allocated Realized Loss Interest Amount" means, with respect
to any Payment Date, interest accrued during the related Accrual Period at the
Class B-1 Interest Rate on the Unpaid Class B-1 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(viii)(B)).
"Class B-1 Basis Risk Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any of
(a) the amount of interest that the Class B-1 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class B-1 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class B-1 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class B-1 Certificate" means any one of the Class B-1 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class B-1 Current Interest Amount" means, with respect to any Payment
Date, an amount equal to interest accrued during the related Accrual Period at
the Class B-1 Interest Rate on the Class B-1 Principal Balance for such Payment
Date.
"Class B-1 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class B-1 Certificateholders pursuant to Sections 8.04,
8.09 and 8.10 on such Payment Date.
"Class B-1 Formula Principal Distribution Amount" means, for any
Payment Date, the excess of:
(a) the sum of:
(i) the Class A Principal Balance (after giving effect to
the distributions of the Class A Formula Principal
Distribution Amount for such Payment Date);
(ii) the Class M-1 Principal Balance (after giving effect
to the distributions of the Class M-1 Formula
Principal Distribution Amount for such Payment Date);
11
(iii) the Class M-2 Principal Balance (after giving effect
to the distributions of the Class M-2 Formula
Principal Distribution Amount for such Payment Date);
and
(iv) the Class B-1 Principal Balance immediately prior to
such Payment Date over
(b) the lesser of
(i) 91.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period) and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to scheduled
principal payments during the related Due Period and
unscheduled principal collections received during the
related Due Period), less the OC Floor.
"Class B-1 Interest Carry Forward Amount" means, with respect to any
Payment Date, the excess, if any, of the Class B-1 Current Interest Amount for
such Payment Date over the amount actually paid on the Class B-1 Certificates in
respect of the Class B-1 Current Interest on such Payment Date.
"Class B-1 Interest Rate" means a floating rate per annum equal to the
lesser of (a) LIBOR plus the Class B-1 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class B-1 Margin" means 5.25%.
"Class B-1 Principal Balance" means, as to any Payment Date, the
Original Class B-1 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class B-1 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class B-1 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class B-2 Allocated Realized Loss Amount" means, for any Payment Date,
that portion, if any, of the Realized Loss Amount for such Payment Date
allocated to the Class B-2 Certificates in accordance with Section 8.11(a).
"Class B-2 Allocated Realized Loss Interest Amount" means, with respect
to any Payment Date, interest accrued during the related Accrual Period at the
Class B-2 Interest Rate on the Unpaid Class B-2 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(x)(B)).
12
"Class B-2 Basis Risk Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any of
(a) the amount of interest that the Class B-2 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class B-2 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class B-2 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class B-2 Certificate" means any one of the Class B-2 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class B-2 Current Interest Amount" means, with respect to any Payment
Date, an amount equal to interest accrued during the related Accrual Period at
the Class B-2 Interest Rate on the Class B-2 Principal Balance for such Payment
Date.
"Class B-2 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class B-2 Certificateholders pursuant to Sections 8.04,
8.09 and 8.10 on such Payment Date.
"Class B-2 Formula Principal Distribution Amount" means, for any
Payment Date, the excess of:
(a) of the sum of:
(i) the Class A Principal Balance (after giving effect to
the distributions of the Class A Formula Principal
Distribution Amount for such Payment Date);
(ii) the Class M-1 Principal Balance (after giving effect
to the distributions of the Class M-1 Formula
Principal Distribution Amount for such Payment Date);
(iii) the Class M-2 Principal Balance (after giving effect
to the distributions of the Class M-2 Formula
Principal Distribution Amount for such Payment Date);
(iv) the Class B-1 Principal Balance (after giving effect
to the distributions of the Class B-1 Formula
Principal Distribution Amount for such Payment Date);
and
13
(v) the Class B-2 Principal Balance immediately prior to
such Payment Date over
(b) the lesser of
(i) 95.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period) and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to scheduled
principal payments during the related Due Period and
unscheduled principal collections received during the
related Due Period), less the OC Floor.
"Class B-2 Interest Carry Forward Amount" means, with respect to any
Payment Date, the excess, if any, of the Class B-2 Current Interest Amount for
such Payment Date over the amount actually paid on the Class B-2 Certificates in
respect of the Class B-2 Current Interest on such Payment Date.
"Class B-2 Interest Rate" means a floating rate per annum equal to the
lesser of (a) LIBOR plus the Class B-2 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class B-2 Margin" means 5.75%
"Class B-2 Principal Balance" means, as to any Payment Date, the
Original Class B-2 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class B-2 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class B-2 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class B-3I Certificate" means any one of the Class B-3I Certificates
executed and delivered by the Trustee substantially in the form set forth in
Exhibit I hereto and evidencing an interest designated as a "regular interest"
in the Master REMIC for purposes of the REMIC Provisions.
"Class B-3I Distribution Amount" means, as to any Payment Date, an
amount equal to the sum of (A) the lesser of (i) the Class B-3I Formula
Distribution Amount for such Payment Date and (ii) the Excess Cashflow for such
Payment Date minus all amounts distributed on that Payment Date under Sections
8.04(e)(i)-(xii) and (B) the amount, if any, by which the Class B-3I Formula
Distribution Amount on the preceding Payment Date exceeds the Class B-3I
Distribution Amount on such preceding Payment Date.
14
"Class B-3I Formula Distribution Amount" means, as to any Payment Date,
an amount equal to the product of (i) the Class B-3I Interest Rate for such
Payment Date and (ii) the Class B-3I Notional Amount.
"Class B-3I Interest Rate" means the excess of (i) the Adjusted Net WAC
Cap Rate over (ii) the product of (A) two and (B) the weighted average
Pass-Through Rate of the Class I-Accrual Interest and the Intermediate REMIC
Accretion Directed Interests, provided that for this purpose the Pass-Through
Rate for the Class I-Accrual Interest shall be subject to a cap of zero and the
Pass-Through Rate for each Intermediate REMIC Accretion Directed Interest shall
not exceed the Interest Rate on its Corresponding Certificate Class.
"Class B-3I Notional Amount" means $600,000,000 for the first Payment
Date and, for any other Payment Date, the sum of the Pool Scheduled Principal
Balance and the Pre-Funded Amount as of the immediately preceding Payment Date.
"Class I-AIO" means any one or more individual components of the Class
I-AIO Interest, as the case may be.
"Class I-AIO Interest" means the Class I-AIO(1), Class I-AIO(2), Class
I-AIO(3) and Class I-AIO(4) Interests, collectively.
"Class I-XIO" means any one or more individual components of the Class
I-XIO Interest, as the case may be.
"Class I-XIO Interest" means the sole Class I-XIO Interest,
collectively.
"Class M Certificates" means the Class M-1 and Class M-2 Certificates,
collectively.
"Class M-1 Allocated Realized Loss Amount" means, with respect to any
Payment Date, that portion, if any, of the Realized Loss Amount for such Payment
Date allocated to the Class M-1 Certificates in accordance with Section 8.11(d).
"Class M-1 Allocated Realized Loss Interest Amount" means, with respect
to any Payment Date, interest accrued during the related Accrual Period at the
Class M-1 Interest Rate on the Unpaid Class M-1 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(iv)(B)).
"Class M-1 Basis Risk Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any, of
(a) the amount of interest that the Class M-1 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class M-1 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
15
(b) the amount of interest that the Class M-1 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class M-1 Certificate" means any one of the Class M-1 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class M-1 Current Interest Amount" means, with respect to any Payment
Date, an amount equal to interest accrued during the related Accrual Period at
the Class M-1 Interest Rate on the Class M-1 Principal Balance for such Payment
Date.
"Class M-1 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class M-1 Certificateholders pursuant to Sections 8.04,
8.09 and 8.10 on such Payment Date.
"Class M-1 Formula Principal Distribution Amount" means, for any
Payment Date, the excess of
(a) the sum of
(i) the Class A Principal Balance for such Payment Date
(after giving effect to the distribution of the Class
A Formula Principal Distribution Amount for such
Payment Date), plus
(ii) the Class M-1 Principal Balance immediately prior to
such Payment Date, over
(b) the lesser of
(i) 73.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to scheduled
principal payments during the related Due Period and
unscheduled principal collections received during the
related Due Period), less the OC Floor.
"Class M-1 Interest Carry Forward Amount" means, with respect to any
Payment Date, the excess, if any, of the Class M-1 Current Interest Amount for
such Payment Date over the amount actually paid on the Class M-1 Certificates in
respect of the Class M-1 Current Interest Amount on such Payment Date.
16
"Class M-1 Interest Rate" means a floating rate per annum equal to the
lesser of (a) LIBOR plus the Class M-1 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class M-1 Margin" means 1.85%.
"Class M-1 Principal Balance" means, as to any Payment Date, the
Original Class M-1 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class M-1 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class M-1 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class M-2 Allocated Realized Loss Amount" means, with respect to any
Payment Date, that portion, if any, of the Realized Loss Amount for such Payment
Date allocated to the Class M-2 Certificates in accordance with Section 8.11(c).
"Class M-2 Allocated Realized Loss Interest Amount" means, with respect
to any Payment Date, interest accrued during the related Accrual Period at the
Class M-2 Interest Rate on the Unpaid Class M-2 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(vi)(B)).
"Class M-2 Basis Risk Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any of
(a) the amount of interest that the Class M-2 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class M-2 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class M-2 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class M-2 Certificate" means any one of the Class M-2 Certificates
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class M-2 Current Interest Amount" means, with respect to any Payment
Date, an amount equal to interest accrued during the related Accrual Period at
the Class M-2 Interest Rate on the Class M-2 Principal Balance.
17
"Class M-2 Distribution Amount" means, for any Payment Date, the amount
to be distributed to the Class M-2 Certificateholders pursuant to Sections 8.04,
8.09 and 8.10 on such Payment Date.
"Class M-2 Formula Principal Distribution Amount" means, for any
Payment Date, the excess of
(a) the sum of
(i) the Class A Principal Balance for such Payment Date
(after giving effect to the distribution of the Class
A Formula Principal Distribution Amount for such
Payment Date), plus
(ii) the Class M-1 Principal Balance for such Payment Date
(after giving effect to the distribution of the Class
M-1 Formula Principal Distribution Amount for such
Payment Date), plus
(iii) the Class M-2 Principal Balance immediately prior to
such Payment Date, over
(b) the lesser of
(i) 83.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period) and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to scheduled
principal payments during the related Due Period and
unscheduled principal collections received during the
related Due Period), less the OC Floor.
"Class M-2 Interest Carry Forward Amount" means, with respect to any
Payment Date, the excess, if any, of the Class M-2 Current Interest Amount for
such Payment Date over the amount actually paid on the Class M-2 Certificates in
respect of the Class M-2 Current Interest on such Payment Date.
"Class M-2 Interest Rate" means a floating rate per annum equal to the
lesser of (a) LIBOR plus the Class M-2 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class M-2 Margin" means 2.75%.
"Class M-2 Principal Balance" means, as to any Payment Date, the
Original Class M-2 Principal Balance minus the sum of
18
(a) all amounts distributed to Holders of Class M-2 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class M-2 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class P Certificate" means the uncertificated Class P Certificate,
evidencing an interest designated as a "regular interest" in the Subsidiary
REMIC for purposes of the REMIC Provisions.
"Class P Certificate Pass-Through Rate" means a fixed per annum rate of
0.0% per annum.
"Class P Certificateholder" shall mean Green Tree Finance Corp.--Two.
"Class P Distribution Amount" means, for any Payment Date, that portion
of the Excess Cashflow eligible for distribution in respect of the Class P
Certificate in accordance with the priorities set forth in Section 8.04(e)(xiii)
and all Prepayment Charges distributed pursuant to Section 8.04(f).
"Class P Principal Balance" means, for any Payment Date, the Original
Class P Principal Balance less all amounts previously distributed to the Class P
Certificateholder pursuant to Section 8.04(e)(xiii).
"Class X-IO Certificate" means the uncertificated Class X-IO
Certificate, evidencing an interest designated as a "regular interest" in the
Master REMIC for purposes of the REMIC Provisions.
"Class X-IO Certificateholder" shall initially mean Green Tree Finance
Corp.--Two.
"Class X-IO Current Interest Amount" means, with respect to any Payment
Date, an amount as determined pursuant to Section 2.05(b).
"Class X-IO Distribution Amount" means, for any Payment Date, the
amount to be distributed pursuant to Section 8.04(b)(iii) on such Payment Date.
"Class X-IO Interest" means the Class X-IO Certificate, which bears
interest at the Class X-IO Interest Rate as applied to the Class X-IO Notional
Amount.
"Class X-IO Interest Rate" means a rate equal to 7.25% per annum.
"Class X-IO Notional Amount" means, with respect to each Payment Date,
the Subsidiary Interest Principal Balance of the Class S-3 Interest.
"Class X-IO Preference" means the amount payable to the Class X-IO
Certificateholder pursuant to Section 8.04(b)(iii).
19
"Class Percentage Interest" means, as to any Certificate (other than
the Class R Certificates), 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 Certificate by the aggregate denomination of all Certificates of the
related Class (which equals the Original Class A-1a Principal Balance in the
case of a Class A-1a Certificate, the Original Class A-1b Principal Balance in
the case of a Class A-1b Certificate, the Original Class A-2 Principal Balance
in the case of the Class A-2 Certificates, the Original Class A-3 Principal
Balance in the case of the Class A-3 Certificates, the Original Class A-4
Principal Balance in the case of the Class A-4 Certificates, the Original Class
A-5 Principal Balance in the case of the Class A-5 Certificates, the Original
Class A-IO Notional Amount in the case of the Class A-IO Certificates, the
Original Class M-1 Principal Balance in the case of a Class M-1 Certificate, the
Original Class M-2 Principal Balance in the case of a Class M-2 Certificate, the
Original Class B-1 Principal Balance in the case of a Class B-1 Certificate, the
Original Class B-2 Principal Balance in the case of the Class B-2 Certificate,
the Original Class B-3I Notional Amount in the case of a Class B-3I Certificate,
and the Original Class P Principal Balance in the case of a Class P
Certificate). The aggregate Class Percentage Interest for each Class of
Certificates shall equal 100%. The Class R Certificate shall each be issued as a
single Certificate having a Class Percentage Interest of 100%.
"Class Principal Balance" means any of the Class A-1a, Class A-1b,
Class A-2, Class A-3, Class A-4, Class A-5, Class M-1, Class M-2, Class B-1,
Class B-2 or Class P Principal Balances, as appropriate.
"Class R Certificate" means a Certificate for Home Equity Loans, Series
2002-A, bearing the designation "Class R," executed and delivered by the
Trustee, substantially in the Form of Exhibit R, and evidencing the aggregate of
the Class R-I, Class R-II and Class R-III Interests designated as "residual
interests" in the Subsidiary REMIC, Intermediate REMIC and Master REMIC,
respectively, for purposes of the REMIC provisions.
"Class R Certificateholder" means the person in whose name a Class R
Certificate is registered on the Certificate Register.
"Class R-I Interest" means the uncertificated interest designated as
the "residual interest" in the Subsidiary REMIC for purposes of the REMIC
Provisions.
"Class R-II Interest" means the uncertificated interest designated as
the "residual interest" in the Intermediate REMIC for purposes of the REMIC
Provisions.
"Class R-III Interest" means the uncertificated interest designated as
the "residual interest" in the Master REMIC for purposes of the REMIC
Provisions.
"Class R-III Distribution Amount" means, for any Payment Date, that
portion of the Amount Available eligible for distribution in respect of the
Class R-III Interest in accordance with the priorities set forth in Sections
8.04(e)(xiv) and 12.04(c)(ii).
20
"Class S-1 Interest," "Class S-2(1) Interest," "Class S-2(2) Interest,"
"Class S-2(3) Interest," "Class S-2(4) Interest" and "Class S-3 Interest" means,
respectively, a regular interest in the Subsidiary REMIC which is held as an
asset of the Intermediate REMIC, is entitled to monthly distributions as
provided in Section 8.07(b), and has the Original Principal Balance and bears
interest at the Pass-Through Rate specified in Section 2.05(d).
"Class S-2 Interest" means any one of the Class S-2(1) Interest, Class
S-2(2) Interest, Class S-3(3) Interest and Class S-2(4) Interest.
"Closing Date" means February 6, 2002.
"Code" means the Internal Revenue Code of 1986, as amended.
"Combined LTV" means, with respect to any Loan, the percentage obtained
by dividing
(a) the sum of
(i) the current principal balance of such Loan, plus
(ii) the outstanding principal balance, as of the date of
origination of such Loan, of any loan secured by a
prior lien on the property which secures the Loan
(the "Collateral"), by
(b) the lesser of
(i) the appraised value of the Collateral based on an
appraisal made for the originator of the Loan by an
independent fee appraiser (or by an employee of the
Originator who is a licensed appraiser) at the time
of origination of the Loan, and
(ii) the sales price of the Collateral at the time of
origination of the Loan; provided that, in the case
of a Loan the proceeds of which were used to
refinance an existing mortgage loan, the amount
described in clause (ii) shall be the amount to be
used for purposes of clause (ii).
"Computer Tape" means the computer tape generated by the Originator
which provides information relating to the Loans and which was used by the
Originator in selecting the Loans, and includes the master file and the history
file.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in Section 12.09.
"Corresponding Certificate Class" means, with respect to each Class of
Uncertificated Intermediate Interests, as follows:
21
Uncertificated Intermediate Interest Corresponding Certificate Class
------------------------------------ -------------------------------
Class I-A1a Class A-1a
Class I-A1b Class A-1b
Class I-A2 Class A-2
Class I-A3 Class A-3
Class I-A4 Class A-4
Class I-A5 Class A-5
Class I-M1 Class M-1
Class I-M2 Class M-2
Class I-B1 Class B-1
Class I-B2 Class B-2
"Counsel for the Originator" means Xxxxxx & Xxxxxxx LLP, or other legal
counsel for the Originator.
"Counsel for the Seller" means Xxxxxx & Xxxxxxx LLP, or other legal
counsel for the Seller.
"Cumulative Realized Loss Ratio" means, for any Payment Date, a
fraction, expressed as a percentage, the numerator of which is the Cumulative
Realized Losses for the Loans for that Payment Date and the denominator of which
is the sum of the Cut-off Date Pool Scheduled Principal Balance plus the amount
on deposit in the Pre-Funding Account immediately prior to the Post-Funding
Payment Date.
"Cumulative Realized Losses" means, for any Payment Date, the sum of
the Realized Losses for the Loans for that Payment Date and each preceding
Payment Date since the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied"
for any Payment Date, that the Cumulative Realized Loss Ratio for the Loans for
such Payment Date is less than or equal to the percentage set forth below for
the specified period:
22
Month Percentage
----- ----------
37-48 4.75%
49-60 5.75%
61-72 6.25%
73 and thereafter 6.50%
"Custodian" means at any time an Eligible Institution, or a financial
institution organized under the laws of the United States or any State, which is
not an Affiliate of the Originator, which is subject to supervision and
examination by Federal or State authorities and whose commercial paper or
unsecured long-term debt (or, in the case of a member of a bank holding company
system, the commercial paper or unsecured long-term debt of such bank holding
company) has been rated A-1+ by S&P, P-1 by Xxxxx'x in the case of commercial
paper, or BBB+ or higher by each of S&P and Xxxxx'x in the case of unsecured
long-term debt, as is acting at such time as Custodian of the Loan Files
pursuant to Section 4.01.
"Cut-off Date" means, with respect to each Initial and Additional Loan,
December 31, 2001 and January 31, 2002, respectively (or the date of
origination, if later); and with respect to each Subsequent Loan, the applicable
Subsequent Cut-off Date.
"Cut-off Date Pool Principal Balance" means the aggregate of the
Cut-off Date Principal Balances of all Loans.
"Cut-off Date Principal Balance" means,
(a) as to any Initial or Additional Loan, the Scheduled Principal
Balance thereof with respect to the Cut-off Date, and
(b) as to any Subsequent Loan, the Scheduled Principal Balance
thereof with respect to the related Subsequent Cut-off Date.
"Defaulted Loan" means a Loan with respect to which the Servicer
commenced foreclosure proceedings, made a sale of such Loan to a third party for
foreclosure or enforcement, or as to which there was a Delinquent Payment 180 or
more days past due.
"Definitive Certificates" has the meaning assigned in Section 9.02(e).
"Delinquent Payment" means, as to any Loan, with respect to any Due
Period, any payment or portion of a payment of principal or interest that was
scheduled to be made during such Due Period under such Loan (after giving effect
to any reduction in the principal amount deemed owed on such Loan by the
Obligor) and was not received or applied during such Due Period and deposited in
the Certificate Account, whether or not any payment extension has been granted
by the Servicer; provided, however, that with respect to any Liquidated Loan,
the payment scheduled to be made in the Due Period in which such Loan became a
Liquidated Loan shall not be deemed a Delinquent Payment.
23
"Depository" means the initial Depository, The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of
(a) one Class A-1a Certificate evidencing $147,000,000 in Original
Class A-1a Principal Balance,
(b) one Class A-1b Certificate evidencing $56,500,000 in Original
Class A-1b Principal Balance,
(c) one Class A-2 Certificate evidencing $68,000,000 in Original
Class A-2 Principal Balance,
(d) one Class A-3 Certificate evidencing $102,000,000 in Original
Class A-3 Principal Balance,
(e) one Class A-4 Certificate evidencing $53,500,000 in Original
Class A-4 Principal Balance,
(f) one Class A-5 Certificate evidencing $65,000,000 in Original
Class A-5 Principal Balance,
(g) one Class A-IO Certificate evidencing $211,000,000 in Original
Class A-IO Notional Amount,
(h) one Class M-1 Certificate evidencing $42,000,000 in Original
Class M-1 Principal Balance,
(i) one Class M-2 Certificate evidencing $30,000,000 in Original
Class M-2 Principal Balance,
(j) one Class B-1 Certificate evidencing $24,000,000 in Original
Class B-1 Principal Balance, and
(k) one Class B-2 Certificate evidencing an aggregate of
$12,000,000 in Original Class B-2 Principal Balance,
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(5) of the Uniform Commercial
Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date" means the second Business Day preceding each
Payment Date during the term of this Agreement.
24
"Disqualified Organization" has the meaning assigned in Section
9.02(b)(3).
"Due Period" means, for any Payment Date, a calendar month during the
term of this Agreement.
"Early Termination Fee" means an amount equal to the excess of
$2,149,800 over the sum of amounts distributed pursuant to Section 8.04(b)(iii)
on all Payment Dates preceding the purchase date specified in the notice given
under Section 8.06(b).
"Electronic Ledger" means the electronic master record of promissory
notes of the Originator.
"Eligible Account" means, at any time, an account which is any of the
following:
(a) an account maintained with an Eligible Institution;
(b) an account or accounts the deposits in which are fully insured
by either the Bank Insurance Fund or the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation;
(c) a trust account (which shall be a "segregated trust account")
maintained with the corporate trust department of a federal or
state chartered depository institution or trust company with
trust powers and acting in its fiduciary capacity for the
benefit of the Trustee hereunder, which depository institution
or trust company shall have capital and surplus of not less
than $50,000,000; or
(d) an account that will not cause any of the Rating Agencies to
downgrade or withdraw its then-current rating assigned to the
Certificates, as evidenced in writing by each of the Rating
Agencies.
"Eligible Institution" means any depository institution (which may be
the Trustee or an Affiliate of the Trustee) organized under the laws of the
United States or any State, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or State authorities and whose
short-term deposits have been rated A-1+ by S&P and P-1 by Xxxxx'x or whose
unsecured long-term debt has been rated in one of the two highest rating
categories by S&P and Xxxxx'x.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
"Eligible Servicer" means the Originator or any Person
(a) which is qualified to act as Servicer of the Loans under
applicable federal and state laws and regulations, and
25
(b) which services not less than an aggregate of $100,000,000 in
outstanding principal amount of manufactured housing
conditional sales contracts and installment loan agreements
and home equity loans.
"Eligible Substitute Loan" means, as to
(a) any Replaced Loan for which an Eligible Substitute Loan is
being substituted pursuant to Section 3.06(b), and
(b) any Prepaid Loan for which an Eligible Substitute Loan is
being substituted pursuant to Section 2.06, a Loan that
(i) as of the date of its substitution, satisfies all of
the representations and warranties (which, except
when expressly stated to be as of origination, shall
be deemed to be made as of the date of its
substitution rather than as of the applicable Cut-off
Date or the Closing Date) in Sections 3.02 and 3.03
and does not cause any of the representations and
warranties in Sections 3.03, 3.04 and 3.05, after
giving effect to such substitution, to be incorrect,
(ii) after giving effect to the scheduled payment due in
the month of such substitution, has a Scheduled
Principal Balance that is not greater than the
Scheduled Principal Balance of such Replaced Loan or,
but for such Principal Prepayment in Full, the
Scheduled Principal Balance of such Prepaid Loan, as
the case may be,
(iii) has a Loan Interest Rate that is at least equal to
the Loan Interest Rate of such Replaced Loan or
Prepaid Loan, as the case may be,
(iv) has a remaining term to scheduled maturity that is
not greater than the remaining term to scheduled
maturity of the Replaced Loan or Prepaid Loan, as the
case may be,
(v) as of the date of its origination, was identified by
the Originator under its standard underwriting
criteria as the same credit grade as the Replaced
Loan or Prepaid Loan, as the case may be,
(vi) the mortgage securing such Loan is in a lien position
that is the same or better than the mortgage securing
the Replaced Loan or Prepaid Loan, as the case may
be, and
(vii) the Combined LTV of such Loan is not more than 100
basis points higher than the Combined LTV of the
Replaced Loan or Prepaid Loan, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
26
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Loans comprising a
portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Excess Cashflow" means, for any Payment Date, the sum of the amounts,
if any, distributable pursuant to Sections 8.04(b)(ix) and either Section
8.04(c)(vi) or Section 8.04(d)(vi), whichever is applicable, which amounts shall
be distributed pursuant to Section 8.04(e).
"Exemption" means, an individual administration exemption, granted by
the U.S. Department of Labor to Deutsche Bank A.G., New York Branch (Final
Authorization Number 97-03E granted pursuant to the expedited processing
procedure provided under Prohibited Transaction Exemption 96-62; Exemption
Application No. D-7958, 61 Fed. Reg. 39988 (1996)), from certain of the
prohibited transaction rules of ERISA and the Code.
"Extra Principal Distribution Amount" means, with respect to any
Payment Date thereafter, an amount equal to the lesser of:
(a) the excess, if any, of (x) the Required
Overcollateralization Amount for such Payment Date
over (y) the Overcollateralization Amount for such
Payment Date (after giving effect to distributions of
principal other than any Extra Principal Distribution
Amount, but without giving effect to any
distributions of Excess Cashflow to the Class B-2
Certificates pursuant to Section 8.04(e)(xii), and
(b) the Excess Cashflow for such Payment Date.
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
"FHA-Insured Loan" means a home equity loan that has been or is being
reported to the Federal Housing Administration, or any successor thereto
("FHA"), as eligible for credit insurance provided by FHA pursuant to Title I of
the National Housing Act.
"FICO Score" means a credit score derived on the basis of a methodology
developed by Fair Xxxxx and Company.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or
any similar replacement bond, meeting the requirements of Section 5.09, as such
bond relates to Loans comprising a portion of the corpus of the Trust.
"FIFO" has the meaning assigned in Section 5.11(e).
27
"Final Payment Date" means the Payment Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
12.04.
"Formula Principal Distribution Amount" means, for any Payment Date,
the sum of:
(a) all scheduled payments of principal due on each outstanding
Loan during the prior Due Period as specified in the
amortization schedule at the time applicable thereto (after
adjustments for previous Partial Principal Prepayments and
after any adjustment to such amortization schedule by reason
of any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period); plus
(b) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior Due Period with
respect to the Loans; plus
(c) the aggregate Scheduled Principal Balance of all Loans that
became Liquidated Loans during the prior Due Period plus the
amount of any reduction in principal balance of any Loan
during the prior Due Period pursuant to bankruptcy proceedings
involving the related Obligor; plus
(d) the aggregate Scheduled Principal Balance of all Loans
repurchased, and all amounts deposited in lieu of the
repurchase of any Loan, during the prior Due Period pursuant
to Section 3.06(a) or, in the event of a substitution of a
Loan in accordance with Section 3.06(b), any amount required
to be deposited by the Servicer in the Certificate Account
during the prior Due Period pursuant to Section 3.06(b)(vi);
plus
(e) any amount described in clauses (i) through (iv) above that
was not previously distributed because of an insufficient
amount of funds available in the Certificate Account; plus
(f) on the Post-Funding Payment Date, any amount withdrawn from
the Pre-Funding Account and deposited in the Certificate
Account.
"GNMA" means the Government National Mortgage Association, or any
successor thereto.
"Initial Loan" means a Loan identified as such on the List of Loans
attached hereto, the aggregate Cut-off Date Principal Balance of which Loans is
$493,943,868.56.
"Interest Funds" means, for any Payment Date, that portion of the
Amount Available for such Payment Date equal to the sum, without duplication,
of:
(a) all scheduled interest collected or advanced pursuant to
Section 8.02 hereof in respect of the Loans during the related Due Period;
28
(b) all Net Liquidation Proceeds collected in respect of the Loans
during the related Due Period (to the extent such Net Liquidation Proceeds
relate to interest);
(c) the interest portion of the Repurchase Price collected in
respect of any Loans repurchased during the related Due Period; and
(d) investment earnings on the funds in the Certificate Account.
"Intermediate Interest Principal Balance" means, with respect to each
Class of Intermediate REMIC Accretion Directed Interests, one-half the Principal
Balance of the Corresponding Certificate Class and with respect to the Class
I-Accrual Interest, one-half the sum of the Pool Scheduled Principal Balance,
the Pre-Funded Amount and the Overcollateralization Amount.
"Intermediate REMIC" means the segregated pool of assets consisting of
the Uncertificated Subsidiary Interests other than the Class P Certificate, as
to which assets a separate REMIC election is to be made.
"Intermediate REMIC Accretion Directed Interests" means the
Uncertificated Intermediate Interests, other than the Class I-Accrual Interest
and the Class I-AIO Interest and the Class I-XIO Interest. In all cases, the
principal balance of each Intermediate REMIC Accretion Directed Interest shall
maintain, including after giving effect to any allocation of principal or loss,
a direct and unvarying proportionality to the principal balance of its
Corresponding Certificate Class.
"LIBOR" means, with respect to any Accrual Period, the offered rate, as
established by the Trustee, for United States dollar deposits for one month that
appears on Telerate Page 3750 as of 11:00 A.M., London time, on the LIBOR Rate
Adjustment Date for such Accrual Period. If on any LIBOR Rate Adjustment Date
the offered rate does not appear on Telerate Page 3750, the Calculation Agent
will request each of the reference banks (which shall be major banks that are
engaged in transactions in the London interbank market selected by the
Calculation Agent) to provide the Trustee with its offered quotation for United
States dollar deposits for one month to prime banks in the London interbank
market as of 11:00 A.M., London time, on such date. If at least two reference
banks provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, of all such quotations. If on such date fewer than two of the
reference banks provide the Calculation Agent with such offered quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward, of the offered per annum rates that one or more
leading banks in the City of Minneapolis selected by the Calculation Agent are
quoting as of 11:00 A.M., Minnesota time, on such date to leading European banks
for United States dollar deposits for one month; provided, however, that if such
banks are not quoting as described above, LIBOR for such date will be LIBOR
applicable to the Accrual Period immediately preceding such Accrual Period; and
provided, further, that if the result of the foregoing would be for three
consecutive Payment Dates to base LIBOR on the rate applicable in the
immediately preceding Accrual
29
Period, for such third consecutive Payment Date the Calculation Agent shall
instead select an alternative comparable index (over which the Calculation Agent
has no control) used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent third
party.
"LIBOR Business Day" as used herein means a day that is both a Business
Day and a day on which banking institutions in the City of London, England are
not required or authorized by law to be closed.
"LIBOR Cap Counterparty" means Bear Xxxxxxx Financial Products, Inc.
"LIBOR Rate Adjustment Date" means the second LIBOR Business Day prior
to the first day of the related Accrual Period.
"Liquidated Loan" means, with respect to any Due Period, either
(a) a Defaulted Loan as to which the Servicer has received from
the Obligor, or a third party purchaser of the Loan, all
amounts which the Servicer reasonably and in good faith
expects to recover from or on account of such Loan, or
(b) a Loan
(i) upon which all or a portion of the first payment of
interest due by the Obligor was added to principal,
and
(ii) on which the Obligor failed to pay the full amount of
principal due on the Loan, as computed by the
Servicer;
provided, however, that any Loan which the Originator is obligated to repurchase
pursuant to Section 3.06, and did so repurchase or substitute therefor an
Eligible Substitute Loan in accordance with Section 3.06, shall be deemed not to
be a Liquidated Loan; and provided, further, that with respect to Due Periods
beginning on or after January 15, 2033, a Liquidated Loan also means any Loan as
to which the Servicer has commenced foreclosure proceedings, or made a sale of
the Loan to a third party for foreclosure or enforcement.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Loan, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for pursuing claims in
bankruptcy proceedings of the related Obligor, property taxes, property
preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including insurance proceeds)
received in connection with the liquidation of Defaulted Loans, whether through
repossession, foreclosure sale or otherwise.
30
"List of Loans" means the lists identifying each Loan constituting part
of the Trust Fund and attached either to this Agreement as Exhibit L or to a
Subsequent Transfer Instrument, as such lists may be amended from time to time
pursuant to Section 2.06 or Section 3.06(b) to add Eligible Substitute Loans and
delete Replaced Loans or Prepaid Loans, as the case may be. Each List of Loans
shall set forth as to each Loan identified on it
(a) the Cut-off Date Principal Balance,
(b) the amount of monthly payments due from the Obligor,
(c) the Loan Interest Rate, and
(d) the maturity date.
"Loan" means each closed-end home equity loan identified as such in the
List of Loans, which Loan is to be assigned and conveyed by the Seller to the
Trust, and includes, without limitation, all related mortgages, deeds of trust
and security deeds and any and all rights to receive payments due pursuant
thereto after the applicable Cut-off Date.
"Loan File" means, as to each Loan,
(a) the original promissory note (or executed lost note affidavit,
together with a copy of the note) duly endorsed in blank or in
the name of the Trustee for the benefit of the
Certificateholders,
(b) the original or a copy of the mortgage, deed of trust or
security deed or similar evidence of a lien on the related
improved property and evidence of due recording of such
mortgage, deed of trust or security deed, if available,
(c) if such Loan was originated by a lender other than the
Originator, the original or a copy of an assignment of the
mortgage, deed of trust or security deed by such lender to the
Originator,
(d) an assignment of the mortgage, deed of trust or security deed
in recordable form to the Trustee or in blank, and
(e) any extension, modification or waiver agreements.
"Loan Interest Rate" means, as to any Loan, the annual rate of interest
specified in the Loan.
"Master REMIC" means the segregated pool of assets consisting of the
Uncertificated Intermediate Interests, as to which a separate REMIC election is
to be made.
"Monthly Report" has the meaning assigned in Section 6.01.
31
"Monthly Servicing Fee" means, for any Payment Date, with respect to
the Loans, one-twelfth of the product of 0.55% and the Pool Scheduled Principal
Balance for the preceding Payment Date (or, in the case of the first Payment
Date, the Cut-off Date Pool Principal Balance).
"Moody's" means Xxxxx'x Investors Service, Inc., or any successor
thereto; provided that, if Moody's no longer has a rating outstanding on any
Class of Certificates, then references herein to "Xxxxx'x" shall be deemed to
refer to the NRSRO then rating any Class of the Certificates (or, if more than
one such NRSRO is then rating any Class of the Certificates, to such NRSRO as
may be designated by the Originator or the Trustee), 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.
"Net Liquidation Loss" means, as to a Liquidated Loan, the difference
between
(a) the Repurchase Price of such Loan, and
(b) the Net Liquidation Proceeds with respect to such Liquidated
Loan, where such difference is a positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Loan, the proceeds
received, or, for Loans which become Liquidated Loans pursuant to the last
proviso in the definition of "Liquidated Loan," the estimated proceeds to be
received, as of the last day of the Due Period in which such Loan became a
Liquidated Loan, from the Obligor, from a third party purchaser of the Loan,
under insurance, or otherwise, net of Liquidation Expenses.
"Net WAC Cap Rate" means
(a) with respect to each Payment Date
(i) occurring in and including March 2002 through and
including the Post-Funding Payment Date, the Weighted
Average Loan Rate, and
(ii) occurring after the latest Payment Date specified in
(i), the Weighted Average Loan Rate; over
(b) the per annum rates at which the Trustee Fee, the Servicing
Fee, and the Backup Servicing Fee are paid.
"NRSRO" means any nationally recognized statistical rating
organization.
"Obligor" means the person who owes payments under a Loan.
"OC Floor" means 0.50% of the sum of
(i) the Cut-off Date Pool Principal Balance plus
32
(ii) amounts deposited in the Pre-Funding Account, if any.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board, President or any Vice President of the Originator or the Seller and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may,
except as expressly provided herein, be salaried counsel for the Originator, the
Seller or the Servicer, as applicable, acceptable to the Trustee, the Originator
and the Seller.
"Original Aggregate Certificate Principal Balance" means $600,000,000.
"Original Class Notional Amount" means as to each of the Uncertificated
Master Interests, the Class A-IO and Class B-3I Certificates, the amount set
forth with respect to such Class in Section 2.05(b).
"Original Class Principal Balance" means as to each Class of
Certificates (other than the Class A-IO, the Class X-IO and Class B-3I
Certificates), the amount set forth with respect to such Class in Section
2.05(b).
"Original Pre-Funded Amount" means the amount deposited in the
Pre-Funding Account pursuant to Section 2.02(l).
"Original Principal Balance" means as to each Class of Uncertificated
Intermediate Interests (other than the Class I-XIO Interest and the Class I-AIO
Interest) and Uncertificated Subsidiary Interests, the respective amount set
forth with respect to such Class in Sections 2.05(c) and 2.05(d).
"Overcollateralization Amount" means, for any Payment Date, the amount,
if any, by which the Pool Scheduled Principal Balance with respect to such
Payment Date exceeds the Aggregate Certificate Principal Balance as of such
Payment Date (after giving effect to distributions in respect of principal on
the Certificates on such Payment Date).
"Partial Principal Prepayment" means
(a) any Principal Prepayment other than a Principal Prepayment in
Full and
(b) any cash amount deposited in the Certificate Account pursuant
to the proviso in Section 3.06(a) or pursuant to
Section 3.06(b).
"Pass-Through Rate" means, with respect to each Class of Certificates,
the rate set forth for such Class in Section 2.05(b), with respect to each Class
of Uncertificated Intermediate Interests, the rate set forth in Section 2.05(c),
and with respect to each Class of Uncertificated Subsidiary Interests, the rate
set forth in Section 2.05(d).
"Paying Agent" has the meaning assigned in Section 8.01(c).
33
"Payment Date" means the fifteenth day of each calendar month during
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing in March 2002.
"Percentage Interest" means, as to any Certificate or the Class R
Certificate, the percentage interest evidenced thereby in distributions made on
the related Class, such percentage interest being equal to:
(a) as to any Certificate other than the Class B-3I and Class P
Certificates, the percentage (carried to eight places)
obtained from dividing the denomination of such Certificate by
the Original Class Principal Balance of the related Class, and
(b) as to the Class B-3I, Class P and Class R Certificates, the
percentage specified on the face of such Certificate. The
aggregate Percentage Interests for each Class of Certificates
and the Class R Certificate shall equal 100%, respectively.
"Permitted Transferee" means, in the case of a transfer of the Class R
Certificate, a Person that is not a Plan or a Disqualified Organization, except
as permitted by Sections 9.02(b)(2) and (3), respectively.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
"Pool Factor" means, at any time, the percentage derived from a
fraction, the numerator of which is the Aggregate Certificate Principal Balance
at such time and the denominator of which is the Original Aggregate Certificate
Principal Balance.
"Pool Scheduled Principal Balance" means, for any Payment Date, the
aggregate Scheduled Principal Balance for such Payment Date of all Loans that
were outstanding during the immediately preceding Due Period.
"Post-Funding Payment Date" means the Payment Date on, or the first
Payment Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means, with respect to any date of determination,
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Loans to the Trust on such date.
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 8.08.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of
34
(a) the date on which the amount on deposit in the Pre-Funding
Account is less than $10,000.00, or
(b) the close of business on April 14, 2002, or
(c) the date on which an Event of Termination occurs.
"Prepaid Loan" has the meaning assigned in Section 2.06.
"Prepayment Charges" means all prepayment premiums, penalties and
similar charges paid by any Obligor in connection with, and as a condition to,
prepayment in part or in full of a Loan.
"Principal Funds" means, for any Payment Date, that portion of the
Amount Available for such Payment Date equal to the sum, without duplication,
of:
(a) the scheduled principal collected or advanced pursuant to
Section 8.02 hereof in respect of the Loans during the related Due Period;
(b) prepayments collected in respect of the Loans during the
related Due Period;
(c) the principal portion of the Repurchase Price collected in
respect of any Loan repurchased during the related Due Period; and
(d) all Net Liquidation Proceeds in respect of the Loans collected
during the related Due Period (to the extent such Net Liquidation Proceeds
relate to principal).
"Principal Prepayment" means a payment or other recovery of principal
on a Loan (exclusive of Liquidation Proceeds) which is received in advance of
its scheduled due date and applied upon receipt (or, in the case of a partial
prepayment, upon the next scheduled payment date on such Loan) to reduce the
outstanding principal amount due on such Loan prior to the date or dates on
which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Loan.
"Qualified Plan Investor" shall mean a plan investor or group of plan
investors on whose behalf the decision to purchase the Certificates, as the case
may be, is made by an independent fiduciary that is
(a) qualified to analyze and understand the terms and conditions
of the Yield Maintenance Agreements and the effect of the
Yield Maintenance Agreements on the credit ratings of the
Certificates, and
(b) a "qualified professional asset manager," as defined in Part
V(a) of PTE 84-14, an "in-house asset manager" as defined in
Part IV(a) of PTE 96-23, or a plan
35
fiduciary with a total plan and non-plan assets under
management of at least $100,000,000 at the time of the
acquisition of the Certificates.
"Rating Agencies" means S&P and Moody's.
"Realized Loss Amount" means, as to any Payment Date, the excess, if
any, of the Aggregate Certificate Principal Balance, after giving effect to
distributions in respect of principal on the Certificates on such Payment Date,
but prior to any reduction in Class Principal Balances as a result of any
Realized Loss Amount for such Payment Date, over the Pool Scheduled Principal
Balance with respect to such Payment Date.
"Realized Losses" means, for any Payment Date, the aggregate Net
Liquidation Losses for all Loans that became Liquidated Loans during the related
Due Period.
"Record Date" means, with respect to any Payment Date, the Business Day
immediately preceding such Payment Date.
"Regular Certificates" means a Class A-1a, Class A-1b, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-IO, Class M-1, Class M-2, Class B-1, Class
B-2 or Class B-3I Certificate.
"REMIC" means a "real estate mortgage investment conduit" as defined in
Section 860D of the Code.
"REMIC Provisions" means the provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"REO" means Loans as to which the real estate collateral has been
foreclosed upon and is owned by the Trust.
"Replaced Loan" has the meaning assigned in Section 3.06(b).
"Repurchase Price" means, with respect to a Loan to be repurchased
pursuant to Section 3.06 or which becomes a Liquidated Loan, an amount equal to
(a) the remaining principal amount outstanding on such Loan
(without giving effect to any Advances paid by the Servicer or
the Trustee, as applicable, with respect to such Loan pursuant
to Section 8.02), plus
(b) interest at the weighted average pass-through rate on such
Loan from the end of the Due Period with respect to which the
Obligor last made a scheduled payment (without giving effect
to any Advances paid by the Servicer or the Trustee, as
applicable, with respect to such Loan pursuant to Section
8.02) through the date of such repurchase or liquidation, plus
36
(c) without duplication, the amount necessary to reimburse all
Advances in respect of such Loan on the date of repurchase.
"Required Overcollateralization Amount" means, for any Payment Date
(a) prior to the Stepdown Date, an amount equal to 2.50% of the
Cut-off Date Principal Balance plus amount deposited in the
Pre-Funding Account, if any, on the Closing Date; or
(b) on or after the Stepdown Date, an amount equal to 5.00% of the
Pool Scheduled Principal Balance with respect to such Payment
Date, but in no event (x) less than the OC Floor in each case,
or (y) greater than the Pool Scheduled Principal Balance with
respect to such Payment Date.
"Reserve Fund Addition" means the amount, if any, received from the
LIBOR Cap Counterparty pursuant to the applicable Yield Maintenance Agreement.
"Residual Interests" means the Class R-I, Class R-II and Class R-III
Interests, each one evidencing the sole class of "residual interests" in the
Subsidiary REMIC, Intermediate REMIC and Master REMIC, respectively, and
represented in the aggregate by the Class R Certificate.
"Responsible Officer" means, with respect to the Trustee, the chairman
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto; provided that, if S&P no
longer has a rating outstanding on any Class of the Certificates, then
references herein to "S&P" shall be deemed to refer to the NRSRO then rating any
Class of the Certificates (or, if more than one such NRSRO is then rating any
Class of the Certificates, to such NRSRO as may be designated by the Originator
or the Trustee), and references herein to ratings by or requirements of S&P
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Scheduled Principal Balance" means, with respect to any Loan and
(i) any Payment Date, the principal balance of such Loan as of the
due date in the Due Period immediately preceding such Payment
Date, 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
37
proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous Partial Principal
Prepayments received during such Due Period and all prior Due
Periods 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; or
(ii) any Cut-off Date or Subsequent Cut-off Date, the principal
balance of such Loan as of the due date immediately preceding
such Cut-off Date or Subsequent Cut-off Date, as applicable,
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 received prior to such Cut-off Date or Subsequent
Cut-off Date, as applicable, and to the payment of principal
due on such due date and irrespective of any delinquency in
payment by, or extension granted to, the related Obligor.
If for any Loan the Cut-off Date is the date of origination of the Loan, its
Scheduled Principal Balance as of the Cut-off Date is the principal balance of
the Loan on its date of origination.
"Senior Enhancement Percentage" means, for any Payment Date, a
fraction, expressed as a percentage, obtained by dividing:
(a) the excess of
(i) the Pool Scheduled Principal Balance with respect to
the prior Payment Date over
(ii) the Principal Balance of the most senior Class of
Certificates outstanding immediately following the
prior Payment Date, by
(b) the Pool Scheduled Principal Balance with respect to the prior
Payment Date.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means the Originator until any Service Transfer hereunder
and thereafter means the new servicer appointed pursuant to Article VII.
"Servicer Termination Cumulative Loss Test" means to be considered
"satisfied" for any Payment Date, the Cumulative Realized Loss Ratio for the
Loans for such Payment Date is less than or equal to the percentage set forth
below for the specified period:
Month Percentage
----- ----------
37-48 6.25%
49-60 7.25%
61-72 7.75%
38
73 and thereafter 8.00%
"Servicer Termination Delinquency Test" means to be considered
"satisfied" for any Payment Date, the three month rolling average of the Loans
that are 90 days or more delinquent as of such Payment Date (including REO) does
not exceed 49% of the Senior Enhancement Percentage.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Trustee by the Servicer, as the same may be amended from time to time.
"Sixty-Day Delinquency Ratio" means, for any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Loans that were delinquent 60 days or more as of the
end of the prior Due Period (including such Loans in respect of which the
related real estate has been foreclosed upon but is still in inventory), and the
denominator of which is the Pool Scheduled Principal Balance of the Loans for
such Payment Date.
"Stepdown Date" means the earlier of (a) the later of (i) the Payment
Date in March 2005 and (ii) the first Payment Date on which the Class A
Principal Balance (after taking into account distribution of the Formula
Principal Distribution Amount for that Payment Date) is less than or equal to
59.00% of the Pool Scheduled Principal Balance with respect to such Payment Date
and (b) the Payment Date on which the Class A Principal Balance has been reduced
to zero.
"Subsequent Cut-off Date" means, with respect to a Subsequent Loan, the
last day of the month in which the Subsequent Transfer Date occurs or the last
day of the preceding month, as specified by the Seller in the related loan
schedule.
"Subsequent Loan" means a Loan sold by the Seller to the Trust pursuant
to Section 2.03, such Loan being identified as such in the Subsequent Transfer
Instrument.
"Subsequent Transfer Date" means, with respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Loans are sold to
the Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Seller
substantially in the form of Exhibit O, by which the Seller sells Subsequent
Loans to the Trust.
"Subsidiary Interest Adjusted Principal Balance" means, as to any
Payment Date and each Class of Uncertificated Subsidiary Interests, the
Subsidiary Interest Principal Balance of such Class less its allocable share of
the amount, if any, by which the aggregate Subsidiary Interest Principal Balance
of the Class S-1, Class S-2 and Class S-3 Interests exceeds the Pool Scheduled
Principal Balance plus the Pre-Funded Amount, such excess to be allocated
sequentially in accordance with Section 8.07(b)(iii).
39
"Subsidiary Interest Principal Balance" means, as to any Payment Date
and each Class of Uncertificated Subsidiary Interests, the Original Principal
Balance of such Class less all amounts previously distributed under Section
8.07(b) in respect of such Class on account of principal.
"Subsidiary REMIC" means the segregated pool of assets described as
follows, which a separate REMIC election is to be made:
(a) all the rights, benefits, and obligations arising from and in
connection with each Loan, including rights to receive
payments due on the Loans after the Cut-Off Date and any liens
on the related real estate,
(b) all remittances, deposits and payments made into the
Certificate Account and amounts in the Certificate Account
(other than payments on the Uncertificated Subsidiary
Interests),
(c) all proceeds in any way derived from any of the foregoing
items, and
(d) all documents contained in the Loan Files.
"Transfer Agreement" means that Transfer Agreement between Conseco
Finance Securitizations Corp., as purchaser, and Conseco Finance Corp., as
seller, dated as of January 1, 2002.
"Trigger Event" exists for any Payment Date if
(a) Average Sixty-Day Delinquency Ratio Test for the Loans is not
satisfied or
(b) the Cumulative Realized Losses Test for the Loans is not
satisfied.
"Trust" means Conseco Finance Home Equity Loan Trust 2002-A.
"Trust Fund" means the corpus of the Trust created by this Agreement
which consists of
(a) all the rights, benefits and obligations arising from and in
connection with the Loans, including without limitation all
related mortgages, deeds of trust and security deeds and any
and all rights to receive payments on or with respect to the
Loans due after the applicable Cut-off Date,
(b) all rights under any hazard, flood or other individual
insurance policy on the real estate securing a Loan for the
benefit of the creditor of such Loan,
(c) all rights of the Seller under the Transfer Agreement and any
Subsequent Transfer Agreement (as defined in the Transfer
Agreement),
(d) all rights the Originator may have against the originating
lender with respect to Loans originated by a lender other than
the Originator,
40
(e) all rights under the Errors and Omissions Protection Policy
and the Fidelity Bond as such policy and bond relate to the
Loans,
(f) all rights under any title insurance policies, if applicable,
on any of the properties securing Loans,
(g) all documents contained in the Loan Files,
(h) all rights under the Yield Maintenance Agreements,
(i) amounts in the Certificate Account, the Pre-Funding Account,
the Basis Risk Reserve Fund, and the Yield Maintenance Reserve
Funds (including all proceeds of investments of funds in the
Certificate Account), and
(j) all proceeds and products of the foregoing.
"Trustee Advance" has the meaning assigned in Section 11.15.
"Trustee Fee" means the fees payable to the Trustee under its agreement
with Conseco Finance Corp. dated November 8, 1995, including its reasonable and
customary fees as custodian, and the reasonable and customary fees of any
Custodian appointed by the Trustee, including those payable under the contract
dated August 15, 1997 between Conseco Finance Corp. and Xxxxx Fargo Bank
Minnesota, National Association, but in all cases only if and to the extent such
fees are not paid by Conseco Finance Corp. as and when due under such
agreements, which nonpayment continues for thirty (30) days; and the reasonable
and customary fees of any successor Trustee.
"Uncertificated Intermediate Interests" means the Class I-A1a, Class
I-A1b, Class I-A2, Class I-A3, Class I-A4, Class I-A5, Class I-AIO(1), Class
I-AIO(2), Class I-AIO(3), Class I-AIO(4), Class I-XIO, Class I-M1, Class I-M2,
Class I-B1, Class I-B2 and Class I-XIO Accrual Interests, collectively.
"Uncertificated Master Interest" means the sole Class X-IO Interest,
held by the Class X-IO Certificateholder.
"Uncertificated Subsidiary Interests" means the Class S-1, Class S-2
and Class S-3 Interests and Class P Certificate, collectively.
"Underwriters" means Deutsche Banc Xxxx. Xxxxx, Inc., Credit Suisse
First Boston Corporation, Xxxxxx Brothers Inc. and Xxxxxxx Xxxxx, Xxxxxx Xxxxxx
& Xxxxx Incorporated.
"Underwriting Agreement" means the Underwriting Agreement and related
Terms Agreement, each dated January 28, 2002, among the Originator, the Seller
and the Underwriters.
41
"Unpaid Class A Basis Risk Carryover Shortfall" means, as to any
Payment Date, the sum of the Unpaid Class A-1a, Class A-1b, Class A-2, Class
A-3, Class A-4 and Class A-5 Basis Risk Carryover Shortfalls.
"Unpaid Class A Interest Carry Forward Amount" means, as to any Payment
Date, the excess of
(a) the aggregate amount of all Class A Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of the Unpaid Class A
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(ii),
plus interest (to the extent payment thereof is legally permissible) at the
Class A Interest Rate for such Payment Date on the Unpaid Class A Interest Carry
Forward Amount for the immediately preceding Payment Date (after giving effect
to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(ii)), accrued during the related Accrual Period.
"Unpaid Class A-1a Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-1a Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-1a
Basis Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Sections 8.09 and 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-1a Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-1a Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Sections 8.09
and 8.10), accrued during the related Accrual Period.
"Unpaid Class A-1b Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-1b Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-1b
Basis Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Sections 8.09 and 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-1b Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-1b Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Sections 8.09
and 8.10), accrued during the related Accrual Period.
42
"Unpaid Class A-2 Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-2 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-2 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-2 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-2 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-3 Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-3 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-3 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-3 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-3 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-4 Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-4 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-4 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-4 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-4 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-5 Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-5 Basis Risk Carryover
Shortfalls, over
43
(b) the sum of all payments in reduction of Unpaid Class A-5 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-5 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-5 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-IO Interest Carry Forward Amount" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class A-IO Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class A-IO
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(ii),
plus interest (to the extent payment thereof is legally permissible) at the
Class A-IO Interest Rate for such Payment Date on the Unpaid Class A-IO Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(ii)), accrued during the related Accrual Period.
"Unpaid Class B-1 Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class B-1 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class B-1 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class B-1 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class B-1 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Sections 8.09
and 8.10), accrued during the related Accrual Period.
"Unpaid Class B-1 Interest Carry Forward Amount" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class B-1 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class B-1
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(vii),
44
plus interest (to the extent payment thereof is legally permissible) at the
Class B-1 Interest Rate for such Payment Date on the Unpaid Class B-1 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(vii)), accrued during the related Accrual Period.
"Unpaid Class B-1 Realized Loss Amount" means, with respect to any
Payment Date,
(a) the sum of all Class B-1 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-1 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(viii)(B).
"Unpaid Class B-1 Realized Loss Interest Amount" means, with respect to
any Payment Date,
(a) the sum of all Class B-1 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-1 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(viii)(A).
"Unpaid Class B-2 Basis Risk Carryover Shortfall" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class B-2 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class B-2 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class B-2 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class B-2 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Sections 8.09
and 8.10), accrued during the related Accrual Period.
"Unpaid Class B-2 Interest Carry Forward Amount" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class B-2 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class B-2
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(ix),
plus interest (to the extent payment thereof is legally permissible) at the
Class B-2 Interest Rate for such Payment Date on the Unpaid Class B-2 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction
45
thereof on such Payment Date pursuant to Section 8.04(e)(ix)), accrued during
the related Accrual Period.
"Unpaid Class B-2 Realized Loss Amount" means, with respect to any
Payment Date,
(a) the sum of all Class B-2 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-2 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(x)(B).
"Unpaid Class B-2 Realized Loss Interest Amount" means, with respect to
any Payment Date,
(a) the sum of all Class B-2 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-2 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(x)(A).
"Unpaid Class M-1 Basis Risk Carryover Shortfall" means, with respect
to the Class M-1 Certificates and as to any Payment Date, the excess of
(a) the aggregate amount of all Class M-1 Basis Risk Carryover
Shortfalls over
(b) the sum of all payments in reduction of Class M-1 Basis Risk
Carryover Shortfalls on all previous Payment Dates pursuant to
Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class M-1 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class M-1 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Sections 8.09
and 8.10), accrued during the related Accrual Period.
"Unpaid Class M-1 Interest Carry Forward Amount" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class M-1 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class M-1
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(iii),
plus interest (to the extent payment thereof is legally permissible) at the
Class M-1 Interest Rate for such Payment Date on the Unpaid Class M-1 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(iii)), accrued during the related Accrual Period.
46
"Unpaid Class M-1 Realized Loss Amount" means, with respect to any
Payment Date,
(a) the sum of all Class M-1 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-1 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(iv)(B).
"Unpaid Class M-1 Realized Loss Interest Amount" means, with respect to
any Payment Date,
(a) the sum of all Class M-1 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-1 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(iv)(A).
"Unpaid Class M-2 Basis Risk Carryover Shortfall" means, with respect
to the Class M-2 Certificates and as to any Payment Date, the excess of
(a) the aggregate amount of all Class M-2 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Class M-2 Basis Risk
Carryover Shortfalls on all previous Payment Dates pursuant to
Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class M-2 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class M-2 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment in reduction thereof on such Payment Date pursuant to Sections 8.09 and
8.10), accrued during the related Accrual Period.
"Unpaid Class M-2 Interest Carry Forward Amount" means, as to any
Payment Date, the excess of
(a) the aggregate amount of all Class M-2 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class M-2
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(v),
plus interest (to the extent payment thereof is legally permissible) at the
Class M-2 Interest Rate for such Payment Date on the Unpaid Class M-2 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(v)), accrued during the related Accrual Period.
"Unpaid Class M-2 Realized Loss Amount" means, with respect to any
Payment Date,
(a) the sum of all Class M-2 Allocated Realized Loss Amounts,
minus
47
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-2 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(vi)(B).
"Unpaid Class M-2 Realized Loss Interest Amount" means, with respect to
any Payment Date,
(a) the sum of all Class M-2 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-2 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(vi)(A).
"Unpaid Intermediate Interest Shortfall" means, with respect to each
Class of Uncertificated Intermediate Interests and any Payment Date, the amount,
if any, by which the amount distributed on such Class on such Payment Date
pursuant to Section 8.07(a)(i) is less than the amount specified in Section
8.07(a)(i).
"Unpaid Subsidiary Interest Shortfall" means, with respect to each
Class of Uncertificated Subsidiary Interests and any Payment Date, the amount,
if any, by which the amount distributed on such Class on such Payment Date
pursuant to Section 8.07(b)(i) is less than the amount specified in Section
8.07(b)(i).
"Weighted Average Debt Consolidation Percentage" means the weighted
average, by Scheduled Principal Balance, of Loans the proceeds of which were
used by the related Obligors for the purpose of debt consolidation.
"Weighted Average Loan Rate" means, for any Payment Date, the weighted
average (determined by Scheduled Principal Balance) of the Loan Interest Rates
for all Loans that were outstanding during the immediately preceding month.
"Weighted Average Pass-Through Rate" means, for any Payment Date, with
respect to any Payment Date, the sum of (i) the weighted average (expressed as a
percentage and rounded to four decimal places) of the Class A-1a, Class A-1b,
Class A-2, Class A-3, Class A-4, Class A-5, Class A-IO, Class X-IO, Class M-1,
Class M-2, Class B-1 and Class B-2 Pass-Through Rates, weighted on the basis of
the respective Class A-1a, Class A-1b, Class A-2, Class A-3, Class A-4, Class
A-5, Class A-IO, Class X-IO, Class M-1, Class M-2, Class B-1 and Class B-2
Principal Balances or Notional Amount, as applicable, for such Payment Date.
"Yield Maintenance Agreements" means the five Yield Maintenance
Agreements, each effective as of February 6, 2002, between the Trust (on behalf
of the Class X-IO Certificateholder) and the LIBOR Cap Counterparty, relating to
the Class A-1a, Class M-1, Class M-2, Class B-1 and Class B-2 Certificates,
respectively.
"Yield Maintenance Reserve Funds" means the five separate trust
accounts created and maintained pursuant to Section 8.09 in the name of the
Trust in an Eligible Institution.
48
SECTION 1.03. Calculations. Except as otherwise provided in this
Agreement,
(a) interest payable on the Class A-1a, Class M and Class B
Certificates for each Accrual Period shall be calculated on
the basis of actual days in a 360-day year, and
(b) interest payable on the Class A-1b, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-IO, and Class X-IO Certificates
for each Accrual Period shall be calculated on the basis of a
360-day year comprised of twelve 30-day months.
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF LOANS
SECTION 2.01. Closing.
-------
(a) There is hereby created, by the Seller as settlor, a separate
trust which shall be known as Conseco Finance Home Equity Loan Trust 2002-A.
The Trust shall be administered pursuant to the provisions of this Agreement for
the benefit of the Certificateholders and the Class R Certificateholder.
(b) The Seller hereby transfers, assigns, sets over and otherwise
conveys to the Trustee on behalf of the Trust, by execution and delivery of an
assignment substantially in the form of Exhibit D hereto, all the right, title
and interest of the Seller in and to the Initial Loans and Additional Loans,
including all rights to receive payments on or with respect to the Initial Loans
and Additional Loans due after the applicable Cut-off Date, all rights of the
Seller under the Transfer Agreement and all other assets now or hereafter
included in the Trust Fund. Each such transfer and assignment is intended by the
Seller to be a sale of such assets for all purposes, including, without
limitation, the Federal Bankruptcy Code, to the end that all such assets will
hereafter cease to be the property of the Seller and would not be includable in
the estate of the Seller or the Originator for purposes of Section 541 of the
Federal Bankruptcy Code.
(c) Although the parties intend that each conveyance pursuant to
this Agreement of the Seller's right, title and interest in and to the Loans
(including the Subsequent Loans) shall constitute a purchase and sale and not a
loan, if such conveyances are deemed to be loans, the parties intend that the
rights and obligations of the parties to such loans shall be established
pursuant to the terms of this Agreement. If the conveyances are deemed to be
loans, the parties further intend and agree that the Originator and the Seller
shall be deemed to have granted to the Trustee and the Originator and the Seller
do hereby grant to the Trustee, a perfected first-priority security interest in
the Trust Fund and that this Agreement shall constitute a security agreement
under applicable law. If the trust created by this Agreement terminates prior to
the satisfaction of the claims of any Person under any Certificate or Class R
Certificate, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for the
benefit of such Person.
49
SECTION 2.02. Conditions to the Closing. On or before the Closing Date,
the Seller shall deliver or cause to be delivered the following documents to the
Trustee:
(a) The List of Loans attached to this Agreement as Exhibit L,
certified by the Chairman of the Board, President or any Vice President of the
Seller.
(b) A certificate of an officer of the Originator substantially in
the form of Exhibit E hereto on behalf of the Seller and the Originator.
(c) An Opinion of Counsel for the Seller substantially in the form
of Exhibit F hereto.
(d) A letter, acceptable to the Underwriters, from Deloitte &
Touche LLP or another nationally recognized accounting firm, stating that such
firm has reviewed the Initial Loans on a statistical sampling basis and setting
forth the results of such review.
(e) Copies of resolutions of the board of directors of the Seller
or of the executive committee of the board of directors of the Seller approving
the execution, delivery and performance of this Agreement and the transactions
contemplated hereunder, certified in each case by the secretary or an assistant
secretary of the Seller.
(f) Officially certified recent evidence of due incorporation and
good standing of the Seller under the laws of the State of Minnesota and of the
Originator under the laws of the State of Delaware.
(g) An Officer's Certificate listing the Servicer's Servicing
Officers.
(h) Evidence of continued coverage of the Servicer under the
Errors and Omissions Protection Policy.
(i) Evidence of deposit in the Certificate Account of all funds
received with respect to the Loans from the Cut-off Date to the Closing Date,
other than principal due on or before the Cut-off Date, together with an
Officer's Certificate to the effect that such amount is correct.
(j) The Loan Files for the Initial Loans and Additional Loans and
an Officer's Certificate confirming that the Originator has reviewed the
original or a copy of each related promissory note and each related Loan File,
that each such Loan and Loan File conforms in all material respects with the
List of Loans and that each such Loan File is complete in accordance with the
definition thereof and has been delivered to the Trustee (or its custodian).
(k) An executed copy of the Transfer Agreement.
(l) Evidence of the deposit of $360,636.71 in the Pre-Funding
Account.
(m) Letters from each of the Rating Agencies evidencing the
following ratings for the Certificates:
50
Class S&P Rating Xxxxx'x Rating
----------------------------------------- -------------------- ---------------------
A-1a AAA Aaa
A-1b AAA Aaa
A-2 AAA Aaa
A-3 AAA Aaa
A-4 AAA Aaa
A-5 AAA Aaa
A-IO AAA Aaa
M-1 AA+ Aa2
M-2 A A2
B-1 BBB Baa2
B-2 BB+ _____
(n) Evidence of the deposit of $5,000 in the Basis Risk Reserve
Fund.
SECTION 2.03. Conveyance of the Subsequent Loans.
----------------------------------
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Seller of all or a portion of the balance of funds
in the Pre-Funding Account, the Seller shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey to the Trust by execution and
delivery of a Subsequent Transfer Instrument, all the right, title and interest
of the Seller in and to the Subsequent Loans identified on the List of Loans
attached to the Subsequent Transfer Instrument, including all rights to receive
payments on or with respect to the Subsequent Loans due after the related
Subsequent Cut-off Date, and all items with respect to such Subsequent Loans in
the related Loan Files. The transfer to the Trustee by the Seller of the
Subsequent Loans shall be absolute and is intended by the Seller, the Trustee,
the Certificateholders and the Class R Certificateholder to constitute and to be
treated as a sale of the Subsequent Loans by the Seller or the Originator to the
Trust. Such transfer and assignment is intended by the Seller to be a sale of
such assets for all purposes, including, without limitation, the Federal
Bankruptcy Code, to the end that all such assets will hereafter cease to be the
property of the Seller and would not be includable in the estate of the Seller
for purposes of Section 541 of the Federal Bankruptcy Code.
The purchase price paid by the Trustee shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balances of such Subsequent
Loans. The purchase price of Subsequent Loans shall be paid solely with amounts
in the Pre-Funding Account. This
51
Agreement shall constitute a fixed price contract in accordance with Section
860G(a)(3)(A)(ii) of the Code.
(b) The Seller shall transfer to the Trustee the Subsequent Loans,
and the Trustee shall release funds from the Pre-Funding Account only upon
the satisfaction of each of the following conditions on or prior to the
related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee with an
Addition Notice at least five Business Days prior to
the Subsequent Transfer Date and shall have provided
any information reasonably requested by the Trustee
with respect to the Subsequent Loans;
(ii) the Seller shall have delivered the related Loan File
for each Subsequent Loan to the Trustee at least two
Business Days prior to the Subsequent Transfer Date;
(iii) the Seller shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument substantially
in the form of Exhibit O, which shall include a List
of Loans identifying the related Subsequent Loans;
(iv) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, the
Seller shall not be insolvent nor shall it have been
made insolvent by such transfer nor shall it be aware
of any pending insolvency;
(v) such sale and transfer shall not result in a material
adverse tax consequence to the Trust (including the
Master REMIC, Intermediate REMIC or Subsidiary REMIC)
or the Certificateholders or Class R
Certificateholder;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Seller shall have delivered to the Trustee an
Officer's Certificate, substantially in the form
attached hereto as Exhibit P, confirming the
satisfaction of each condition precedent and the
representations specified in this Section 2.03 and in
Sections 3.01, 3.02, 3.03, 3.04 and 3.05;
(viii) the Seller and the Originator shall have delivered to
the Trustee Opinions of Counsel addressed to S&P,
Xxxxx'x and the Trustee with respect to the transfer
of the Subsequent Loans substantially in the form of
the Opinions of Counsel delivered to the Trustee on
the Closing Date regarding certain bankruptcy,
corporate and tax matters;
(ix) no Subsequent Loan will have a Combined LTV greater
than 100%; and
52
(x) the Seller shall have delivered assignments in
recordable form to the Trustee of the mortgages,
deeds of trust and security deeds relating to the
Subsequent Loans.
(c) On or before the last day of the Pre-Funding Period, the
Seller shall deliver to the Trustee:
(i) A letter from Deloitte & Touche LLP or another
nationally recognized accounting firm retained by the
Seller (with copies provided to S&P, Xxxxx'x, the
Underwriters and the Trustee) that is in form,
substance and methodology the same as that dated
February 6, 2002 and delivered under Section 2.02(d)
of this Agreement, except that it shall address the
Subsequent Loans and their conformity in all material
respects to the characteristics described in Sections
2.03(b)(ix) and 3.04(b) of this Agreement.
(ii) Evidence that, as a result of the purchase by the
Trust of the Subsequent Loans, none of the ratings
assigned to the Certificates as of the Closing Date
by S&P or Xxxxx'x will be reduced, withdrawn or
qualified.
(iii) Evidence that the aggregate Cut-off Date Principal
Balances of the Subsequent Loans, not specifically
identified as Subsequent Loans as of the Closing
Date, do not exceed 25% of the Original Aggregate
Certificate Principal Balance.
SECTION 2.04. Acceptance by Trustee.
---------------------
(a) On the Closing Date and each Subsequent Transfer Date, if the
conditions set forth in Section 2.02 and 2.03, respectively, have been
satisfied, the Trustee shall deliver a certificate to the Seller substantially
in the form of Exhibit G hereto (an "Acknowledgment") acknowledging conveyance
of the Loans identified on the applicable List of Loans and the related Loan
Files to the Trustee and declaring that the Trustee, directly or through a
Custodian, will hold all Loans that have been delivered in trust, upon the
trusts herein set forth, for the use and benefit of all Certificateholders and
the Class R Certificateholder.
(b) The Trustee or a Custodian shall review each Loan File, as
described in Exhibit G, within 60 days of the Closing Date or later receipt by
it of the Loan File. If, in its review of the Loan Files as described in Exhibit
G, the Trustee or a Custodian discovers a breach of the representations or
warranties set forth in Sections 2.03, 3.02, 3.03, 3.04 or 3.05 of this
Agreement, or in the Officer's Certificates delivered pursuant to Section
2.02(j) or 2.03(b)(vii) of this Agreement, the Trustee or Custodian, as the case
may be, shall notify the Seller and the Originator shall cure such breach or
repurchase or replace such Loan pursuant to Section 3.06.
53
SECTION 2.05. REMIC Provisions.
----------------
(a) The Originator, as Servicer, and each holder of the Class R-I
Interest, the Class R-II Interest and the Class R-III Interest, by acceptance
thereof, each agree that, in accordance with the requirements of Section
860D(b)(1) of the Code, the federal tax return of each of the Subsidiary REMIC,
Intermediate REMIC and Master REMIC for its first taxable year shall provide an
election for the Subsidiary REMIC, Intermediate REMIC or Master REMIC, as the
case may be (excluding the Pre-Funding Account, the Basis Risk Reserve Fund and
the Yield Maintenance Reserve Funds), to be treated as a REMIC under the Code
for such taxable year and all subsequent taxable years, and the Trustee shall
sign such return. In furtherance of the foregoing, the Trustee (at the direction
of the Originator, the Seller or the Servicer), the Originator, the Seller and
the Servicer shall take, or refrain from taking, all such action as is necessary
to maintain the status of each of the Subsidiary REMIC, Intermediate REMIC or
Master REMIC as a REMIC under the REMIC Provisions of the Code, including, but
not limited to, the taking of such action as is necessary to cure any
inadvertent termination of REMIC status.
(b) The Regular Certificates and the Uncertificated Master
Interest are being issued in twelve classes and are hereby designated by the
Seller as the "regular interests" in the Master REMIC for the purposes of
Section 860G(a)(1) of the Code. The following terms of the Regular Certificates
and Uncertificated Master Interest are irrevocably established as of the Closing
Date:
54
Original Class
Principal Balance
Interest Rate Xxx Xxxxx (or Notional Assumed Final
Class (Pass-Through Rate) Amount) Maturity Date/(1)/
----------------------- ------------------------------------------ ---------------------- -------------------
Class A-1a a floating rate equal to the lesser of
one month LIBOR plus 0.25% per year
or the Adjusted Net WAC Cap Rate, but
in no event greater than 15.00% per year $ 147,000,000 January 15, 2034
Class A-1b the lesser of 3.34% per year or the
Adjusted Net WAC Cap Rate $ 56,500,000 January 15, 2034
Class A-2 the lesser of 4.69% per year or the
Adjusted Net WAC Cap Rate $ 68,000,000 January 15, 2034
Class A-3 the lesser of 5.33% per year or the
Adjusted Net WAC Cap Rate $ 102,000,000 January 15, 2034
Class A-4 the lesser of 6.32%per year or the
Adjusted Net WAC Cap Rate $ 53,500,000 January 15, 2034
Class A-5 the lesser of 7.05% (or, to the extent
provided in Section 8.06(f), 7.55%) per
year or the Adjusted Net WAC Cap Rate $ 65,000,000 January 15, 2034
Class A-IO /(2)/ /(2)/ January 15, 2034
Class X-IO /(3)/ /(3)/ January 15, 2034
Class M-1 a floating rate equal to lesser of
one month LIBOR plus 1.85% per year or
the Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% $ 42,000,000 January 15, 2034
Class M-2 a floating rate equal to lesser of one
month LIBOR plus 2.75% per year or the
Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% $ 30,000,000 January 15, 2034
Class B-1 a floating rate equal to lesser
of one month LIBOR plus 5.25% per year or
the Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% $ 24,000,000 January 15, 2034
Class B-2 a floating rate equal lesser of one month
LIBOR plus 5.75% per year or the Adjusted
Net WAC Cap Rate, but in no event greater
than 15.00% $ 12,000,000 January 15, 2034
Class B-3I /(4)/ /(4)/ January 15, 2034
-----------------
55
/(1)/ Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month 24 months following the month of the maturity
date for the Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each class of Certificates that
represents one or more of the "regular interests" in the Master REMIC.
/(2)/ Collectively, the Class A-IO Certificates will be entitled to receive on
each Payment Date the distribution on such Payment Date to the Class
I-AIO Interest under Section 8.07(a)(i)(C), which is equivalent to
interest accrued at the Class A-IO Pass-Through Rate on the Class A-IO
Notional Amount. Thus, the Class A-IO Certificates shall effectively
accrue interest on an initial notional amount and at a rate as described
in the Prospectus Supplement. For federal tax purposes and pursuant to
Treas. Reg. 1.860G-1(a)(2)(v), the Class A-IO Certificates collectively
will be entitled to 100% of the interest payable on the Class I-AIO
Interest.
/(3)/ The Class X-IO Interest will be entitled to receive on each Payment Date
the distribution on such Payment Date to the Class I-XIO Interest under
Section 8.07(a)(i)(B), which is equivalent to the interest accrued at
the Class X-IO Interest Rate on the Class X-IO Notional Amount. For
federal tax purposes and pursuant to Treas. Reg. 1.860G-1(a)(2)(v), the
Class X-IO Interest will be entitled to 100% of the interest payable on
the Class I-XIO Interest.
/(4)/ The Class B-3I Certificate is an interest-only regular interest
certificate entitled to the payment of the Class B-3I Distribution
Amount. Nonetheless, solely for federal tax purposes, the Class B-3I
Certificate shall be entitled to the payment of the Class B-3I Formula
Distribution Amount.
The Seller does not represent that any regular interest in the Master
REMIC will, in fact, mature on any given date, except that each regular interest
of the Master REMIC will absolutely mature by the Assumed Final Maturity Date as
indicated above. Solely for federal income tax purposes, the Master REMIC will
issue a Class R-III Interest, which is hereby designated by the Seller as
constituting the sole class of "residual interests" in the Master REMIC for
purposes of Section 860G(a)(2) of the Code. For purposes of certification, a
Class R Certificate will represent the Class R-III Interest, as well as the
Class R-I and Class R-II Interests described in Section 2.05(c) and Section
2.05(d).
(c) The Uncertificated Intermediate Interests are being issued in
sixteen classes and are hereby designated by the Seller as constituting the
"regular interests" in the Intermediate REMIC for the purposes of Section
860G(a)(1) of the Code. The following terms of the Uncertificated Intermediate
Interests are irrevocably established as of the Closing Date:
Assumed
Original Class Principal Final
Interest Rate Per Annum Balance (or Notional Maturity Date
Class (Pass-Through Rate) Amount ) /(1)/
------------------- ------------------------------------------ ------------------------ -------------------
Class I-A1a Adjusted Net WAC Cap Rate $ 73,500,000 January 15, 2034
Class I-A1b Adjusted Net WAC Cap Rate $ 28,250,000 January 15, 2034
Class I-A2 Adjusted Net WAC Cap Rate $ 34,000,000 January 15, 2034
Class I-A3 Adjusted Net WAC Cap Rate $ 51,000,000 January 15, 2034
56
Assumed
Original Class Principal Final
Interest Rate Per Annum Balance (or Notional Maturity Date
Class (Pass-Through Rate) Amount ) /(1)/
------------------- ------------------------------------------ -------------------------- --------------------
Class I-A4 Adjusted Net WAC Cap Rate $ 26,750,000 January 15, 2034
Class I-A5 Adjusted Net WAC Cap Rate $ 32,500,000 January 15, 2034
Class I-AIO/(1)/ /(2)/ /(2)/ January 15, 2034
Class I-AIO/(2)/ /(2)/ /(2)/ January 15, 2034
Class I-AIO/(3)/ /(2)/ /(2)/ January 15, 2034
Class I-AIO/(4)/ /(2)/ /(2)/ January 15, 2034
Class I-XIO /(3)/ /(3)/ January 15, 2034
Class I-M1 Adjusted Net WAC Cap Rate $ 21,000,000 January 15, 2034
Class I-M2 Adjusted Net WAC Cap Rate $ 15,000,000 January 15, 2034
Class I-B1 Adjusted Net WAC Cap Rate $ 12,000,000 January 15, 2034
Class I-B2 Adjusted Net WAC Cap Rate $ 6.000,000 January 15, 2034
Class I-Accrual Adjusted Net WAC Cap Rate $ 300,000,000 January 15, 2034
-------------------
/(1)/ Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month 24 months following the month of the maturity
date for the Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each class of interests that
represents one or more of the "regular interests" in the Intermediate
REMIC.
/(2)/ Each Class I-AIO Interest comprising the Class I-AIO Interest is entitled
to that specified portion of the interest paid on a Class S-2 Interest as
designated in Section 8.07(a)(i)(C). Therefore, solely for federal income
tax purposes, the corresponding Pass-Through Rate and notional amount of
each Class I-AIO Interest as of the Closing Date is that designated in
Section 8.07(a)(i)(C) and applicable at such time.
/(3)/ The Class I-XIO Interest is entitled to that specified portion of the
interest paid on a Class S-3 Interest as designated in Section
8.07(a)(i)(B). Therefore, solely for federal income tax purposes, the
corresponding Pass-Through Rate and notional amount of each Class I-XIO
Interest as of the Closing Date is that designated in Section
8.07(a)(i)(B) and applicable at such time.
The Seller does not represent that any Class of Uncertificated
Intermediate Interests will, in fact, mature on any given date, except that each
regular interest of the Intermediate REMIC will absolutely mature by the Assumed
Final Maturity Date as indicated above. Solely for federal income tax purposes,
the Intermediate REMIC will issue a Class R-II Interest, which is hereby
designated by the Seller as constituting the sole class of "residual interests"
in the Intermediate REMIC for purposes of Section 860G(a)(2) of the Code.
57
(d) The Uncertificated Subsidiary Interests are being issued in
six classes and are hereby designated by the Seller as constituting the "regular
interests" in the Subsidiary REMIC for the purposes of Section 860G(a)(1) of the
Code. The following terms of the Uncertificated Subsidiary Interests are
irrevocably established as of the Closing Date:
Interest Assumed Final
Rate Per Annum Original Maturity Date
Class (Pass-Through Rate) Principal Balance /(1)/
-------------------- ---------------------------------- -------------------------- -------------------
Class S-1 Net WAC Cap Rate $ 377,139,034 January 15, 2034
Class S-2/(1)/ Net WAC Cap Rate $ 20,000,000 January 15, 2034
Class S-2/(2)/ Net WAC Cap Rate $ 96,000,000 January 15, 2034
Class S-2/(3)/ Net WAC Cap Rate $ 26,880,000 January 15, 2034
Class S-2/(4)/ Net WAC Cap Rate $ 68,120,000 January 15, 2034
Class S-3 Net WAC Cap Rate $ 11,860,966 January 15, 2034
Class P /(2)/ $ 100 January 15, 2034
----------------------
/(1)/ Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month 24 months following the month of the maturity
date for the Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each class of interests that
represents one or more of the "regular interests" in the Subsidiary
REMIC.
/(2)/ The Class P Certificate is entitled to all Prepayment Charges and bears
interest at the Class P Certificate Pass-Through Rate. The Class P
Certificate shall not be entitled to receive any distribution of
principal until a Payment Date subsequent to the month in which
Prepayment Charges are no longer collectible on any Loan.
The Seller does not represent that any Class of Uncertificated
Subsidiary Interests will, in fact, mature on any given date, except that each
regular interest of the Subsidiary REMIC will absolutely mature by the Assumed
Final Maturity Date as indicated above. Solely for federal income tax purposes,
the Subsidiary REMIC will issue a Class R-I Interest, which is hereby designated
by the Seller as the sole class of "residual interests" in the Subsidiary REMIC
for purposes of Section 860G(a)(2) of the Code.
(e) The Closing Date, which is the day on which each of the
Subsidiary REMIC, the Intermediate REMIC and the Master REMIC will issue all of
its regular and residual interests, is hereby designated as the "startup day" of
each of the Subsidiary REMIC, the Intermediate REMIC and the Master REMIC within
the meaning of Section 860G(a)(9) of the Code.
(f) After the Closing Date, neither the Trustee, the Originator,
the Seller nor any Servicer shall:
58
(i) accept any contribution of assets to the Subsidiary
REMIC, the Intermediate REMIC or the Master REMIC,
(ii) dispose of any portion of the Subsidiary REMIC, the
Intermediate REMIC or the Master REMIC, other than as
provided in Sections 3.06, 3.08 and 8.06,
(iii) engage in any "prohibited transaction," as defined in
Sections 860F(a)(2) and (5) of the Code, except as
may be contemplated by Section 3.07,
(iv) accept any contribution after the Closing Date that
is subject to the tax imposed by Section 860G(d) of
the Code or
(v) engage in any activity or enter into any agreement
that would result in the receipt by the Subsidiary
REMIC, the Intermediate REMIC or the Master REMIC of
any "net income from foreclosure property" as defined
in Section 860G(c)(2) of the Code, unless, prior to
any such action set forth in clauses (i), (ii),
(iii), (iv) or (v) the Trustee shall have received an
unqualified Opinion of Counsel, which opinion shall
not be an expense of the Trust, stating that such
action will not, directly or indirectly,
(A) adversely affect the status of the
Subsidiary REMIC, the Intermediate REMIC or
the Master REMIC as a REMIC or the status of
the Uncertificated Subsidiary Interests as
"regular interests" in the Subsidiary REMIC,
the status of the Class R-I Interest as the
sole class of "residual interests" in the
Subsidiary REMIC, the status of the
Uncertificated Intermediate Interests as
"regular interests" in the Intermediate
REMIC, the status of the Class R-II Interest
as the sole class of "residual interests" in
the Intermediate REMIC, the status of the
Regular Certificates and the Uncertificated
Master Interest as "regular interests" in
the Master REMIC, or the status of the Class
R-III Interest as the sole class of
"residual interests" in the Master REMIC,
(B) affect the distributions payable hereunder
to the Certificateholders or
(C) result in the imposition of any lien, charge
or encumbrance upon the Subsidiary REMIC,
the Intermediate REMIC or the Master REMIC.
(g) Upon the acquisition of any real property (including interests
in real property), or any personal property incident thereto, in connection with
the default of a Loan, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of
59
Section 860G(a)(8) of the Code, unless the Servicer and the Trustee receive an
Opinion of Counsel to the effect that the holding by the Subsidiary REMIC, the
Intermediate REMIC or the Master REMIC of such property subsequent to the period
then permitted by the Code will not result in the imposition of any taxes on
"prohibited transactions" of the Subsidiary REMIC, the Intermediate REMIC or the
Master REMIC, as defined in Section 860F of the Code, or cause the Subsidiary
REMIC, the Intermediate REMIC or the Master REMIC to fail to qualify as a REMIC
at any time that the Uncertificated Subsidiary Interests, Class R Certificate,
Uncertificated Intermediate Interests, Regular Certificates or Uncertificated
Master Interest are outstanding. The Servicer shall manage, conserve, protect
and operate such real property, or any personal property incident thereto, so
that such property will not fail to qualify as "foreclosure property," as
defined in Section 860G(a)(8) of the Code, and that the management,
conservation, protection and operation of such property will not result in the
receipt by the Subsidiary REMIC, the Intermediate REMIC or the Master REMIC of
any "income from nonpermitted assets," within the meaning of Section
860F(a)(2)(B) of the Code.
SECTION 2.06. Seller Option to Substitute for Prepaid Loans. The Seller
may, at its option, substitute new loans for Loans as to which a Principal
Prepayment in Full has been received by the Servicer prior to May 1, 2002
("Prepaid Loans"), up to a maximum of 5% of the Cut-Off Date Pool Principal
Balance, upon satisfaction of the following conditions:
(i) the Seller shall have conveyed to the Trustee the
Loan to be substituted for the Prepaid Loan and the
Loan File related to such Loan and the Seller shall
have marked the Electronic Ledger indicating that
such Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute
Loan and the Seller delivers an Officers'
Certificate, substantially in the form of Exhibit J-3
hereto, to the Trustee certifying that such Loan is
an Eligible Substitute Loan;
(iii) the Seller shall have delivered to the Trustee
evidence of filing of a UCC-1 financing statement
executed by the Seller as debtor, naming the Trustee
as secured party and filed in Minnesota, listing such
Loan to be substituted as collateral;
(iv) the Seller shall have delivered to the Trustee an
executed assignment to the Trustee on behalf of the
Trust in recordable form for the mortgage securing
such Loan to be substituted;
(v) such substitution shall be accomplished prior to the
Determination Date immediately following the calendar
month in which the Principal Prepayment in Full was
received by the Servicer, and no such substitution
shall take place after May 1, 2002.
(vi) the Seller shall have delivered to the Trustee an
Opinion of Counsel
60
(A) to the effect that the substitution of such
Loan for such Prepaid Loan will not cause
the Master, Intermediate or Subsidiary REMIC
to fail to qualify as a REMIC at any time
under then applicable REMIC Provisions or
cause any "prohibited transaction" that will
result in the imposition of a tax under such
REMIC Provisions, and
(B) to the effect of paragraph 9 of Exhibit F
hereto; and
(vii) if the Principal Prepayment received in respect of
such Prepaid Loan is greater than the Scheduled
Principal Balance of the Loan to be substituted, such
excess shall be distributed to Certificateholders on
the related Payment Date as a prepayment of
principal.
Upon satisfaction of such conditions, the Trustee shall add such Loan
to be substituted to the List of Loans.
Any substitutions pursuant to this Section 2.06 may be accomplished on
a loan-by-loan basis or on an aggregate basis as to all Prepaid Loans with
respect to a given calendar month.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller and the Originator make the following representations and
warranties. The Trustee will rely on the representations and warranties in
accepting the Loans in trust and issuing the Certificates and the Class R
Certificate on behalf of the Trust. The repurchase or substitution and
indemnification obligations of the Originator set forth in Section 3.06
constitute the sole remedies available to the Trust, the Certificateholders or
the Class R Certificateholder for a breach of a representation or warranty of
the Originator set forth in Sections 2.03, 3.02, 3.03, 3.04 or 3.05 of this
Agreement, or in the Officer's Certificates delivered pursuant to Sections
2.02(j) or 2.03(b)(vii) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Seller. The
Seller represents and warrants to the Certificateholders and the Class R
Certificateholder, effective on the Closing Date and each Subsequent Transfer
Date, that:
(a) Organization and Good Standing. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged. The Seller is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Seller.
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(b) Authorization; Binding Obligations. The Seller has the power
and authority to make, execute, deliver and perform this Agreement and all of
the transactions contemplated under this Agreement, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and to cause the Trust to
be created. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Seller enforceable in accordance with
its terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) No Consent Required. The Seller is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
(d) No Violations. The execution, delivery and performance of this
Agreement by the Seller will not violate any provision of any existing law or
regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Seller is a party
or by which the Seller may be bound.
(e) Litigation. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of its properties
or with respect to this Agreement, the Certificates or the Class R Certificate
which, if adversely determined, would in the opinion of the Seller have a
material adverse effect on the transactions contemplated by this Agreement.
(f) Licensing. The Seller is duly licensed in each state in which
Loans were originated to the extent the Seller is required to be licensed by
applicable law in connection with the origination and servicing of the Loans.
(g) Chief Executive Office. The chief executive office of the
Seller is at 300 Landmark Towers, 000 Xx. Xxxxx Xxxxxx, Xx. Xxxx, Xxxxxxxxx
00000-0000. The Seller is a corporation organized and existing under the laws of
the State of Minnesota.
(h) No Default. The Seller 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 is condition (financial or other) or operations or its
properties or the consequences of which would materially and adversely affect
its performance hereunder. The Seller is not in default under any agreement
involving financial obligations or on any outstanding obligation which would
materially adversely impact its financial condition or operations or legal
documents associated with the transaction contemplated by this Agreement.
(i) Lawful Assignment. The Seller has duly executed a valid
blanket assignment of the Loans transferred to the Trust, and has transferred
all its right, title and interest in such
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Loans. The Assignment, any and all documents executed and delivered by the
Seller pursuant to Section 2.01(a), and this Agreement each constitutes the
legal, valid and binding obligation of the Seller enforceable in accordance with
its respective terms.
(j) Good Title. The Seller is the sole owner of the Loans and has
the authority to sell, transfer and assign such Loans to the Trust under the
terms of this Agreement. There has been no assignment, sale or hypothecation of
the Loans by the Seller, other than a hypothecation which terminates upon sale
of the Loans to the Trust. The Seller has good and marketable title to the
Loans, free and clear of any encumbrance, equity, loan, pledge, charge, claim,
or security interest of any type and has full right to transfer the Loans to the
Trust.
SECTION 3.02. Representations and Warranties Regarding Each Loan. The
Originator has made the following representations and warranties to the Seller
in the Transfer Agreement, which representations and warranties the Seller has
assigned to the Trustee for the benefit of the Certificateholders and the Class
R Certificateholder, as of the Closing Date with respect to each Loan identified
on the List of Loans attached to this Agreement as Exhibit L and as of each
Subsequent Transfer Date with respect to each Subsequent Loan identified on the
List of Loans attached to the related Subsequent Transfer Instrument:
(a) List of Loans. The information set forth in the List of Loans
is true and correct as of its date.
(b) Payments. No scheduled payment due under the Loan was
delinquent over 30 days as of the Cut-off Date if an Initial Loan (except for
0.07% of the Initial Loans by principal balance), or 29 days as of the related
Cut-off Date or Subsequent Cut-off Date, if a Subsequent Loan.
(c) Costs Paid and No Waivers. The terms of the Loan have not been
waived, altered or modified in any respect, except by instruments or documents
identified in the Loan File. All costs, fees and expenses incurred in making,
closing and perfecting the lien of the Loan have been paid. The subject real
property has not been released from the lien of such Loan.
(d) Binding Obligation. The Loan is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Loan is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the Loan or the exercise of any right
thereunder will not render the Loan unenforceable in whole or in part or subject
to any right of rescission, setoff, counterclaim or defense, including the
defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
(f) Insurance Coverage. The Originator has been named as an
additional insured party under any hazard insurance on the property described in
the Loan, to the extent required by the Originator's underwriting guidelines. If
upon origination of the Loan, the property securing
63
the Loan was in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards (and if flood
insurance was required by federal regulation and such flood insurance has been
made available in the locale where the property is located), the property is
covered by a flood insurance policy of the nature and in an amount which is
consistent with the servicing standard set forth in Section 5.02.
(g) Combined LTV. As of the Cut-Off Date and as of the date that
each Loan is transferred to the Trust, the Combined LTV for each Loan is not
greater than 100%.
(h) Lawful Assignment. The Loan was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Loan under this Agreement or pursuant to transfers of the Certificates or
Class R Certificate unlawful or render the Loan unenforceable. The Originator
has duly executed a valid blanket assignment of the Loans transferred to the
Seller, and has transferred all its right, title and interest in such Loans,
including all rights the Originator may have against the originating lender with
respect to Loans originated by a lender other than the Originator, to the
Seller. The blanket assignment, any and all documents executed and delivered by
the Originator pursuant to Sections 2.01(b) and 2.03(b), and this Agreement each
constitutes the legal, valid and binding obligation of the Originator
enforceable in accordance with its respective terms.
(i) Compliance with Law. At the date of origination of the Loan,
all requirements of any federal and state laws, rules and regulations applicable
to the Loan, including, without limitation, usury and truth in lending laws,
have been complied with and the Originator shall for at least the period of this
Agreement, maintain in its possession, available for the Trustee's inspection,
and shall deliver to the Trustee upon demand, evidence of compliance with all
such requirements.
(j) Loan in Force. The Loan has not been satisfied or subordinated
in whole or in part or rescinded, and the real estate securing such Loan has not
been released from the lien of such Loan in whole or in part.
(k) Valid Lien. The contract and/or promissory note, and the
mortgage, deed of trust, security deed or other evidence of a lien on the
related real property, which evidence the Loan has been duly executed and
delivered by the Obligor, and the lien created thereby has been duly recorded,
or has been delivered to the appropriate governmental authority for recording
and will be duly recorded within 180 days, and constitutes a valid and perfected
first, second or third priority lien, as the case may be, on the real estate
described in such Loan.
(l) Capacity of Parties. The signature(s) of the Obligor(s) on the
contract and/or promissory note, and the mortgage, deed of trust, security deed
or other evidence of a lien on the related real property, which evidence the
Loan are genuine and all parties to the Loan had full legal capacity to execute
such documents.
(m) Good Title. The Originator is the sole owner of the Loan and
has the authority to sell, transfer and assign such Loan to the Seller under the
terms of the Transfer Agreement. There has been no assignment, sale or
hypothecation of the Loan by the Originator except the
64
usual past hypothecation of the Loan in connection with the Originator's normal
banking transactions in the conduct of its business, which hypothecation
terminates upon sale of the Loan to the Seller. The Originator has good and
marketable title to the Loan, free and clear of any encumbrance, equity, loan,
pledge, charge, claim, lien or encumbrance of any type and has full right to
transfer the Loan to the Seller.
(n) No Defaults. As of the applicable Cut-off Date, there was no
default, breach, violation or event permitting acceleration existing under the
Loan and no event which, with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event permitting
acceleration under such Loan (except payment delinquencies permitted by clause
(b) or (c) above). The Originator has not waived any such default, breach,
violation or event permitting acceleration except payment delinquencies
permitted by clause (b) above.
(o) Equal Installments. The Loan provides for monthly payments
(except, in the case of a Balloon Loan, for the final monthly payment of such
Loan) which fully amortize the Loan over its term.
(p) Enforceability. Each Loan contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the lien
provided thereby.
(q) One Original. There is only one original executed promissory
note, which promissory note has been delivered to the Trustee or its Custodian
on or before the Closing Date or Subsequent Transfer Date if a Subsequent Loan,
except for 22 home equity Loans with an aggregate Cut-off Date Principal Balance
of $1,257,115.50. As to each missing note, the Originator has delivered to the
Trustee or its Custodian a copy of the note and a lost note affidavit.
(r) Genuine Documents. All documents submitted are genuine, and
all other representations as to each Loan, including the List of Loans, are true
and correct. Any copies of documents provided by the Originator are accurate and
complete (except that, with respect to each Loan that was originated by a lender
other than the Originator, the Originator makes such representation and warranty
only to the best of the Originator's knowledge).
(s) Origination. Each Loan was originated by a home equity lender
in the ordinary course of such lender's business or was originated by the
Originator directly.
(t) Underwriting Guidelines. The Loan was originated or purchased
in accordance with the Originator's then-current underwriting guidelines, and
such underwriting guidelines required an appraisal acceptable to Xxxxxx Xxx or
Freddie Mac.
(u) Good Repair. The property described in the Loan is, to the
best of the Originator's knowledge, free of damage and in good repair.
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(v) Qualified Mortgage. The Loan is a "qualified mortgage" within
the meaning of the REMIC Provisions. The Originator represents and warrants
that, either as of (i) the date of origination (within the meaning of the REMIC
Provisions) or (ii) the Closing Date or, if a Subsequent Loan, the Subsequent
Transfer Date, the fair market value of the interest in real property securing
each Loan was not less than 80% of the "adjusted issue price" (in each case
within the meaning of the REMIC Provisions) of such Loan.
(w) Prepayment Term. No Prepayment Charges are payable under the
Loan after the 60th month following the origination date of the Loan.
(x) Certain Disclosure Statements. The 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
such statement will be retained in the Loan File.
SECTION 3.03. Additional Representations and Warranties. The Seller
hereby represents and warrants to the Trustee for the benefit of the
Certificateholders and the Class R Certificateholder, as of the Closing Date
with respect to each Loan identified on the List of Loans attached to this
Agreement as Exhibit L and as of each Subsequent Transfer Date with respect to
each Subsequent Loan identified on the List of Loans attached to the related
Subsequent Transfer Instrument:
(a) Lawful Assignment. The Loan was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Loan under this Agreement or pursuant to transfers of the Certificates or
Class R Certificate unlawful or render the Loan unenforceable. The Seller has
duly executed a valid blanket assignment of the Loans transferred to the Trust,
and has transferred all its right, title and interest in such Loans. The blanket
assignment, any and all documents executed and delivered by the Seller pursuant
to Sections 2.01(b) and 2.03(b), and this Agreement each constitutes the legal,
valid and binding obligation of the Seller enforceable in accordance with its
respective terms.
(b) Good Title. The Seller is the sole owner of the Loan and has
the authority to sell, transfer and assign such Loan to the Trust under the
terms of this Agreement. There has been no assignment, sale or hypothecation of
the Loan by the Seller. The Seller has good and marketable title to the Loan,
free and clear of any encumbrance, equity, loan, pledge, charge, claim, lien or
encumbrance of any type and has full right to transfer the Loan to the Trust.
SECTION 3.04. Representations and Warranties Regarding the Loans in the
Aggregate. The Originator has represented and warranted to the Seller in the
Transfer Agreement, which representations and warranties the Seller has assigned
to the Trustee for the benefit of the Certificateholders and the Class R
Certificateholder, as of the Closing Date with respect to the Initial Loans and
Additional Loans, and as of each Subsequent Transfer Date with respect to the
related Subsequent Loans, that:
(a) Amounts. As of the Closing Date, the sum of the Cut-off Date
Pool Principal Balance, plus the Original Pre-Funded Amount, equals at least the
Original Aggregate Certificate Principal Balance. By Cut-off Date Principal
Balance, the Initial Loans and Additional Loans
66
plus the Subsequent Loans specifically identified as of the Closing Date
represent at least 75% of the Original Aggregate Certificate Principal Balance.
(b) Characteristics. The Loans have the following characteristics:
(i) 100% are secured by a mortgage, deed of trust or
security deed creating a first, second or third lien
on the related real estate;
(ii) none has a remaining or original maturity of more
than 360 months;
(iii) no Initial Loan has a final scheduled payment date
later than January 15, 2032, no Additional Loan has a
final scheduled payment date later than February 15,
2032 and no such Subsequent Loan has a final
scheduled payment date later than April 15, 2032;
(iv) none had a principal balance at origination of more
$670,000;
(v) none has a Loan Interest Rate less than 4.00%; and
(vi) no Subsequent Loan is an FHA-Insured Loan.
The weighted average (by Scheduled Principal Balance) loan to
value ratio of the Loans as of the Post-Funding Payment Date will not
be more than 100 basis points more than such ratio with respect to the
Initial Loans.
The weighted average (by Scheduled Principal Balance) of the
Loan Interest Rates of the Loans as of the Cut-Off Date will be greater
than 11.73%, and as of the Post-Funding Payment Date, will not be more
than 25 basis points less than the weighted average of the Loan
Interest Rates of the Initial Loans.
The percentage (by Scheduled Principal Balance) of the Loans
as of the Post-Funding Payment Date which are identified by the
Originator under its standard underwriting criteria as "B," "C," and
"D" credits will not be more than 300 basis points, 200 basis points,
and 100 basis points, respectively, more than the percentage of Initial
Loans identified as "B," "C," and "D" credits.
(c) All Loans. As of the Cut-Off Date, 84.87% (by Scheduled
Principal Balance) of the Initial Loans are secured by a first priority lien,
14.88% by a second priority lien and 0.25% by a third priority lien. As of the
Post-Funding Payment Date, the percentage of the Loans secured by a second
priority lien is not more than 16% and not more than 0.25% are secured by a
third priority lien.
The percentage (by Scheduled Principal Balance) of the Loans
as of the Closing Date which are identified by the Originator as debt
consolidation loans will be no more than 9.00%. As of any Subsequent
Transfer Date, such percentage of debt consolidation loans will not be
greater than 9.25%.
67
As a result of the purchase of the Additional Loans and the
Subsequent Loans, the percentage of the Loans, by Aggregate Principal
Balance, with a FICO score of less than 620 will not increase by more
than 2%.
(d) Geographic Concentrations. By Cut-off Date Principal Balance,
approximately 12.44% of the Initial and Additional Loans are secured by property
located in California, approximately 8.56% in Texas, approximately 7.67% in
Florida, approximately 6.14% in Michigan and approximately 5.1-% in Iowa. No
other state represents more than 5.00% of the aggregate Cut-off Date Principal
Balances of the Initial and Additional Loans.
The percentage (by Scheduled Principal Balance) of the Loans
as of the Post-Funding Payment Date which are owner-occupied will be at
least 97%.
The percentage (by Scheduled Principal Balance) of the Loans
as of the Post-Funding Payment Date which are single family will be at
least 92%.
No more than 1% of the Loans by Cut-off Date Principal Balance
are secured by property located in an area with the same five-digit zip
code.
(e) Marking Records. The Originator has caused the portions of the
Electronic Ledger relating to the Loans to be clearly and unambiguously marked
to indicate that such Loans constitute part of the Trust and are owned by the
Trust in accordance with the terms of the Trust created hereunder.
(f) No Adverse Selection. No adverse selection procedures have
been employed in selecting the Loans.
(g) Lender Concentration. No more than 5.0% of the Loans, by
Cut-off Date Principal Balance, were originated by any one lender (other than
the Originator).
(h) Home Ownership and Equity Protection Act. With respect to any
Loan subject to the Home Ownership and Equity Protection Act of 1994, each such
Loan has been originated and serviced in compliance with the provisions thereof.
SECTION 3.05. Representations and Warranties Regarding the Loan Files.
The Originator has represented and warranted to the Seller in the Transfer
Agreement, which representations and warranties the Seller has assigned to the
Trustee for the benefit of the Certificateholders and the Class R
Certificateholder that:
(a) Possession. On the Closing Date, the Trustee or a Custodian
will have possession of each original Initial Loan and Additional Loan and the
related Loan File, except for each of the missing notes described in Section
3.02(q), as to which the Originator has delivered to the Trustee or its
Custodian a copy of the note and a lost note affidavit. On each Subsequent
Transfer Date, the Originator will have possession of each original Subsequent
Loan being transferred to the Trust on that Subsequent Transfer Date and the
related Loan File. There are and there will be no custodial agreements or
servicing contracts in effect materially and
68
adversely affecting the rights of the Originator to make, or cause to be made,
any delivery required hereunder or under the Transfer Agreement.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance
of the Loans and the Loan Files by the Originator pursuant to the Transfer
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
SECTION 3.06. Repurchases of Loans for Breach of Representations and
------------------------------------------------------
Warranties.
----------
(a) Subject to Section 3.07, the Originator shall repurchase a
Loan, at its Repurchase Price, not later than 90 days after the day on which the
Originator, the Servicer, the Seller or the Trustee first discovers or should
have discovered a breach of a representation or warranty set forth in Sections
2.03, 3.02, 3.03, 3.04 or 3.05, or in the Officer's Certificates delivered
pursuant to Sections 2.02(j) or 2.03(b)(vii), that materially and adversely
affects the Trust's, the Certificateholders' or the Class R Certificateholder's
interest in such Loan and which breach has not been cured within such time;
provided, however, that
(i) in the event that a party other than the Originator
first becomes aware of such breach, such discovering
party shall notify the Originator in writing within 5
Business Days of the date of such discovery and
(ii) with respect to any Loan incorrectly described on the
List of Loans with respect to Cut-off Date Principal
Balance, which the Originator would otherwise be
required to repurchase pursuant to this Section, the
Originator may, in lieu of repurchasing such Loan,
deliver to the Seller for deposit in the Certificate
Account within 90 days from the date of such
discovery cash in an amount sufficient to cure such
deficiency or discrepancy. Any such cash so deposited
shall be distributed to Certificateholders and the
Class R Certificateholder on the immediately
following Payment Date as a collection of principal
or interest on such Loan, according to the nature of
the deficiency or discrepancy. Notwithstanding any
other provision of this Agreement, the obligation of
the Originator under this Section shall not terminate
upon a Service Transfer pursuant to Article VII.
(b) On or prior to the date that is the second anniversary of the
Closing Date, the Originator may, at its election, substitute an Eligible
Substitute Loan for a Loan that it is obligated to repurchase pursuant to
Section 3.06(a) (such Loan being referred to as the "Replaced Loan") upon
satisfaction of the following conditions:
(i) the Originator shall have conveyed to the Seller the
Loan to be substituted for the Replaced Loan and the
Loan File related to such Loan and the Originator
shall have marked the Electronic Ledger indicating
that such Loan constitutes part of the Trust;
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(ii) the Loan to be substituted is an Eligible Substitute
Loan and the Originator delivers an Officers'
Certificate, substantially in the form of Exhibit J-2
hereto, to the Trustee certifying that such Loan is
an Eligible Substitute Loan;
(iii) the Originator shall have delivered to the Trustee
evidence of filing of a UCC-1 financing statement
identifying the Originator as debtor, naming the
Seller as secured party and filed in Delaware,
listing such Loan to be substituted as collateral;
(iv) the Originator shall have delivered to the Trustee an
executed assignment to the Seller and to the Trustee
on behalf of the Trust in recordable form for the
mortgage securing such Loan to be substituted;
(v) the Originator shall have delivered to the Trustee an
Opinion of Counsel
(A) to the effect that the substitution of such
Loan for such Replaced Loan will not cause
the Trust to fail to qualify as a REMIC at
any time under then applicable REMIC
Provisions or cause any "prohibited
transaction" that will result in the
imposition of a tax under such REMIC
Provisions and
(B) to the effect of paragraph 9 of Exhibit F
hereto; and
(vi) if the Scheduled Principal Balance of such Replaced
Loan is greater than the Scheduled Principal Balance
of the Loan to be substituted, the Originator shall
have delivered to the Seller for deposit in the
Certificate Account the amount of such excess and
shall have included in the Officers' Certificate
required by clause (ii) above a certification that
such deposit has been made.
Upon satisfaction of such conditions, the Trustee shall add such Loan to be
substituted to, and delete such Replaced Loan from, the List of Loans. Such
substitution shall be effected prior to the first Determination Date that occurs
more than 90 days after the Originator becomes aware, or should have become
aware, or receives written notice from the Trustee, of the breach referred to in
Section 3.06(a). Promptly after any such substitution of a Loan, the Originator
shall give written notice of such substitution to S&P and Xxxxx'x.
(c) If the Originator is required to repurchase a Loan under
Section 3.06(a) or has elected to substitute an Eligible Substitute Loan for a
Loan under Section 3.06(b), and if the reason for such repurchase or
substitution is that the Originator has failed to deliver to the Trustee the
Loan File for the Loan to be repurchased or substituted for (except in the case
of a failure to deliver evidence of the lien on the related improved property
and evidence of due recording of such mortgage, deed of trust or security deed,
if available), then, notwithstanding the time periods set out in Sections
3.06(a) and 3.06(b), the Originator shall either
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(i) repurchase such Loan, at its respective Repurchase
Price, within 30 days of the Closing Date, or
(ii) substitute an Eligible Substitute Loan for the Loan
within 90 days of the Closing Date.
(d) The Originator shall defend and indemnify the Seller, the
Trustee, the Certificateholders, and the Class R Certificateholder against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of any third-party action arising out of any breach of any
such representation and warranty.
SECTION 3.07. No Repurchase Under Certain Circumstances.
Notwithstanding any provision of this Agreement to the contrary, no repurchase
or substitution pursuant to Section 3.06 shall be made unless the Originator (at
its own expense) obtains for the Trustee an Opinion of Counsel addressed to the
Trustee that any such repurchase or substitution would not, under the REMIC
Provisions,
(i) cause the Master REMIC, Intermediate REMIC or
Subsidiary REMIC to fail to qualify as a REMIC while
any regular interest in such REMIC is outstanding,
(ii) result in a tax on prohibited transactions within the
meaning of Section 860F(a)(2) of the Code, or
(iii) constitute a contribution after the startup day
subject to tax under Section 860G(d) of the Code.
The Originator diligently shall attempt to obtain such Opinion of Counsel. In
the case of a repurchase or deposit pursuant to Section 3.06(a) or (b), the
Originator shall, notwithstanding the absence of such opinion as to the
imposition of any tax as the result of such purchase or deposit, repurchase such
Loan or make such deposit and shall guarantee the payment of such tax by paying
to the Trustee the amount of such tax not later than five Business Days before
such tax shall be due and payable to the extent that amounts previously paid
over to and then held by the Trustee pursuant to Section 6.06 are insufficient
to pay such tax and all other taxes chargeable under Section 6.06. Pursuant to
Section 6.06, the Servicer is hereby directed to withhold, and shall withhold
and pay over to the Trustee, an amount sufficient to pay such tax and any other
taxes imposed on "prohibited transactions" under Section 860F(a)(i) of the Code
or imposed on "contributions after startup date" under Section 860G(d) of the
Code from amounts otherwise distributable to the Class R Certificateholder. The
Servicer shall give notice to the Trustee at the time of such repurchase of the
amounts due from the Originator pursuant to the guarantee of the Originator
described above and give notice as to who should receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant
to this Section other than from moneys provided to it by the Originator or from
moneys held in the
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funds and accounts created under this Agreement. The Trustee shall be deemed
conclusively to have complied with this Section if it follows the directions of
the Originator.
In the event any tax that is guaranteed by the Originator pursuant to
this Section 3.07 is refunded to the Trust or otherwise is determined not to be
payable, the Originator shall be repaid the amount of such refund or that
portion of any guarantee payment made by the Originator that is not applied to
the payment of such tax.
SECTION 3.08. Certain Representations and Warranties Regarding
Perfection of the Loans. The Seller represents that:
(a) This Agreement creates a valid and continuing security
interest (as defined in the UCC) in the Loans in favor of the Trustee, which
security interest is prior to all other Liens, and is enforceable as such as
against creditors of and purchasers from the Seller.
(b) The Loans constitute "instruments," "tangible chattel paper,"
"promissory notes," "payment intangibles" or "accounts" within the meaning of
the applicable UCC.
(c) Seller owns and has good and marketable title to the Loans
free and clear of any Lien, claim or encumbrance of any Person.
(d) The Seller has received all consents and approvals required by
the terms of the Loans to the sale of the Loans hereunder to the Trust.
(e) The Seller has caused or will have caused, within ten days,
the filing of all appropriate financing statements in the proper filing office
in the appropriate jurisdictions under applicable law in order to perfect the
security interest in the Loans granted to the Trust hereunder.
(f) Other than the security interest granted to the Trust pursuant
to this Agreement, the Seller has not pledged, assigned, sold, granted a
security interest in, or otherwise conveyed any of the Loans. The Seller has not
authorized the filing of and is not aware of any financing statements against
the Seller that include a description of collateral covering the Loans other
than any financing statement relating to the security interest granted to the
Trust hereunder or that has been terminated. The Seller is not aware of any
judgment or tax lien filings against the Seller.
(g) The Seller has in its possession all original copies of the
mortgage notes and promissory notes that constitute or evidence the Loans. With
respect to any Loan bearing a stamp indicating that such Loan has been sold to
another party, such other party's interest in such Loan has been released. All
financing statements filed or to be filed against the Seller in favor of the
Trust in connection herewith describing the Loans contain a statement to the
following effect: "A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the Secured
Party."
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ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Transfer of Loans.
-----------------
(a) On or prior to the Closing Date or the related Subsequent
Transfer Date in the case of Subsequent Loans, the Originator shall deliver the
Loan Files to the Trustee. The Trustee shall maintain the Loan Files at its
office or with a duly appointed Xxxxxxxxx, who shall act as the agent of the
Trustee on behalf of the Certificateholders. The Trustee may release a Loan File
to the Servicer pursuant to Section 5.07. The Originator has filed a form UCC-1
financing statement regarding the sale of the Loans to the Seller, and shall
file continuation statements in respect of such UCC-1 financing statement as if
such financing statement were necessary to perfect the security interest granted
pursuant to Section 2.01(c). The Originator shall take any other actions
necessary to maintain the perfection of such security interest.
(b) The Originator shall file promptly in the appropriate
recording offices the assignments to the Trustee on behalf of the Trust of the
mortgage, deed of trust or security deed securing each Loan relating to real
estate located in Maryland, and shall deliver to the Trustee an Opinion of
Counsel to the effect that the recordation of assignments of the mortgages,
deeds of trust and security deeds, securing Loans relating to real estate
located in any state other than Maryland, is not necessary to effect the
assignment to the Trustee of the Originator's lien on the real property securing
such Loans.
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SECTION 4.02. Costs and Expenses. The Originator agrees to pay all
reasonable costs and disbursements in connection with the vesting (including the
perfection and the maintenance of perfection, as against all third parties) in
the Trust of all right, title and interest in and to the Loans (including,
without limitation, the mortgage or deed of trust on the related real estate
granted thereby).
ARTICLE V
SERVICING OF LOANS
SECTION 5.01. Responsibility for Loan Administration. The Servicer will
have the sole obligation to manage, administer, service and make collections on
the Loans and perform or cause to be performed all contractual and customary
undertakings of the holder of the Loans to the Obligor. Conseco Finance Corp.,
if it is the Servicer, may delegate some or all of its servicing duties to a
wholly owned subsidiary of Conseco Finance Corp., for so long as such subsidiary
remains, directly or indirectly, a wholly owned subsidiary of Conseco Finance
Corp. Notwithstanding any such delegation Conseco Finance Corp. shall retain all
of the rights and obligations of the Servicer hereunder. The Trustee, at the
request of a Servicing Officer, shall furnish the Servicer with any powers of
attorney or other documents necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder. Conseco Finance
Corp. is hereby appointed the Servicer until such time as any Service Transfer
shall be effected under Article VII.
SECTION 5.02. Standard of Care. In managing, administering, servicing
and making collections on the Loans pursuant to this Agreement, the Servicer
will exercise that degree of skill and care consistent with the highest degree
of skill and care that the Servicer exercises with respect to similar loans
(including manufactured housing contracts) serviced by the Servicer; provided,
however, that such degree of skill and care shall be at least as favorable as
the degree of skill and care generally applied by prudent servicers of home
equity loans for prudent institutional investors.
SECTION 5.03. Records. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the Trustee to determine the status of each Loan.
SECTION 5.04. Inspection.
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(a) At all times during the term hereof, the Servicer shall afford
the Trustee and its authorized agents reasonable access during normal business
hours to the Servicer's records relating to the Loans, which have not previously
been provided to the Trust, and will cause its personnel to assist in any
examination of such records by the Trustee. The examination referred to in this
Section will be conducted in a manner which does not unreasonably interfere with
the Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Trustee may make, the
Trustee may, using generally accepted audit procedures, verify the status of
each Loan and review the Electronic Ledger and records relating
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thereto for conformity to Monthly Reports prepared pursuant to Article VI and
compliance with the standards represented to exist as to each Loan in this
Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Loans at its principal executive office for
inspection by Certificateholders.
(c) A Certificateholder holding Certificates representing in the
aggregate at least 5% of the Aggregate Certificate Principal Balance shall have
the rights of inspection afforded to the Trustee pursuant to this Section 5.04.
SECTION 5.05. Certificate Account.
-------------------
(a) On or before the Closing Date, the Servicer shall establish
the Certificate Account on behalf of the Trust, which shall be an Eligible
Account. The Servicer shall pay into the Certificate Account, as promptly as
practicable (but not later than the next Business Day) following receipt
thereof, all amounts received with respect to the Loans, including Prepayment
Charges, other than extension fees and assumption fees, which fees shall be
retained by the Servicer as compensation for servicing the Loans, and other than
Liquidation Expenses permitted by Section 5.08. The Trustee shall hold all
amounts paid into the Certificate Account under this Agreement in trust for the
Trustee, the Certificateholders and the Class R Certificateholder until payment
of any such amounts is authorized under this Agreement. Only the Trustee may
withdraw funds from the Certificate Account.
(b) If the Servicer so directs, the institution maintaining the
Certificate Account shall, in the name of the Trustee in its capacity as such,
invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Payment
Date. Any investment of funds in the Certificate Account shall be made in
Eligible Investments held by a financial institution in accordance with the
following requirements:
(i) all Eligible Investments shall be held in an account
with such financial institution in the name of the
Trustee, and the agreement governing such account
shall be governed by the laws of the State of
Minnesota,
(ii) with respect to securities held in such account, such
securities shall be
(A) certificated securities (as such term is
used in N.Y. U.C.C. [sec] 8-102(4)(i)),
securities deemed to be certificated
securities under applicable regulations of
the United States government, or
uncertificated securities issued by an
issuer organized under the laws of the State
of New York or the State of Delaware,
(B) either
(1) in the possession of such
institution,
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(2) in the possession of a clearing
corporation (as such term is used in
Minn. Stat. [sec] 8-102(5)) in the
State of New York, registered in the
name of such clearing corporation or
its nominee, not endorsed for
collection or surrender or any other
purpose not involving transfer, not
containing any evidence of a right
or interest inconsistent with the
Trustee's security interest therein,
and held by such clearing
corporation in an account of such
institution,
(3) held in an account of such
institution with the Federal Reserve
Bank of New York or the Federal
Reserve Bank of Minneapolis, or
(4) in the case of uncertificated
securities, issued in the name of
such institution, and
(C) identified, by book entry or otherwise, as
held for the account of, or pledged to, the
Trustee on the records of such institution,
and such institution shall have sent the
Trustee a confirmation thereof, and
(iii) with respect to repurchase obligations held in such
account, such repurchase obligations shall be
identified by such institution, by book entry or
otherwise, as held for the account of, or pledged to,
the Trustee on the records of such institution, and
the related securities shall be held in accordance
with the requirements of clause (ii) above.
Once such funds are invested, such institution shall not change the investment
of such funds. All income and gain from such investments shall be added to the
Certificate Account and distributed on such Payment Date pursuant to Section
8.04. Any losses from such investments will be deducted from other investment
earnings or from other funds in the Certificate Account. An amount equal to any
net loss on such investments shall be deposited in the Certificate Account by
the Seller out of its own funds immediately as realized. The Servicer and the
Trustee shall in no way be liable for losses on amounts invested in accordance
with the provisions hereof. Funds in the Certificate Account not so invested
must be insured to the extent permitted by law by the Federal Deposit Insurance
Corporation. "Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully
guaranteed by, the United States of America, or any
agency or instrumentality of the United States of
America the obligations of which are backed by the
full faith and credit of the United States of
America;
(ii)
(A) demand and time deposits in, certificates of
deposit of, bankers' acceptances issued by,
or federal funds sold by any depository
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institution or trust company (including the
Trustee or any Affiliate of the Trustee,
acting in its commercial capacity)
incorporated under the laws of the United
States of America or any state thereof and
subject to supervision and examination by
federal and/or state authorities, so long
as, at the time of such investment or
contractual commitment providing for such
investment, the commercial paper or other
short-term debt obligations of such
depository institution or trust company are
rated at least A-1+ by S&P, F-1+ by Fitch
(if rated by Fitch) and P-1 by Xxxxx'x (if
rated by Xxxxx'x), and
(B) any other demand or time deposit or
certificate of deposit which is fully
insured by the Federal Deposit Insurance
Corporation;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are
registered under the Securities Act of 1933 and have
a rating of AAA by both S&P and Xxxxx'x, and whose
only investments are in securities described in
clauses (i) and (ii) above;
(iv) repurchase obligations with respect to (A) any
security described in clause (i) above or (B) any
other security issued or guaranteed by an agency or
instrumentality of the United States of America, in
either case entered into with a depository
institution or trust company (acting as principal)
described in clause (ii)(A) above;
(v) securities that have been rated at least A-1+ by S&P
(if rated by S&P), F-1+ by Fitch (if rated by Fitch)
and at least Aa2 from Xxxxx'x (if rated by Xxxxx'x),
and bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the
United States of America or any State thereof which
have a credit rating of at least AA from S&P (if
rated by S&P), in one of the two highest rating
categories from Fitch (if rated by Fitch) and Aa2
from Xxxxx'x (if rated by Xxxxx'x); provided,
however, that securities issued by any particular
corporation will not be Eligible Investments to the
extent that investment therein will cause the then
outstanding principal amount of securities issued by
such corporation and held as part of the corpus of
the Trust to exceed 10% of amounts held in the
Certificate Account;
(vi) commercial paper having a rating of at least A-1+
from S&P (if rated by S&P), at least F-1+ from Fitch
(if rated by Fitch) and at least P-1 from Xxxxx'x (if
rated by Xxxxx'x) at the time of such investment;
(vii) money market funds rated AAAm or AAAm-G by S&P; and
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(viii) other obligations or securities that are acceptable
to each of the Rating Agencies as an Eligible
Investment hereunder and will not reduce the rating
assigned to any Class of Certificates by each of the
Rating Agencies below the lower of the then-current
rating or the rating assigned to such Certificates as
of the Closing Date by each of the Rating Agencies,
as evidenced in writing;
provided that any such investment must constitute a "cash flow investment"
within the meaning of the REMIC Provisions.
The Trustee may trade with itself or an Affiliate in the purchase or
sale of such Eligible Investments. The Servicer acknowledges that to the extent
that regulations of the Comptroller of the Currency or other applicable
regulatory agency grant the Servicer the right to receive brokerage
confirmations of security transactions as they occur, the Servicer specifically
waives receipt of such confirmations; provided that, such confirmations shall
begin to be provided to the Backup Servicer upon its replacement of the
Servicer.
(c) If at any time the Trustee receives notice (from any of the
Rating Agencies, the Servicer or otherwise) that the Certificate Account has
ceased to be an Eligible Account, the Trustee shall, as soon as practicable but
in no event later than five Business Days of the Trustee's receipt of such
notice, transfer the Certificate Account and all funds and Eligible Investments
therein to an Eligible Account. Following any such transfer, the Trustee shall
notify each of the Rating Agencies, the Backup Servicer and the Servicer of the
location of the Certificate Account.
SECTION 5.06. Enforcement.
-----------
(a) The Servicer shall, consistent with customary servicing
procedures, act with respect to the Loans in such manner as will in the
Servicer's reasonable judgment maximize the receipt of principal and interest on
such Loans and Liquidation Proceeds with respect to Liquidated Loans. The
Servicer shall exercise its discretion, consistent with customary servicing
procedures and the terms of this Agreement, with respect to the enforcement of
defaulted Loans in such manner as will maximize the receipt of principal and
interest with respect thereto, including but not limited to the sale of such
Loan to a third party, the modification of such Loan, or foreclosure upon the
related real property and disposition thereof.
(b) In accordance with the standard of care specified in Section
5.02, the Servicer may, in its own name, if possible, or as agent for the Trust,
commence proceedings for the foreclosure of any subject real estate, or may take
such other steps that in the Servicer's reasonable judgment will maximize
Liquidation Proceeds with respect to the Loan, including, for example, the sale
of the Loan to a third party for foreclosure or enforcement and, in the case of
any default on a related prior mortgage loan, the advancing of funds to correct
such default and the advancing of funds to pay off a related prior mortgage
loan, which advances are Liquidation Expenses that will be reimbursed to the
Servicer out of related Liquidation Proceeds before the related Net Liquidation
Proceeds are paid to Certificateholders and the Class R Certificateholder. The
Servicer shall also deposit in the Certificate Account any Net Liquidation
Proceeds received in connection with any Loan which became a Liquidated Loan in
a prior Due Period.
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(c) The Servicer may sue to enforce or collect upon Loans, in its
own name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Loan, the act of commencement shall be
deemed to be an automatic assignment of the Loan to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce a Loan on the ground that it is not a
real party in interest or a holder entitled to enforce the Loan, the Trustee on
behalf of the Trust shall, at the Servicer's expense for which it will be
reimbursed by the Trust, take such steps as the Servicer deems necessary to
enforce the Loan, including bringing suit in its name or the names of the
Certificateholders and the Class R Certificateholder.
(d) The Servicer may grant to the Obligor on any Loan any rebate,
refund or adjustment out of the Certificate Account that the Servicer in good
faith believes is required because of the Principal Prepayment in Full of the
Loan. The Servicer will not permit any rescission or cancellation of any Loan.
(e) The Servicer shall enforce any due-on-sale clause in a Loan if
such enforcement is called for under its then current servicing policies for
obligations similar to the Loans, provided that such enforcement is permitted by
applicable law and will not adversely affect any applicable insurance policy. If
an assumption of a Loan is permitted by the Servicer, upon conveyance of the
related property the Servicer shall use its best efforts to obtain an assumption
agreement in connection therewith.
(f) Any provision of this Agreement to the contrary
notwithstanding, the Servicer shall not agree to the modification or waiver of
any provision of a Loan at a time when such Loan is not in default or such
default is not reasonably foreseeable, if such modification or waiver would both
(i) be treated as a taxable exchange under Section 1001 of the Code or any
proposed, temporary or final Treasury Regulations promulgated thereunder and
(ii) cause the Master REMIC, Intermediate REMIC or the Subsidiary REMIC to fail
to qualify as a REMIC or cause the imposition of any tax on "prohibited
transactions" or "contributions after the startup date" under the REMIC
Provisions.
SECTION 5.07. Trustee to Cooperate.
--------------------
(a) Upon payment in full on any Loan, the Servicer will notify the
Trustee and Conseco Finance Corp. (if Conseco Finance Corp. is not the Servicer)
on the next succeeding Payment Date by certification of a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Certificate Account pursuant to Section 5.05 have been so deposited and may
be in substantially the form of Exhibit J-4 hereto) and shall request delivery
of the Loan and Loan File to the Servicer. Upon receipt of such delivery and
request, the Trustee shall promptly release or cause to be released such Loan
and Loan File to the Servicer. Upon receipt of such Loan and Loan File, each of
Conseco Finance Corp. (if different from the Servicer) and the Servicer is
authorized to execute an instrument in satisfaction of such Loan and to do such
other acts and execute such other documents as the Servicer deems necessary to
discharge the Obligor thereunder and eliminate any lien on the related real
estate. The Servicer
79
shall determine when a Loan has been paid in full; provided that, to the extent
that insufficient payments are received on a Loan credited by the Servicer as
prepaid or paid in full and satisfied, the shortfall shall be paid by the
Servicer out of its own funds, without any right of reimbursement therefor
(except from additional amounts recovered from the related Obligor or otherwise
in respect of such Loan), and deposited in the Certificate Account.
(b) From time to time as appropriate for servicing and foreclosing
in connection with a Loan, the Trustee shall, upon written request of a
Servicing Officer (which may be substantially in the form of Exhibit J-4 hereto)
and delivery to the Trustee of a receipt signed by such Servicing Officer, cause
the original Loan and the related Loan File to be released to the Servicer and
shall execute such documents as the Servicer shall deem necessary to the
prosecution of any such proceedings. The Trustee shall stamp the face of each
such Loan to be released to the Servicer with a notation that the Loan has been
assigned to the Trustee. Upon request of a Servicing Officer, the Trustee shall
perform such other acts as reasonably requested by the Servicer and otherwise
cooperate with the Servicer in enforcement of the Certificateholders' and Class
R Certificateholder's rights and remedies with respect to Loans.
(c) The Servicer's receipt of a Loan and/or Loan File shall
obligate the Servicer to return the original Loan and the related Loan File to
the Trustee when its need by the Servicer has ceased unless the Loan shall be
liquidated or repurchased or replaced as described in Section 3.06 or Section
8.06.
SECTION 5.08. Costs and Expenses. All costs and expenses incurred by
the Servicer in carrying out its duties hereunder, including payment of all fees
and expenses incurred in connection with the enforcement of Loans, foreclosure
upon real estate securing any such Loans and all other fees and expenses not
expressly stated hereunder to be for the account of the Trust or the Originator,
and, while the Originator or a subsidiary or affiliate of the Originator is the
Servicer, payment of the Trustee's fees pursuant to Section 8.06 and fees and
expenses of accountants, shall be paid by the Servicer and the Servicer shall
not be entitled to reimbursement hereunder, except as provided in this Section
and except that the Servicer shall be reimbursed out of the Liquidation Proceeds
of a Liquidated Loan for customary out-of-pocket Liquidation Expenses incurred
by it. The Servicer shall not incur such Liquidation Expenses unless it
determines in its good faith business judgment that incurring such expenses will
increase the Net Liquidation Proceeds on the related Loan. In the case of
Conseco Finance, but not the Backup Servicer or any successor Servicer,
reimbursement for such Liquidation Expenses incurred in connection with filing
claims in bankruptcy proceedings for those Loans for which no Liquidation
Proceeds are ultimately received shall not exceed $500 per loan or $50,000 in
the aggregate. So long as the Servicer is not the Originator or a subsidiary or
Affiliate of the Originator, the Servicer shall be reimbursed for any third
party costs incurred by it pursuant to Sections 6.06 or 11.06.
SECTION 5.09. Maintenance of Insurance. The Servicer shall at all times
keep in force a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement, and a fidelity
bond. Such policy or policies and such fidelity bond shall be in such form and
amount as is generally customary among persons who service a
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portfolio of home equity loans having an aggregate principal amount of
$10,000,000 or more, and which are generally regarded as servicers acceptable to
institutional investors. The Servicer shall cause to be maintained with respect
to the real property securing a Loan hazard insurance (excluding flood insurance
coverage) if such Loan is secured by a first priority mortgage, deed of trust or
security deed or the initial principal balance of such Loan exceeds $20,000.
SECTION 5.10. Merger or Consolidation of Servicer. Any Person into
which the Servicer may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Servicer shall be a party shall be the successor of
the Servicer hereunder, provided such Person shall be an Eligible Servicer,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Servicer shall promptly notify each of the Rating Agencies and the Backup
Servicer in the event it is a party to any merger, conversion or consolidation.
SECTION 5.11. Advance Facility.
----------------
(a) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, an "Advance Facility"), the documentation
for which complies with Section 5.11(e) below, under which (1) the Servicer
assigns or pledges its rights under this Agreement to be reimbursed for any or
all Advances to a special-purpose bankruptcy-remote entity (an "SPV"), which in
turn, directly or through other assignees and/or pledges, assigns or pledges
such rights to a Person, which may include a trustee acting on behalf of holders
of debt instruments (any such Person, an "Advance Financing Person"), and/or (2)
an Advance Financing Person agrees to fund some or all Advances required to be
made by the Servicer pursuant to this Agreement. No consent of the Trustee,
Certificateholders or any other party is required before the Servicer may enter
into an Advance Facility. Notwithstanding the existence of any Advance Facility
under which an Advance Financing Person agrees to fund Advances on the
Servicer's behalf, the Servicer shall remain obligated pursuant to this
Agreement to make Advances pursuant to and as required by this Agreement, and
shall not be relieved of such obligations by virtue of such Advance Facility. If
the Servicer enters into an Advance Facility, and for so long as an Advance
Financing Person remains entitled to receive reimbursement for any Advances
outstanding and previously unreimbursed pursuant to this Agreement, then the
Servicer shall not be permitted to reimburse itself for Advances, pursuant to
Sections 8.04(b)(ii), (c) and (d) of this Agreement, but instead the Servicer's
assignee and designee (the "Servicer's Assignee") shall have the right to
receive from the Trustee from amounts in the Certificate Account collections
that the Servicer would otherwise have the right to receive from the Certificate
Account, pursuant to Sections 8.04(b)(ii), (c) and (d) of this Agreement,
amounts available to reimburse previously unreimbursed Advances ("Reimbursement
Amounts").
(b) If the Servicer enters into an Advance Facility, the Servicer
and the related Advance Financing Person shall deliver to the Trustee a written
notice of the existence of such Advance Facility (an "Advance Facility Notice"),
stating the identity of the Advance Financing Person and the related Servicer's
Assignee, and specifying what Advances are covered by the
81
Advance Facility. An Advance Facility may only be terminated by the joint
written direction of the Servicer and the related Advance Financing Person.
(c) Reimbursement Amounts shall consist solely of amounts in
respect of Advances made with respect to the Delinquent Payments for which the
Servicer would be permitted to reimbursement in accordance with Section
8.04(b)(ii), (c) and (d) hereof, assuming the Servicer had made the related
Advance(s).
(d) An Advance Financing Person who receives an assignment or
pledge of rights to receive Reimbursement Amounts and/or whose obligations
hereunder are limited to the funding of Advances shall not be required to meet
the criteria for qualification as an Eligible Servicer.
(e) The documentation establishing any Advance Facility shall
require that Reimbursement Amounts be allocated to outstanding unreimbursed
Advances on a "first-in, first out" ("FIFO") basis. In the event that, as a
result of this FIFO allocation, some or all of a Reimbursement Amount related to
Advances that were made by a Person other than Conseco Finance Corp. or the
Advance Financing Person, then the Servicer's Assignee shall be required to
remit any portion of such Reimbursement Amount to each person entitled to such
portion of such Reimbursement Amount. At any time when the Advance Financing
Person shall have ceased funding Advances, and the Servicer's Assignee shall
have received from the Certificate Account Reimbursement Amounts sufficient to
reimburse all Advances, the right to reimbursement for which were assigned to
the Servicer's Asignee, then the Servicer's Assignee and the Advance Financing
Person and the Servicer shall deliver a written notice to the Trustee
terminating the Advance Facility, whereupon the Servicer shall again be entitled
to receive from the Trustee the related Reimbursement Amounts from the
Certificate Account pursuant to Section 8.04(b)(ii), (c) and (d). Without
limiting the generality of the foregoing, the Servicer shall remain entitled to
be reimbursed by the Advance Financing Person for all Advances funded by the
Servicer to the extent the related Reimbursement Amount(s) have not been
assigned or pledged to an Advance Financing Person or related Servicer's
Assignee. By way of illustration, and not by way of limiting the generality of
the foregoing, if a Servicer who is a party to an Advance Facility resigns or is
terminated, and is replaced by a successor Servicer, and the successor Servicer
directly funds Advances and does not assign or pledge the related Reimbursement
Amounts to the Advance Financing Person, then after all Reimbursement Amounts
that are owed to the predecessor Servicer and the Advance Financing Person,
which were made prior to any advances made by the successor Servicer, have been
reimbursed in full, then the successor Servicer shall be entitled to receive all
Reimbursement Amounts collected with respect to the Loans.
(f) The parties hereto acknowledge that Conseco Finance Corp., as
Servicer, has assigned, conveyed and transferred all of its rights to
reimbursement, pursuant to Section 8.04(b)(ii), (c) and (d) hereof, in respect
of now existing outstanding Advances and, to the extent described in the Advance
Facility Indenture referred to below, Advances that may be disbursed by the
Servicer in the future, to Conseco Advance Receivables Company, Inc. Conseco
Advance Receivables Company, Inc. is the Servicer's Assignee with respect to
this Advance Facility, and shall be entitled to receive from the Trustee
Reimbursement Amounts from the Certificate
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Account pursuant to this Section 5.11. Conseco Advance Receivables Company, Inc.
shall remit Reimbursement Amounts that it receives from the Trustee, subject to
Section 5.11(e) above, to U.S. Bank National Association, as Trustee (the
"Advance Facility Trustee") under the Indenture (the "Advance Facility
Indenture") dated as of February 1, 2002, by and among Conseco Finance Advance
Receivables, Inc., as issuer, U.S. Bank National Association, as trustee,
verification agent and paying agent, and Conseco Finance Corp., individually and
as servicer of the Trusts (as defined in the Advance Facility Indenture). The
Advance Facility Trustee is Conseco Advance Receivables Company, Inc.'s pledgee
with respect to the right to be reimbursed for such advances, and is the Advance
Financing Person for purposes of the other provisions of this Section 5.11 with
respect to the Advance Facility described in this Section 5.11. The parties
hereto further agree that any rights of set-off that the Trustee may otherwise
have against Conseco Finance Corp. or the Servicer hereunder shall not attach to
any rights to be reimbursed for advances that have been sold, transferred,
conveyed and otherwise assigned to Conseco Advance Receivables Company, Inc. The
parties hereto further covenant and agree that this Section 5.11(f) may not be
amended or otherwise modified without the prior written consent of 100% of the
holders of the notes issued pursuant to the Advance Facility Indenture, unless
and until such notes shall have been paid in full or the Advance Facility
Indenture shall have been discharged and terminated.
ARTICLE VI
REPORTS AND TAX MATTERS
SECTION 6.01. Monthly Reports. No later than one Business Day following
each Determination Date, the Servicer shall deliver to the Trustee, the Backup
Servicer and the Rating Agencies a Monthly Report, substantially in the form of
Exhibit M hereto.
SECTION 6.02. Officer's Certificate. Each Monthly Report pursuant to
Section 6.01 shall be accompanied by a certificate of a Servicing Officer
substantially in the form of Exhibit H, certifying the accuracy of the Monthly
Report and that no Event of Termination or event that with notice or lapse of
time or both would become an Event of Termination has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
SECTION 6.03. Other Data. In addition, the Originator and (if different
from the Originator) the Servicer shall, on request of the Trustee or any of the
Rating Agencies, furnish the Trustee and/or any such Rating Agencies such
underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants. On or before May 1 of each
year, commencing May 1, 2003, the Servicer at its expense shall cause
Pricewaterhouse Coopers LLP, or another firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants, to
issue to the Servicer a report that such firm has examined selected documents,
records and management's assertions relating to loans serviced by the Servicer
and stating that, on the basis of such examination, such servicing has been
conducted in compliance with the minimum servicing standards identified in the
Mortgage Bankers
83
Association of America's Uniform Single Attestation Program for Mortgage
Bankers, or any successor uniform program, except for such significant
exceptions or errors in records that, in the opinion of such firm, generally
accepted attestation standards requires it to report.
SECTION 6.05. Statements to Certificateholders and the Class R
------------------------------------------------
Certificateholder.
-----------------
(a) The Servicer shall prepare and furnish to the Trustee the
statements specified below relating to the Class A, Class M, Class B, Class
B-3I, Class P and Class R Certificates on or before the third Business Day next
preceding each Payment Date.
(b) Concurrently with each distribution to Certificateholders, the
Trustee shall, so long as it has received the Monthly Report from the Servicer,
forward or cause to be forwarded by mail to each Holder of a Class A, Class M,
Class B, Class B-3I, Class P and Class R Certificate and (if the Originator is
not the Servicer) the Originator a statement setting forth the following:
(i) the amount of such distribution to Holders of each
Class of Certificates allocable to interest
(separately identifying any Unpaid Class Interest
Carry Forward Amount, Unpaid Class Basis Risk
Carryover Shortfall and Unpaid Class Realized Loss
Interest Amount included);
(ii) the amount of such distribution to Holders of each
Class of Certificates allocable to principal
(separately identifying the aggregate amount of any
principal prepayments, any Extra Principal
Distribution Amount and payments in respect of any
Allocated Realized Loss Amounts) and the amount by
which each Class Formula Principal Distribution
Amount exceeds the Distribution Amount for such
Class;
(iii) the Class Interest Carry Forward Amount, Unpaid Class
Interest Carry Forward Amount (after giving effect to
any payment to be made in reduction thereof on such
Payment Date), Class Basis Risk Carryover Shortfall
and Unpaid Class Basis Risk Carryover Shortfall
(after giving effect to any payment to be made in
reduction thereof on such Payment Date), if any, for
each Class;
(iv) the Class Allocated Realized Loss Interest Amount,
Unpaid Class Realized Loss Interest Amount (after
giving effect to any payment to be made in reduction
thereof on such Payment Date) and Unpaid Class
Realized Loss Amount (after giving effect to any
payment to be made in reduction thereof on such
Payment Date), if any, for each of the Class M-1,
M-2, B-1 and B-2 Certificates;
(v) the amount, if any, by which the Formula Principal
Distribution Amount for each of the Class A-1a, the
Class A-1b, the Class A-2, the Class A-3, the Class
A-4, the Class A-5, the Class M-1, the Class M-2, the
Class B-1
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and the Class B-2 Certificates exceeds the
Distribution Amount for that Certificate;
(vi) the Pool Factor;
(vii) the Class A-1a, the Class A-1b, the Class A-2, the
Class A-3, the Class A-4, the Class A-5, the Class
M-1, the Class M-2, the Class B-1, the Class B-2, and
the Class P Principal Balances, and the notional
principal amount for the Class A-IO Certificates,
after giving effect to the distribution of principal
and any Class Allocated Realized Loss Amount on such
Payment Date;
(viii) the Pool Scheduled Principal Balance, the
Overcollateralization Amount and the Required
Overcollateralization Amount on such Payment Date;
(ix) the Cumulative Realized Losses as of the last day of
the calendar month preceding such Payment Date;
(x) the amount of the Monthly Servicing Fee with respect
to the immediately preceding Due Period;
(xi) the Class R-III Distribution Amount (if any);
(xii) the number and aggregate Scheduled Principal Balances
of the Loans that are (A) delinquent (1) 30-59 days,
(2) 60-89 days, and (3) 90 or more days, (B) in
foreclosure, (C) in bankruptcy and (D) REO;
(xiii) the number and aggregate Scheduled Principal Balance
of the Loans that became Defaulted Loans during the
immediately preceding Due Period;
(xiv) the number and aggregate Scheduled Principal Balance
of the Loans that were Defaulted Loans as of the last
day of the immediately preceding Due Period;
(xv) the number and aggregate Scheduled Principal Balance
of the Loans that became Liquidated Loans during the
immediately preceding Due Period and the related Net
Liquidation Losses;
(xvi) the number and aggregate Scheduled Principal Balance
of the Loans (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 Loans that are Liquidated Loans and (z)
foreclosed upon and in the Servicer's inventory; and
(xvii) the amount of any distribution to Holders of the
Class P Certificate allocable to Prepayment Charges.
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In the case of information furnished pursuant to clauses (i) through
(viii) above, the amounts shall be expressed as a dollar amount per $1,000
denomination of each Certificate.
(c) Copies of all reports and statements provided to the Trustee
for the Certificateholders shall also be provided to the Rating Agencies and the
Class R Certificateholder.
(d) In addition, within a reasonable period of time after the end
of each calendar year, the Servicer will furnish a report to each
Certificateholder of record at any time during such calendar year as to the
aggregate of amounts reported pursuant to (i) and (ii) above for such calendar
year.
SECTION 6.06. Payment of Taxes. The Servicer shall be responsible for
and agrees to prepare, make and timely file all federal, state, local or other
tax returns, information statements and other returns and documents of every
kind and nature whatsoever required to be made or filed by or on behalf of the
Trust pursuant to the Code and other applicable tax laws and regulations. Each
such return, statement and document shall, to the extent required by the Code or
other applicable law and at the request of the Servicer, be signed on behalf of
the Trust by the Trustee. The Trustee shall have no responsibility whatsoever
for the accuracy or completeness of any such return, statement or document. The
Servicer agrees to indemnify the Trustee and hold it harmless for, from, against
and in respect to any and all liability, loss, damage and expense which may be
incurred by the Trustee based upon or as a result of the Trustee's execution of
any and all such tax returns, statements and documents. The Servicer, if and for
so long as it is a Class R Certificateholder, shall be designated the "tax
matters person" on behalf of the Trust in the same manner as a partnership may
designate a "tax matters partner," as such term is defined in Section 6231(a)(7)
of the Code. To the extent permitted by the REMIC Provisions, any subsequent
holder of the Class R Certificate, by acceptance thereof, irrevocably designates
and appoints the Servicer as its agent to perform the responsibilities of the
"tax matters person" on behalf of the Trust if, and during such time as, the
Servicer is not the holder of the Class R Certificate. The Servicer may, at its
expense if the Originator or a subsidiary or affiliate of the Originator is the
Servicer, and otherwise subject to reimbursement under Section 5.08 and 8.04(b),
retain such outside assistance as it deems necessary in the performance of its
obligations under this paragraph. The Servicer shall provide to the Internal
Revenue Service the name, title, address and telephone number of the person who
will serve as the representative of the REMICs.
Each of the Holders of the Certificates or the Class R Certificate, by
acceptance thereof, agrees to file tax returns consistent with and in accordance
with any elections, decisions or other reports made or filed with regard to
federal, state or local taxes on behalf of the Trust. The Servicer, as tax
matters person or as agent for the tax matters person, shall represent the Trust
in connection with all examinations of the Trust's affairs by tax authorities,
including resulting administrative and judicial proceedings. Each of the Holders
of the Certificates and the Class R Certificate, by acceptance thereof, agrees
to cooperate with the Servicer in such matters and to do or refrain from doing
any or all things reasonably required by the Servicer to conduct such
proceedings, provided that no such action shall be required by the Servicer of
any
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Certificateholder that would entail unnecessary or unreasonable expenses for
such Certificateholder in the performance of such action.
The Class R Certificateholder shall pay, on behalf of the Trust, any
foreign, federal, state or local income, property, excise, sales, receipts or
any other similar or related taxes or charges which may be imposed upon the
Master REMIC, Intermediate REMIC or Subsidiary REMIC or otherwise and shall, to
the extent provided in Section 10.06, be entitled to be reimbursed out of the
Certificate Account or, if such tax or charge results from a failure by the
Trustee, the Originator or any Servicer to comply with the provisions of Section
2.04 or 3.07, or a failure by any Servicer to comply with the provisions of this
Section 6.06, the Trustee, the Originator or such Servicer, as the case may be,
shall indemnify the Class R Certificateholder for the payment of any such tax or
charge. The Trustee shall be entitled to withhold from amounts otherwise
distributable to the Class R Certificateholder any taxes or charges payable by
the Class R Certificateholder hereunder.
In the event the Class R Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Originator shall provide to the Internal
Revenue Service and the persons specified in Sections 860(E)(e)(5) and (6) of
the Code all information necessary for the application of Section 860E(e) and
any other applicable provision of the Code with respect to the transfer of the
Class R Certificate to such disqualified organization including, without
limitation, a computation showing the present value of the total anticipated
excess inclusions with respect to such Class R Certificate for periods after the
transfer as defined in the REMIC Provisions. In addition, to the extent required
by the REMIC Provisions, the Originator shall, upon the written request of
persons designated in Section 860E(e)(5) of the Code, furnish to such requesting
party and the Internal Revenue Service information sufficient to compute the
present value of anticipated excess inclusions within 60 days of the receipt of
such written request.
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Events of Termination. "Event of Termination" means the
occurrence of any of the following:
(i) Any failure by the Servicer to make any payment or
deposit required to be made hereunder (including an
Advance) and the continuance of such failure for a
period of four Business Days;
(ii) Failure on the Servicer's part to observe or perform
in any material respect any covenant or agreement in
this Agreement (other than a covenant or agreement
which is elsewhere in this Section specifically dealt
with) which continues unremedied for 30 days;
87
(iii) Any assignment or delegation by the Servicer of its
duties or rights hereunder except as specifically
permitted hereunder, or any attempt to make such an
assignment or delegation;
(iv) A court having jurisdiction in the premises shall
have entered a decree or order for relief in respect
of the Servicer in an involuntary case under any
applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Servicer,
as the case may be, or for any substantial
liquidation of its affairs;
(v) The Servicer shall have commenced a voluntary case
under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall have
consented to the entry of an order for relief in an
involuntary case under any such law, or shall have
consented to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official)
of the Servicer or for any substantial part of its
property, or shall have made any general assignment
for the benefit of its creditors, or shall have
failed to, or admitted in writing its inability to,
pay its debts as they become due, or shall have taken
any corporate action in furtherance of the foregoing;
(vi) The failure of the Servicer to be an Eligible
Servicer;
(vii) If Conseco Finance Corp. is the Servicer, Conseco
Finance Corp.'s servicing rights under its master
seller-servicer agreement with GNMA are terminated by
GNMA; or
(viii) Either the Servicer Termination Delinquency Test or
the Servicer Termination Cumulative Loss Test for any
Payment Date is not satisfied.
SECTION 7.02. Transfer. If an Event of Termination has occurred and is
continuing, either the Trustee or Certificateholders, in the aggregate,
representing 25% or more of the Aggregate Certificate Principal Balance, by
notice in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such notice
being herein called a "Service Transfer Notice" and such termination being
herein called a "Service Transfer"). On receipt of such Service Transfer Notice
(or, if later, on a date designated therein) (the date of receipt of such
Service Transfer Notice being herein called a "Service Transfer Notice Date,"
and the later of the Service Transfer Notice Date or such designated date being
herein called a "Service Transfer Date"), all authority and power of the
Servicer under this Agreement, whether with respect to the Loans, the Loan Files
or otherwise (except with respect to the Certificate Account, the transfer of
which shall be governed by Section 7.06), shall pass to and be vested in the
Backup Servicer, or in the event the Backup Servicer is the Servicer being
terminated or the Trustee or its designee will otherwise become the Servicer as
hereinafter provided in this Section 7.02, the Trustee or its designee pursuant
to and under this Section 7.02; and, without
88
limitation, the Backup Servicer or the Trustee or its designee, as appropriate,
is authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do any and all acts or things necessary or appropriate to effect the purposes
of such Service Transfer Notice. The Trustee shall provide the Backup Servicer
(unless it is the Servicer being terminated) with a copy of any Service Transfer
Notice on the Service Transfer Notice Date. The Backup Servicer (unless it is
the Servicer being terminated) shall take over the servicing responsibilities of
the Servicer under this Agreement and become the Servicer no later than ten (10)
days after the Service Transfer Notice Date; provided that if the Backup
Servicer either (i) is incapable of acting as Servicer, or (ii) fails to become
the Servicer prior to the Service Transfer Date, then the Trustee or its
designee shall become the Servicer. The Backup Servicer or the Trustee or its
designee, as appropriate, shall cause all assignments of mortgages, deeds of
trust or security deeds securing the Loans to be duly recorded. The Servicer
agrees to cooperate with the Backup Servicer in conducting the due diligence
reviews described in Section 6 of the Backup Servicing Agreement; provided that,
if the Backup Servicer fails for any reason to assume the rights and obligations
of the Servicer, then the Trustee shall assume such rights and obligations. Each
of the Originator and the Servicer agrees to cooperate with the Backup Servicer
or the Trustee or its designee, as appropriate, in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Backup Servicer or the Trustee or its designee,
as appropriate, for administration by it of all cash amounts which shall at the
time be held by the Servicer for deposit, or have been deposited by the
Servicer, in the Certificate Account, or for its own account in connection with
its services hereafter or thereafter received with respect to the Loans. The
Servicer shall transfer to the new servicer (i) the Servicer's records relating
to the Loans in such electronic form as the new servicer may reasonably request
and (ii) any Loan Files in the Servicer's possession.
SECTION 7.03. Trustee to Act; Appointment of Successor. On and after
the time the Servicer receives a notice of termination pursuant to Section 7.02,
the Backup Servicer or the Trustee or its designee, as appropriate, shall be the
successor in all respects to the terminated Servicer in its capacity as servicer
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the terminated Servicer by the terms and provisions hereof,
and the terminated Servicer shall be relieved of such responsibilities, duties
and liabilities arising after such Service Transfer; provided, however, that
(i) neither the Backup Servicer, the Trustee, nor any
successor servicer shall assume any obligations of
the Originator pursuant to Section 3.06, and
(ii) neither the Backup Servicer, the Trustee, nor any
successor servicer shall be liable for any acts or
omissions of the terminated Servicer occurring prior
to such Service Transfer or for any breach by the
terminated Servicer of any of its obligations
contained herein or in any related document or
agreement.
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As compensation therefor, the Backup Servicer or the Trustee or its designee, as
appropriate, shall be entitled to receive reasonable compensation out of the
Monthly Servicing Fee. Notwithstanding the above, the Trustee may, if it and the
Backup Servicer shall be unwilling so to act, or shall, if it and the Backup
Servicer are legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, an Eligible Servicer as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Pending appointment of a successor to
the Servicer hereunder, unless the Trustee is prohibited by law from so acting,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Loans as it and such
successor shall agree; provided, however, that no such monthly compensation
shall, without the written consent of 100% of the Certificateholders, exceed the
Monthly Servicing Fee, and in the case of the Backup Servicer, be less than the
Monthly Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
SECTION 7.04. Notification to Certificateholders and Class R
----------------------------------------------
Certificateholder.
-----------------
(a) Promptly following the occurrence of any Event of Termination,
the Servicer shall give written notice thereof to the Trustee, to the Backup
Servicer, to S&P, to Xxxxx'x, to the Certificateholders and to the Class R
Certificateholder at their respective addresses appearing on the Certificate
Register.
(b) Within 10 days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to the Backup Servicer, to S&P, to Xxxxx'x, to the
Certificateholders and to the Class R Certificateholder at their respective
addresses appearing on the Certificate Register.
SECTION 7.05. Effect of Transfer.
------------------
(a) After the Service Transfer, the Trustee or new Servicer shall
notify Obligors to make payments directly to the new Servicer that are due under
the Loans after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have
no further obligations with respect to the management, administration, servicing
or collection of the Loans and the new Servicer shall have all of such
obligations, except (i) that the Backup Servicer shall have no responsibility or
obligation for any act or omission of the replaced Servicer and (ii) that the
replaced Servicer will transmit or cause to be transmitted directly to the new
Servicer for its own account, promptly on receipt and in the same form in which
received, any amounts (properly endorsed where required for the new Servicer to
collect them) received as payments upon or otherwise in connection with the
Loans.
(c) A Service Transfer shall not affect the rights and duties of
the parties hereunder (including but not limited to the indemnities of the
Servicer and the Originator pursuant to
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Article X and Sections 3.07, 11.06 and 11.12(vi)) other than those relating to
the management, administration, servicing or collection of the Loans after the
Service Transfer.
SECTION 7.06. Transfer of Certificate Account. Notwithstanding the
provisions of Section 7.02, if the Certificate Account shall be maintained with
the Servicer and an Event of Termination shall occur and be continuing, the
Servicer shall, after five days' written notice from the Trustee, or in any
event within ten days after the occurrence of the Event of Termination,
establish a new account or accounts in trust for the Certificateholders and the
Class R Certificateholder conforming with the requirements of this Agreement at
the corporate trust department of the Trustee or with an institution other than
the Servicer and promptly cause the Trustee to transfer all funds in the
Certificate Account to such new account, which shall thereafter be deemed the
Certificate Account for the purposes hereof.
ARTICLE VIII
PAYMENTS
SECTION 8.01. Monthly Payments.
----------------
(a) Subject to the terms of this Article VIII, each Holder of a
Certificate or Class R Certificate as of a Record Date shall be paid on the next
succeeding Payment Date by check mailed to such Certificateholder or Class R
Certificateholder at the address for such Certificateholder or Class R
Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates of a Class with an aggregate Percentage
Interest of at least 5% of such Class and so requests, by wire transfer pursuant
to instructions delivered to the Trustee at least 10 days prior to such Payment
Date), the sum equal to such Certificateholder's or Class R Certificateholder's
Percentage Interest of the Class A-1a Distribution Amount, the Class A-1b
Distribution Amount, the Class A-2 Distribution Amount, the Class A-3
Distribution Amount, the Class A-4 Distribution Amount, the Class A-5
Distribution Amount, the Class A-IO Distribution Amount, the Class X-IO
Distribution Amount, the Class M-1 Distribution Amount, the Class M-2
Distribution Amount, the Class B-1 Distribution Amount, the Class B-2
Distribution Amount, the Class B-3I Distribution Amount, the Class P
Distribution Amount and the Class R-III Distribution Amount, as applicable.
Final payment of any Certificate or the Class R Certificate shall be made only
upon presentation and surrender of such Certificate or Class R Certificate at
the office or agency of the Paying Agent.
(b) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, which shall credit the amount of such
distribution to the accounts of its Depository Participants in accordance with
its normal procedures. Each Depository Participant shall be responsible for
disbursing such distribution to the Certificate Owners that it represents and to
each indirect participating brokerage firm (a "brokerage firm" or "indirect
participating firm") for which it acts as agent. Each brokerage firm shall be
responsible for disbursing funds to the Certificate Owners that it represents.
All such credits and disbursements with respect to a Book-Entry Certificate are
to be made by the Depository and the Depository Participants in accordance with
the provisions of the Book-Entry Certificates. Neither the Trustee, the
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Certificate Registrar, the Seller nor the Originator shall have any
responsibility therefor except as otherwise provided by applicable law. To the
extent applicable and not contrary to the rules of the Depository, the Trustee
shall comply with the provisions of the form of the Certificates as set forth in
Exhibits A through C hereto, the Class B-3I Certificate as set forth in Exhibit
I hereto and the Class R Certificate as set forth in Exhibit Q hereto.
(c) The Trustee shall either act as the paying agent or appoint an
Eligible Institution to be the paying agent (in either such case, the "Paying
Agent") to make the payments to the Certificateholders and the Class R
Certificateholder required hereunder. The Trustee's corporate trust operations
department, with an office at 000 Xxxx Xxxxx Xxxxxx, Xxxxx Xxxxx, Xx. Xxxx,
Xxxxxxxxx 00000, Attention: Xxxxxx Xxxxxxx-Xxxx, shall initially act as Paying
Agent. The Trustee shall require the Paying Agent (if other than the Trustee) to
agree in writing that all amounts held by the Paying Agent for payment hereunder
will be held in trust for the benefit of the Certificateholders and the Class R
Certificateholder and that it will notify the Trustee of any failure by the
Servicer to make funds available to the Paying Agent for the payment of amounts
due on the Certificates and the Class R Certificate.
SECTION 8.02. Advances.
--------
(a) Not later than the Business Day immediately preceding each
Payment Date, the Servicer shall advance to the trust (each such advance, an
"Advance") all Delinquent Payments for the immediately preceding Due Period and
all preceding Due Periods by depositing the aggregate amount of such Delinquent
Payments in the Certificate Account; provided, however, that the Servicer shall
be obligated to advance Delinquent Payments only to the extent that the
Servicer, in its sole discretion, expects to be able to recover such Advances
from subsequent collections, including, without limitation, Net Liquidation
Proceeds and Repurchase Prices in respect of any such Advances; and provided,
further, that the Servicer will not be obligated to advance Delinquent Payments
with respect to any Loan that has become a Liquidated Loan. If the Servicer or
the Backup Servicer fail to advance all Delinquent Payments required under this
Section 8.02, the Trustee shall be obligated to advance such Delinquent Payments
pursuant to Section 11.15.
(b) The Servicer and the Trustee shall be entitled to
reimbursement of an Advance from subsequent funds available therefor in the
Certificate Account in accordance with Section 8.04(b).
SECTION 8.03. [Reserved].
----------
SECTION 8.04. Permitted Withdrawals from the Certificate Account;
---------------------------------------------------
Payments.
--------
(a) The Trustee shall, from time to time as provided herein, make
withdrawals from the Certificate Account of amounts deposited in said account
pursuant to Section 5.05 that are attributable to the Loans for the following
purposes:
(i) to make payments in the amounts and in the manner
provided for in Section 8.04(b), (c), (d) and (e);
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(ii) to pay to the Originator with respect to each Loan or
property acquired in respect thereof that has been
repurchased or replaced pursuant to Section 3.06, all
amounts received thereon and not required to be
distributed to Certificateholders as of the date on
which the related Scheduled Principal Balance or
Repurchase Price is determined;
(iii) to reimburse the Servicer out of Liquidation Proceeds
for Liquidation Expenses incurred by it and not
otherwise reimbursed, to the extent such
reimbursement is permitted pursuant to Section 5.08;
(iv) to withdraw any amount deposited in the Certificate
Account that was not required to be deposited
therein; or
(v) to make any rebates or adjustments deemed necessary
by the Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clause (iii), the
Servicer's entitlement thereto is limited to collections or other recoveries on
the related Loan, the Servicer shall keep and maintain separate accounting, on a
Loan by Loan basis, for the purpose of justifying any withdrawal from the
Certificate Account pursuant to such clause.
(b) On each Payment Date, the Trustee shall make the following
distributions by 11:00 a.m. (New York time), to the extent of the Interest Funds
for such Payment Date and in the following order of priority:
(i) Servicing Fee, Backup Servicing Fee and Trustee Fee.
To pay the Monthly Servicing Fee and any other
compensation owed to the Servicer pursuant to Section
5.08 or Section 11.06, the Backup Servicing Fee and
any other compensation owed to the Backup Servicer
pursuant to the Backup Servicing Agreement or Section
11.06 and the Trustee Fee and any other compensation
owed to the Trustee pursuant to Section 11.06;
(ii) Advances. After payment of the amount specified in
clause (i) above, to reimburse the Servicer or
Trustee or pay to the Servicer's Assignee, as
appropriate, for Advances made with respect to
Delinquent Payments for the prior Payment Date (to
the extent such Advances relate to interest);
(iii) Class X-IO Preference. After payment of the amounts
specified in clauses (i) and (ii) above, for any
Payment Date occurring in and including March 2002
through and including August 2004, to the Class X-IO
Certificateholder, the Class X-IO Current Interest
Amount;
(iv) Class A Interest. After payment of the amounts
specified in clauses (i) through (iii) above, the
Class A Current Interest Amount and the Class A-IO
Current Interest Amount, to be distributed to the
Class A and Class A-IO Certificates concurrently (or,
if the remaining Interest Funds
93
are not sufficient to pay such amounts in full, the
remaining Interest Funds shall be distributed pro
rata among the Class A Certificates and the Class
A-IO Certificates based upon the ratio of (x) the
Class Current Interest Amount for each such Class to
(y) the aggregate of the Class Current Interest
Amount for all such Classes);
(v) Class M-1 Interest. After payment of the amounts
specified in clauses (i) through (iv) above, the
Class M-1 Current Interest Amount, to be distributed
to the Class M-1 Certificates;
(vi) Class M-2 Interest. After payment of the amounts
specified in clauses (i) through (v) above, the Class
M-2 Current Interest Amount, to be distributed to the
Class M-2 Certificates;
(vii) Class B-1 Interest. After payment of the amounts
specified in clauses (i) through (vi) above, the
Class B-1 Current Interest Amount, to be distributed
to the Class B-1 Certificates;
(viii) Class B-2 Interest. After payment of the amounts
specified in clauses (i) through (vii) above, the
Class B-2 Current Interest Amount, to be distributed
to the Class B-2 Certificates;
(ix) Excess Cashflow. After payment of the amounts
specified in clauses (i) through (viii) above, any
remaining Interest Funds shall be treated as Excess
Cashflow and distributed as described in subsection
(e) below.
(c) On each Payment Date prior to the Stepdown Date or on which a
Trigger Event is in effect, the Trustee shall make the following distributions
by 11:00 a.m. (New York time), to the extent of the Principal Funds for such
Payment Date, net of reimbursements to the Servicer or Trustee or payments to
the Servicer's Assignee, as appropriate, for Advances made with respect to
Delinquent Payments for the prior Payment Date (to the extent such Advances
relate to principal), and in the following order of priority:
(i) Class A Principal. To the Class A Certificates in
the following order of priority:
(A) first, to the Class A-1a Certificates and
the Class A-1b Certificates pro rata, until
the Class A-1a Principal Balance and the
Class A-1b Principal Balance have been
reduced to zero;
(B) then, to the Class A-2 Certificates, until
the Class A-2 Principal Balance has been
reduced to zero;
(C) then, to the Class A-3 Certificates, until
the Class A-3 Principal Balance has been
reduced to zero;
94
(D) then, to the Class A-4 Certificates, until
the Class A-4 Principal Balance has been
reduced to zero;
(E) then, to the Class A-5 Certificates, until
the Class A-5 Principal Balance has been
reduced to zero;
(ii) Class M-1 Principal. After payment of the amounts
specified in clause (i) above, to the Class M-1
Certificates until the Class M-1 Principal Balance
has been reduced to zero;
(iii) Class M-2 Principal. After payment of the amounts
specified in clauses (i) through (ii) above, to the
M-2 Certificates until the Class M-2 Principal
Balance has been reduced to zero;
(iv) Class B-1 Principal. After payment of the amounts
specified in clauses (i) through (iii) above, to the
Class B-1 Certificates until the Class B-1 Principal
Balance has been reduced to zero;
(v) Class B-2 Principal. After payment of the amounts
specified in clauses (i) through (iv) above, to the
Class B-2 Certificates until the Class B-2 Principal
Balance has been reduced to zero; and
(vi) Excess Cashflow. After payment of the amounts
specified in clauses (i) through (v) above, the
remaining Principal Funds shall be treated as Excess
Cashflow and distributed as specified in subsection
(e) below.
(d) On each Payment Date on and after the Stepdown Date and so
long as a Trigger Event is not then in effect, the Trustee shall make the
following distributions by 11:00 a.m. (New York time), to the extent of the
Principal Funds for such Payment Date, net of reimbursements to the Servicer or
Trustee or payments to the Servicer's Assignee, as appropriate, for Advances
made with respect to Delinquent Payments for the prior Payment Date (to the
extent such Advances relate to principal), and in the following order of
priority:
(i) Class A Principal. To the Certificate Distribution
Account, the Class A Formula Principal Distribution
Amount to be distributed to the Class A Certificates
in the following order of priority:
(A) first, to the Class A-1a Certificates and
the Class A-1b Certificates pro rata, until
the Class A-1a Principal Balance and the
Class A-1b Principal Balance have been
reduced to zero;
(B) then, to the Class A-2 Certificates, until
the Class A-2 Principal Balance has been
reduced to zero;
(C) then, to the Class A-3 Certificates, until
the Class A-3 Principal Balance has been
reduced to zero;
95
(D) then, to the Class A-4 Certificates, until
the Class A-4 Principal Balance has been
reduced to zero;
(E) then, to the Class A-5 Certificates, until
the Class A-5 Principal Balance has been
reduced to zero;
(ii) Class M-1 Principal. After payment of the amounts
specified in clause (i) above, to the Class M-1
Formula Principal Distribution Amount to the Class
M-1 Certificates until the Class M-1 Principal
Balance has been reduced to zero;
(iii) Class M-2 Principal. After payment of the amounts
specified in clauses (i) through (ii) above, to the
Class M-2 Formula Principal Distribution Amount to
the Class M-2 Certificates until the Class M-2
Principal Balance has been reduced to zero;
(iv) Class B-1 Principal. After payment of the amounts
specified in clauses (i) through (iii) above, to the
Class B-1 Formula Principal Distribution Amount to
the Class B-1 Certificates until the Class B-1
Principal Balance has been reduced to zero;
(v) Class B-2 Principal. After payment of the amounts
specified in clauses (i) through (iv) above, to the
Class B-2 Formula Principal Distribution Amount to
the Class B-2 Certificates until the Class B-2
Principal Balance has been reduced to zero; and
(vi) Excess Cashflow. After payment of the amounts
specified in clauses (i) through (v) above, the
remaining Principal Funds shall be treated as Excess
Cashflow and distributed as specified in subsection
(e) below.
(e) Subject to Section 8.06(f) below, on each Payment Date, the
Trustee shall make the following deposits and distributions by 11:00 a.m. (New
York time), to the extent of the Excess Cashflow for such Payment Date and in
the following order of priority:
(i) Extra Principal Distribution Amount. To the Class A,
Class M and Class B Certificates, the Extra Principal
Distribution Amount in the order provided in Section
8.04(c) or 8.04(d), as applicable;
(ii) Unpaid Class A Interest Carry Forward Amount. After
payment of the amount specified in clause (i) above,
the Unpaid Class A Interest Carry Forward Amount and
the Unpaid Class A-IO Interest Carry Forward Amount,
to be distributed to the Class A and Class A-IO
Certificates concurrently in accordance with their
respective Unpaid Class Interest Carry Forward
Amounts (or, if the remaining Excess Cashflow is not
sufficient to pay such amounts in full, the remaining
Excess Cashflow shall be distributed pro rata among
the Class A Certificates and the Class
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A-IO Certificates based upon the ratio of (x) the
Unpaid Class Interest Carry Forward Amount for each
such Class to (y) the aggregate of the Unpaid Class
Interest Carry Forward Amount for all such Classes);
(iii) Unpaid Class M-1 Interest Carry Forward Amount. After
payment of the amounts specified in clauses (i) and
(ii) above, the Unpaid Class M-1 Interest Carry
Forward Amount, to be distributed to the Class M-1
Certificates;
(iv) Unpaid Class M-1 Realized Loss Interest Amount and
Unpaid Class M-1 Realized Loss Amount. After payment
of the amounts specified in clauses (i) through (iii)
above, in the following order of priority (A) the
Unpaid Class M-1 Realized Loss Interest Amount and
(B) the Unpaid Class M-1 Realized Loss Amount, to be
distributed to the Class M-1 Certificates;
(v) Unpaid Class M-2 Interest Carry Forward Amount. After
payment of the amounts specified in clauses (i)
through (iv) above, the Unpaid Class M-2 Interest
Carry Forward Amount, to be distributed to the Class
M-2 Certificates;
(vi) Unpaid Class M-2 Realized Loss Interest Amount and
Unpaid Class M-2 Realized Loss Amount. After payment
of the amounts specified in clauses (i) through (v)
above, in the following order of priority (A) the
Unpaid Class M-2 Realized Loss Interest Amount and
(B) the Unpaid Class M-2 Realized Loss Amount, to be
distributed to the Class M-2 Certificates;
(vii) Unpaid Class B-1 Interest Carry Forward Amount. After
payment of the amounts specified in clauses (i)
through (vi) above, the Unpaid Class B-1 Interest
Carry Forward Amount, to be distributed to the Class
B-1 Certificates;
(viii) Unpaid Class B-1 Realized Loss Interest Amount and
Unpaid Class B-1 Realized Loss Amount. After payment
of the amounts specified in clauses (i) through (vii)
above, in the following order of priority (A) the
Unpaid Class B-1 Realized Loss Interest Amount and
(B) the Unpaid Class B-1 Realized Loss Amount, to be
distributed to the Class B-1 Certificates;
(ix) Unpaid Class B-2 Interest Carry Forward Amount. After
payment of the amounts specified in clauses (i)
through (viii) above, the Unpaid Class B-2 Interest
Carry Forward Amount, to be distributed to the Class
B-2 Certificates;
(x) Unpaid Class B-2 Realized Loss Interest Amount and
Unpaid Class B-2 Realized Loss Amount. After payment
of the amounts specified in clauses (i) through (ix)
above, in the following order of priority (A) the
Unpaid
97
Class B-2 Realized Loss Interest Amount and (B) the
Unpaid Class B-2 Realized Loss Amount, to be
distributed to the Class B-2 Certificates;
(xi) Unpaid Basis Risk Carryover Shortfall. After payment
of the amounts specified in clauses (i) through (x)
above, to the Basis Risk Reserve Fund, the sum of all
Unpaid Basis Risk Carryover Shortfalls for the Class
A, Class M-1, Class M-2, Class B-1 and Class B-2
Certificates after taking into account any amounts to
be applied to the payment thereof in accordance with
SECTION 8.09 hereof;
(xii) Class B-2 Principal Balance. After payment of the
amounts specified in clauses (i) through (xi) above,
to the Class B-2 Certificates until the Class B-2
Principal Balance is reduced to zero;
(xiii) Class B-3I Certificates. After payment of the amounts
specified in clauses (i) through (xii) above, to the
Class B-3I Certificateholders the Class B-3I
Distribution Amount;
(xiv) Class P Certificate. After payment of the amounts
specified in clauses (i) through (xiii) above, and
provided the current Payment Date is one subsequent
to the month in which Prepayment Charges are no
longer collectible on any Loan, to the Class P
Certificateholder until the Class P Principal Balance
is reduced to zero; and
(xv) Class R-III Interest. After payment of the amounts
specified in clauses (i) through (xiv) above, to pay
the remainder, if any, of the Excess Cashflow
(A) first, to the Class R Certificateholder, as
reimbursement for any taxes or charges paid
by the Class R Certificateholder pursuant to
Section 6.06, and
(B) any remainder to the Class R
Certificateholder in respect of the Class
R-III Interest.
If the Trustee shall not have received the applicable Monthly Report by
any Payment Date, the Trustee shall, in accordance with this Section 8.04,
distribute all funds then in the Certificate Account to Certificateholders, to
the extent of such funds, on such Payment Date.
(f) On each Payment Date, the Trustee will pay to the Class P
Certificateholder, all Prepayment Charges included in the Certificate Account
for such Payment Date.
(g) Notwithstanding the priorities set forth above, any Pre-Funded
Amount deposited in the Certificate Account shall be applied solely to pay
principal of the Class A-1a and Class A-1b Certificates until reduced to zero.
98
SECTION 8.05. Reassignment of Repurchased and Replaced Loans. Upon
receipt by the Trust, by deposit in the Certificate Account, of the Repurchase
Price under Section 3.06(a), or upon receipt by the Trust of an Eligible
Substitute Loan under Section 3.06(b) and receipt by the Trust, by deposit in
the Certificate Account, of any additional amount under Section 3.06(b)(vi), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as Exhibit J-1 or J-2, as applicable, the Trustee shall convey and assign to the
Originator all of the Certificateholders' right, title and interest in the
repurchased Loan or Replaced Loan without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Trustee. Upon such deposit of the Repurchase Price
or receipt of such Eligible Substitute Loan and related deposit of any
additional amount under Section 3.06(b)(vi), the Servicer shall be deemed to
have released any claims to such Loan as a result of Advances with respect to
such Loan.
SECTION 8.06. Class R Certificateholder's Purchase Option; Increase in
--------------------------------------------------------
Class A-5 Interest Rate.
-----------------------
(a) Beginning on the Payment Date when the condition set forth in
subsection (b)(i) hereof is satisfied as of the last day of the related Due
Period, the Class R Certificateholder shall, subject to subsection (b) hereof,
have the option to purchase all of the Loans and all property acquired in
respect of any Loan remaining in the Trust at a price (such price being referred
to as the "Minimum Purchase Price") equal to the greater of:
(i) the sum of
(x) 100% of the principal balance of each Loan
(other than any Loan as to which title to
the underlying property has been acquired
and whose fair market value is included
pursuant to clause (y) below), together with
accrued and unpaid interest on each such
Loan at a rate per annum equal to the
Weighted Average Pass-Through Rate, plus
(y) the fair market value of such acquired
property (as reasonably determined by the
Servicer as of the close of business on the
third Business Day preceding the date of
such purchase), and
(ii) the Aggregate Certificate Principal Balance as of the
date of such purchase (less any amounts on deposit in
the Certificate Account on such purchase date and
representing payments of principal in respect of the
Loans) plus an amount necessary to pay the Class A
Current Interest Amount, any Unpaid Class A Interest
Carry Forward Amount, any Unpaid Class A Basis Risk
Carryover Shortfall, the Class A-IO Current Interest
Amount, any Unpaid Class A-IO Interest Carry Forward
Amount, the Class M-1 Current Interest Amount, any
Unpaid Class M-1 Interest Carry Forward Amount, any
Class M-1 Realized Loss Interest Amount, any Class
M-1 Realized Loss Amount, any Unpaid Class M-1 Basis
Risk Carryover Shortfall, the Class M-2 Current
Interest Amount, any Unpaid Class M-2
99
Interest Carry Forward Amount, any Class M-2 Realized
Loss Interest Amount, any Class M-2 Realized Loss
Amount, any Unpaid Class M-2 Basis Risk Carryover
Shortfall, the Class B-1 Current Interest Amount, any
Unpaid Class B-1 Interest Carry Forward Amount, any
Class B-1 Realized Loss Interest Amount, any Class
B-1 Realized Loss Amount, any Unpaid Class B-1 Basis
Risk Carryover Shortfall, the Class B-2 Current
Interest Amount, any Unpaid Class B-2 Interest Carry
Forward Amount, any Class B-2 Realized Loss Interest
Amount, any Class B-2 Realized Loss Amount, any
Unpaid Class B-2 Basis Risk Carryover Shortfall and
the Class B-3I Distribution Amount due on the Payment
Date occurring in the calendar month following such
purchase date (less any amounts on deposit in the
Certificate Account on such purchase date and
representing payments of interest in respect of the
Loans at a rate per annum equal to the Weighted
Average Pass-Through Rate).
(b) The purchase by the Class R Certificateholder of all of the
Loans pursuant to this Section 8.06 shall be conditioned upon:
(i) the Pool Scheduled Principal Balance, at the time of
any such purchase, aggregating not more than 10% of
the Cut-off Date Pool Principal Balance plus amounts
deposited in the Pre-Funding Account on the Closing
Date, if any,
(ii) such purchase being made pursuant to a plan of
complete liquidation in accordance with Section 860F
of the Code, as provided in Section 12.04,
(iii) the Class R Certificateholder having provided the
Trustee, the Servicer and the Depository (if any)
with at least 30 days' written notice specifying the
purchase date and setting forth its calculations of
the purchase price,
(iv) the Trustee not having accepted a qualifying bid for
the Loans pursuant to subsection (e) below, and
(v) the Class R Certificateholder having delivered to the
Trustee the Early Termination Fee, which amount shall
not be part of any REMIC but shall be distributed as
provided in Section 8.06(c) below.
(c) The Trustee shall acknowledge in writing its receipt of notice
given under Section 8.06(b). On the purchase date specified in its notice, the
Class R Certificateholder shall deliver the Minimum Purchase Price and the
amount specified in Section 8.06(b)(v) to the Trustee, in immediately available
funds, the Trustee shall pay, on behalf of the Class R Certificateholder, the
sum described in Section 8.06(b)(v) to the LIBOR Cap Counterparty, not in
respect of any interest in any REMIC, and deposit the purchase price in the
Certificate Account for distribution in accordance with Section 12.04, and the
Trustee and the Servicer shall release to the Class R Certificateholder the Loan
Files for all the purchased Loans. The Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
100
(d) The Class R Certificateholder may assign its rights under this
Section 8.06, separately from its other rights as Holder of the Class R
Certificate, by giving written notice of such assignment to the Trustee and the
Servicer. Following the Trustee's receipt of such notice of assignment, the
Trustee shall recognize only such assignee (or its assignee in turn) as the
Person entitled to exercise the purchase option set forth in Section 8.06(a).
(e) The Servicer shall notify the Trustee, any assignee described
in Section 8.06(d), and the Class R Certificateholder (whether or not the Class
R Certificateholder has then assigned its rights under this Section 8.06
pursuant to subsection (d)), no later than two Business Days after the
Determination Date occurring in the first Due Period which includes the date on
which the Pool Scheduled Principal Balance first becomes less than or equal to
10% of the Cut-off Date Pool Principal Balance plus amounts deposited in the
Pre-Funding Account on the Closing Date, if any, to the effect that the Pool
Scheduled Principal Balance is then less than or equal to 10% of the Cut-off
Date Pool Principal Balance plus amounts deposited in the Pre-Funding Account on
the Closing Date, if any.
(f) If the Class R Certificateholder does not purchase the Loans
on or before the Payment Date occurring in the calendar month following the
Determination Date described in Section 8.06(e), the Class A-5 Interest Rate
will increase by 0.50% per annum (but not in excess of the Adjusted Net WAC Cap
Rate) beginning on such Payment Date.
SECTION 8.07. Intermediate REMIC and Subsidiary REMIC Distributions.
-----------------------------------------------------
(a) On each Payment Date, the Uncertificated Intermediate
Interests (or other appropriate Interest or account as the context implies)
shall receive distributions, to the extent of the Amount Available, in the
following order of priority:
(i) to each Class of Uncertificated Intermediate
Interests, pro rata based on its respective
entitlement, accrued interest as follows:
(A) for such Class other than the Class I-AIO and Class
I-XIO Interests, 1/12th of the Adjusted Net WAC Cap
Rate times the Intermediate Interest Principal
Balance of such Class; provided that interest accrued
on the Class I-Accrual Interest shall be paid as
principal to the Intermediate REMIC Accretion
Directed Interests pursuant to Section 8.07(a)(ii),
and added to the Intermediate Interest Principal
Balance of the Class I-Accrual Interest, in an amount
equal to the sum of (x) one-half the Extra Principal
Distribution Amount for that Payment Date plus (y)
any amount by which one-half the aggregate of the
Extra Principal Distribution Amount on prior Payment
Dates exceeds the aggregate amount so paid to the
Intermediate REMIC Accretion Directed Interests and
added to the Class I-Accrual Interest (such excess
not to accrue interest);
(B) for the Class I-XIO Interest, interest equal to:
(1) 7.25% per annum on the Subsidiary Interest
Adjusted Principal Balance of the Class S-3 Interest
101
from and including the Closing Date through and
including the August 2004 Payment Date, and (2) 0.0%
thereafter;
(C) for the Class I-AIO Interest, interest equal to the
sum of:
(1) with respect to the Class I-AIO(1)
Interest, interest at a rate of: (A)
7.25% per annum on the Subsidiary
Interest Adjusted Principal Balance
of the Class S-2(1) Interest from
and including the Closing Date
through the January 2003 Payment
Date, and (B) 0.0% thereafter;
(2) with respect to the Class I-AIO(2)
Interest, interest at a rate of (A)
7.25% per annum on the Subsidiary
Interest Adjusted Principal Balance
of the Class S-2(2) Interest from
and including the Closing Date
through the June 2003 Payment Date
and (B) 0.0% thereafter;
(3) with respect to the Class I-AIO(3)
Interest, interest at a rate of (A)
7.25% per annum on the Subsidiary
Interest Adjusted Principal Balance
of the Class S-2(3) Interest from
and including the Closing Date
through the January 2004 Payment
Date, and (B) 0.0% thereafter;
(4) with respect to the Class I-AIO(4)
Interest, interest at a rate of (A)
7.25% per annum on the Subsidiary
Interest Adjusted Principal Balance
of the Class S-2(4) Interest from
and including the Closing Date
through the July 2004 Payment Date,
and (B) 0.0% thereafter;
(D) any Unpaid Intermediate Interest Shortfall with
respect to such Class;
(ii) To the Class I-Accrual Interest, principal in an amount equal
to one-half the principal distributed on the Class A, Class M
and Class B Certificates on such Payment Date; and to each
Intermediate REMIC Accretion Directed Interest, principal
(including that payable to the Intermediate REMIC Accretion
Directed Interests as described in Section 8.07(a)(i)(A) in an
amount equal to one-half the principal distributed to its
Corresponding Certificate Class on such Payment Date. Realized
losses shall be allocated to each Class of Uncertificated
Intermediate Interests in an amount sufficient to reduce the
Intermediate REMIC Principal Balance of
(A) the Class I-Accrual Interest to one-half the sum of
(1) the Pool Scheduled Principal Balance, (2) the
Pre-Funded Amount and (3) the Overcollateralization
Amount and
102
(B) each Class of Intermediate REMIC Accretion Directed
Interests to one-half the Class Principal Balance of
its Corresponding Certificate Class after giving
effect to distributions on such Payment Date; and
(iii) To the holder of the Class R-II Interest, any remaining Amount
Available.
(b) On each Payment Date, the Uncertificated Subsidiary Interests
(or other appropriate Interest or account as the context implies) shall receive
distributions, to the extent of the Amount Available, in the following order of
priority:
(i) Payment of the Trustee Fee, the Servicing Fee and the Backup
Servicing Fee in the amounts specified in Section 8.04(b)(i);
(ii) Each of the Class S-1, Class S-2 and Class S-3 Interests shall
receive distributions of interest, pro rata based on their
respective entitlements, in an amount equal to (i) 1/12 of the
Net WAC Cap Rate times the Subsidiary Interest Principal
Balance of such Class, plus (ii) any Unpaid Subsidiary
Interest Shortfall with respect to such Class;
(iii) Distributions of principal shall be made first to the Class
S-1 Interest, then:
(A) from and including the Closing Date through the
January 2003 Payment Date sequentially to the Class
S-3 Interest, the Class S-2(1) Interest, the Class
S-2(2) Interest, the Class S-2(3) Interest and last
to the Class S-2(4) Interest;
(B) from the January 2003 Payment Date through the June
2003 Payment Date, sequentially to the Class S-2(1)
Interest, the Class S-3 Interest, the Class S-2(2)
Interest, the Class S-2(3) Interest and last to the
Class S-2(4) Interest;
(C) from the June 2003 Payment Date through the January
2004 Payment Date, sequentially to the Class S-2(1)
Interest, the Class S-2(2) Interest, the Class S-3
Interest, the Class S-2(3) Interest and last to the
Class S-2(4) Interest;
(D) from the January 2004 Payment Date through the July
2004 Payment Date, sequentially to the Class S-2(1)
Interest, the Class S-2(2) Interest, the Class S-2(3)
Interest, the Class S-3 Interest and last to the
Class S-2(4) Interest;
(E) from the July 2004 Payment Date, sequentially to the
Class S-2(1) Interest, the Class S-2(2) Interest, the
Class S-2(3) Interest, the Class S-2(4) Interest and
last to the Class S-3 Interest;
103
in each instance such distribution shall be made up to an
amount equal to the respective Subsidiary Interest Principal
Balance.
(iv) Any remaining Amount Available shall be distributed to the
holder of the Class R-I Interest; and
(v) all Prepayment Charges shall be paid to the Class P
Certificateholder.
SECTION 8.08. Pre-Funding Account.
-------------------
(a) On or before the Closing Date, the Trustee shall establish the
Pre-Funding Account on behalf of the Trust, which must be an Eligible Account,
and shall deposit therein the amount received from the Seller pursuant to
Section 2.02(l). The Pre-Funding Account shall be entitled "Pre-Funding Account,
U.S. Bank National Association as Trustee for the benefit of holders of Home
Equity Loan Certificates, Series 2002-A." Funds deposited in the Pre-Funding
Account shall be held in trust by the Trustee for the Holders of the
Certificates and the Class R Certificate for the uses and purposes set forth
herein.
(b) On or before the Closing Date the Seller shall deposit in the
Pre-Funding Account the amount specified in Section 2.02(l). Amounts on deposit
in such account shall be withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall
withdraw from the Pre-Funding Account an amount equal
to 100% of the Cut-off Date Principal Balance of each
Subsequent Loan transferred and assigned to the
Trustee on such Subsequent Transfer Date and pay such
amount to or upon the order of the Originator upon
satisfaction of the conditions set forth in Section
2.03(b) with respect to such transfer and assignment.
(ii) On the Business Day immediately preceding the
Post-Funding Payment Date, the Trustee shall deposit
into the Certificate Account any amounts remaining in
the Pre-Funding Account, net of investment earnings.
(c) The Pre-Funding Account shall be part of the Trust but not
part of any REMIC. The Trustee on behalf of the Trust shall be the legal owner
of the Pre-Funding Account. The Seller shall be the beneficial owner of the
Pre-Funding Account, subject to the foregoing power of the Trustee to transfer
amounts in the Pre-Funding Account to the Certificate Account. Funds in the
Pre-Funding Account shall, at the direction of the Servicer, be invested in
Eligible Investments of the kind described in clauses (i) and (ii)(A) of the
definition of "Eligible Investments" and that mature no later than the Business
Day prior to the next succeeding Payment Date. All amounts earned on deposits in
the Pre-Funding Account shall be taxable to the Seller. The Trustee shall
release to the Seller all investment earnings in the Pre-Funding Account on the
first Payment Date after the end of the Pre-Funding Period.
104
SECTION 8.09. Yield Maintenance Reserve Funds.
-------------------------------
(a) On or before the Closing Date, the Trustee shall establish
five Yield Maintenance Reserve Funds on behalf of the Class A-1a, Class M-1,
Class M-2, Class B-1 and Class B-2 Certificateholders, respectively. Each must
be an Eligible Account. Each Yield Maintenance Reserve Fund shall be entitled
"Yield Maintenance Reserve Fund, U.S. Bank National Association as Trustee for
the benefit of holders of Home Equity Loan Certificates, Series 2002-A, Class
[A-1a] [M-1] [M-2] [B-1] [B-2]," as applicable. The Trustee shall demand payment
of all money payable by the LIBOR Cap Counterparty under the Yield Maintenance
Agreements. The Trustee shall deposit in the applicable Yield Maintenance
Reserve Fund any Reserve Fund Addition received from the LIBOR Cap Counterparty
pursuant to the related Yield Maintenance Agreement. On each Payment Date the
Trustee shall pay directly the following amounts:
(i) Unpaid Class A-1a Basis Risk Carryover Shortfall. To
the Class A-1a Certificateholders, the lesser of the
Unpaid Class A-1a Basis Risk Carryover Shortfall and
the amount on deposit in the related Yield
Maintenance Reserve Fund;
(ii) Unpaid Class M-1 Basis Risk Carryover Shortfall. To
the Class M-1 Certificateholders, the lesser of the
Unpaid Class M-1 Basis Risk Carryover Shortfall and
the amount on deposit in the related Yield
Maintenance Reserve Fund;
(iii) Unpaid Class M-2 Basis Risk Carryover Shortfall. To
the Class M-2 Certificateholders, the lesser of the
Unpaid Class M-2 Basis Risk Carryover Shortfall and
the amount on deposit in the related Yield
Maintenance Reserve Fund;
(iv) Unpaid Class B-1 Basis Risk Carryover Shortfall. To
the Class B-1 Certificateholders, the lesser of the
Unpaid Class B-1 Basis Risk Carryover Shortfall and
the amount on deposit in the related Yield
Maintenance Reserve Fund;
(v) Unpaid Class B-2 Basis Risk Carryover Shortfall.
After payment of the amounts specified in clauses (i)
through (iv) above, to the Class B-2 Certificates,
the Unpaid Class B-2 Basis Risk Carryover Shortfall;
and
(vi) Payment of Remainder. Any remaining amounts in any of
the related Yield Maintenance Reserve Funds after
payment to the related Certificateholders pursuant to
clauses (i), (ii), (iii), (iv) or (v) above to the
Class X-IO Certificateholder, not as a distribution
in respect of any interest in any REMIC.
(b) The Yield Maintenance Reserve Funds are outside reserve funds
and shall be part of the Trust but not part of any REMIC. The Trustee on behalf
of the Trust shall be the nominal
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owner of the Yield Maintenance Reserve Funds. The Class X-IO Certificateholder
shall be the beneficial owner of the Yield Maintenance Reserve Funds, subject to
the power of the Trustee to transfer amounts under Section 8.09(a). Amounts in
the Yield Maintenance Reserve Funds shall, at the direction of the Class X-IO
Certificateholder, be invested in Eligible Investments that mature no later than
the Business Day prior to the next succeeding Payment Date. All net income and
gain from such investments shall be distributed to the Class X-IO
Certificateholder, not as a disbtribution in respect of any interest in any
REMIC, on such Payment Date. All amounts earned on amounts on deposit in the
Yield Maintenance Reserve Funds shall be taxable to the Class X-IO
Certificateholder. Any losses on such investments shall be deposited in the
Yield Maintenance Reserve Funds by the Class X-IO Certificateholder out of its
own funds immediately as realized.
SECTION 8.10. Basis Risk Reserve Fund.
-----------------------
(a) On or before the Closing Date, the Trustee shall establish the
Basis Risk Reserve Fund on behalf of the Trust, which must be an Eligible
Account. On the Closing Date, the Trustee shall deposit therein the amount
described in Section 2.02(n). The Trustee shall deposit therein on each Payment
Date any amount available for that purpose pursuant to Section 8.04(e)(xi) or
Section 12.04(d)(i)(F), as applicable. The Basis Risk Reserve Fund shall be
entitled "Basis Risk Reserve Fund, U.S. Bank National Association as Trustee for
the benefit of holders of Home Equity Loan Certificates, Series 2002-A." On each
Payment Date the Trustee shall withdraw all amounts from the Basis Risk Reserve
Fund and pay the following amounts in the order of priority indicated:
(i) Unpaid Class A Basis Risk Carryover Shortfall. To the
Class A-1a, Class A-1b, Class A-2, Class A-3, Class
A-4 and Class A-5 Certificates, concurrently, the
respective Unpaid Class A Basis Risk Carryover
Shortfall for each such Class, less amounts
distributed to such Class under Section 8.09, and, if
the amount available therefor is not sufficient to
pay the full amount of Unpaid Class A Basis Risk
Carryover Shortfall, then to each such Class pro rata
based upon its respective entitlement;
(ii) Unpaid Class M-1 Basis Risk Carryover Shortfall. To
the Class M-1 Certificateholders, the Unpaid Class
M-1 Basis Risk Carryover Shortfall, less amounts
distributed to such Class under Section 8.09;
(iii) Unpaid Class M-2 Basis Risk Carryover Shortfall. To
the Class M-2 Certificateholders, the Unpaid Class
M-2 Basis Risk Carryover Shortfall, less amounts
distributed to such Class under Section 8.09;
(iv) Unpaid Class B-1 Basis Risk Carryover Shortfall. To
the Class B-1 Certificateholders, the Unpaid Class
B-1 Basis Risk Carryover Shortfall, less amounts
distributed to such Class under Section 8.09; and
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(v) Unpaid Class B-2 Basis Risk Carryover Shortfall. To
the Class B-2 Certificateholders, the Unpaid Class
B-2 Basis Risk Carryover Shortfall; and
(vi) Payment of Remainder. Any remainder in excess of
$5,000 to the Class B-3I Certificateholder. Any
remainder equal to or less than $5,000 shall be
retained in the Basis Risk Reserve Fund until the
final Payment Date when such remainder shall be so
paid to the Class B-3I Certificateholder.
(b) The Basis Risk Reserve Fund is an outside reserve fund and
shall be part of the Trust but not part of any REMIC. The Trustee on behalf of
the Trust shall be the nominal owner of the Basis Risk Reserve Fund. The Class
B-3I Certificateholder shall be the beneficial owner of the Basis Risk Reserve
Fund, subject to the power of the Trustee to transfer amounts under Section
8.10(a). For all federal tax purposes, all amounts transferred by a REMIC to the
Basis Risk Reserve Fund pursuant to Section 8.04(e)(xi) shall be treated as
amounts distributed by a REMIC to the Class B-3I Certificateholder or its
transferee. Funds in the Basis Risk Reserve Fund shall, at the direction of the
Class B-3I Certificateholder, be invested in Eligible Investments that mature no
later than the Business Day prior to the next succeeding Payment Date. All net
income and gain from such investments shall be distributed to the Class B-3I
Certificateholder on such Payment Date. All amounts earned on amounts on deposit
in the Basis Risk Reserve Fund shall be taxable to the Class B-3I
Certificateholder. Any losses on such investments shall be deposited in the
Basis Risk Reserve Fund by the Class B-3I Certificateholder out of its own funds
immediately as realized.
SECTION 8.11. Allocation of Realized Loss Amounts. On each Payment
Date, Realized Losses shall be distributed to the Uncertificated Subsidiary
Interests in accordance with Section 8.07(b)(iii) (by virtue of the definition
of "Subsidiary Interest Adjusted Principal Balance"), and to the Uncertificated
Intermediate Interests in accordance with Section 8.07(a)(ii), and the Trustee
shall allocate any Realized Loss Amount for such Payment Date to the Regular
Certificates as follows:
(a) to the Class B-2 Certificates up to an amount equal to the
Class B-2 Principal Balance, less distributions of principal on the Class B-2
Certificates on such Payment Date;
(b) any remainder, after allocation pursuant to clause (a) above,
to the Class B-1 Certificates up to an amount equal to the Class B-1 Principal
Balance, less distributions of principal on the Class B-1 Certificates on such
Payment Date and distributions of Excess Cashflow pursuant to Section
8.04(e)(xii);
(c) any remainder, after allocation pursuant to clauses (a) and
(b) above, to the Class M-2 Certificates up to an amount equal to the Class M-2
Principal Balance, less distributions of principal on the Class M-2 Certificates
on such Payment Date); and
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(d) any remainder, after allocation pursuant to clauses (a), (b)
and (c) above, to the Class M-1 Certificates up to an amount equal to the Class
M-1 Principal Balance, less distributions of principal on the Class M-1
Certificates on such Payment Date).
ARTICLE IX
THE CERTIFICATES AND THE CLASS R CERTIFICATE
SECTION 9.01. The Certificates and the Class R Certificate. The Class
A, Class M, Class B, Class B-3I and Class R Certificates shall be substantially
in the forms set forth in Exhibits A, B, C, I, and Q, as applicable, and shall,
on original issue, be executed by the Trustee on behalf of the Trust to or upon
the order of the Originator. The Class A, the Class M and the Class B
Certificates shall be evidenced by (i) one or more Class A-1a Certificates
evidencing $147,000,000 in Original Class A-1a Principal Balance, (ii) one or
more Class A-1b Certificates evidencing $56,500,000 in Original Class A-1b
Principal Balance, (iii) one or more Class A-2 Certificates evidencing
$68,000,000 in Original Class A-2 Principal Balance, (iv) one or more Class A-3
Certificates evidencing $102,000,000 in Original Class A-3 Principal Balance,
(v) one or more Class A-4 Certificates evidencing $53,500,000 in Original Class
A-4 Principal Balance, (vi) one or more Class A-5 Certificates evidencing
$65,000,000 in Original Class A-5 Principal Balance, (vii) one or more Class
A-IO Certificates evidencing $211,000,000 in Original Class A-IO Notional
Amount, (viii) one or more Class M-1 Certificates evidencing $42,000,000 in
Original Class M-1 Principal Balance, (ix) one or more Class M-2 Certificates
evidencing $30,000,000 in Original Class M-2 Principal Balance, (x) one or more
Class B-1 Certificates evidencing $24,000,000 in Original Class B-1 Principal
Balance (xi) one or more Class B-2 Certificates evidencing $12,000,000 in
Original Class B-2 Principal Balance, and (xii) one Class B-3I Certificate
evidencing the entire Class B-3I Notional Amount, beneficial ownership of such
Classes of Certificates (other than the Class B-3I and Class P Certificate) to
be held through Book-Entry Certificates in minimum dollar denominations of
$25,000 and integral multiples of $1.00 in excess thereof. The Class B-3I
Certificate shall be evidenced by a single certificate issued on the Closing
Date to the Originator. The Class P Certificate shall be an Uncertificated
interest, the owner of which will be the Class P Certificateholder. The Class
X-IO Certificate shall be an Uncertificated Interest, the owner of which will be
the Class X-IO Certificateholder. The Class R-I, Class R-II and Class R-III
Interests shall be evidenced by a single Class R Certificate, issued on the
Closing Date to Green Tree Finance Corp.--Two and shall represent 100% of the
Percentage Interest of the Class R Certificate.
The Certificates (other than the Class P and Class X-IO Certificates)
and the Class R Certificate shall be executed by manual signature on behalf of
the Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates or the Class R Certificate bearing the signatures of individuals
who were at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the execution and delivery of such Certificate or Class R
Certificate, or did not hold such offices at the date of such Certificates or
Class R Certificate. No Certificate (other than the Class P Certificate) or
Class R Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless such Certificate or Class R Certificate has been
executed by
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manual signature in accordance with this Section, and such signature upon any
Certificate or Class R Certificate shall be conclusive evidence, and the only
evidence, that such Certificates or Class R Certificate has been duly executed
and delivered hereunder. All Certificates and the Class R Certificate shall be
dated the date of their execution, except for those Certificates and the Class R
Certificate executed on the Closing Date, which shall be dated the Closing Date.
SECTION 9.02. Registration of Transfer and Exchange of Certificates and
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the Class R Certificate.
-----------------------
(a) The Trustee shall keep at the office or agency to be
maintained in accordance with Section 12.03 a "Certificate Register" in which
the Trustee shall provide for the registration of Certificates and the Class R
Certificate and of transfers and exchanges of Certificates and the Class R
Certificate as herein provided. The Trustee initially appoints itself to be the
"Certificate Registrar" and transfer agent for the purpose of registering
Certificates and the Class R Certificate and transfers and exchanges of
Certificates and the Class R Certificate as provided herein. The Trustee will
give prompt written notice to Certificateholders, the Class R Certificateholder,
the Backup Servicer and the Servicer of any change in the Certificate Registrar.
(b)
(i) Subject to clauses (ii) and (iii) below, no transfer
of Class R Certificate shall be made by the Seller or
any other Person unless such transfer is exempt from
the registration requirements of the Securities Act
of 1933 (the "Act"), as amended, and any applicable
state securities laws or is made in accordance with
the Act and laws. In the event that any such transfer
is to be made,
(A) the Originator may require a written Opinion
of Counsel acceptable to and in form and
substance satisfactory to the Originator
that such transfer may be made pursuant to
an exemption, describing the applicable
exemption and the basis therefor, from the
Act and laws or is being made pursuant to
the Act and laws, which Opinion of Counsel
shall not be an expense of the Trustee or
the Originator, and
(B) the Trustee shall require the transferee to
execute an investment letter substantially
in the form of Exhibit K attached hereto,
which investment letter shall not be an
expense of the Trustee or the Originator.
The Class R Certificateholder desiring to
effect such transfer shall, and does hereby
agree to, indemnify the Trustee, the
Originator and the Certificate Registrar
against any liability that may result if the
transfer is not so exempt or is not made in
accordance with such federal and state laws.
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(ii) No transfer of a Class B-3I, Class B-2, Class P or
Class R Certificate or any interest therein shall be
made to any employee benefit plan that is subject to
ERISA, or that is described in Section 4975(e)(1) of
the Code or to any person or entity purchasing on
behalf of, or with assets of, such an employee
benefit plan (each, a "Plan"), unless the Plan
delivers to the Originator and the Trustee, an
Opinion of Counsel in form satisfactory to the
Originator and the Trustee that the purchase and
holding of such Class B-3I Certificate, Class B-2,
Class P or Class R Certificate by such Plan will not
result in the assets of the Trust being deemed to be
"plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will
not subject the Trustee, the Originator, the Seller,
the Backup Servicer or the Servicer to any obligation
or liability in addition to those undertaken in this
Agreement. Unless such opinion is delivered and in
the case of Definitive Certificates, each person
acquiring such a Certificate or Class R Certificate
will be deemed to represent to the Trustee, the
Originator, the Seller, the Backup Servicer and the
Servicer either
(A) that such person is neither a Plan, nor
acting on behalf of a Plan, subject to ERISA
or to Section 4975 of the Code, or
(B) that the purchase and holding of the Class
B-3I Certificate, Class B-2, Class P or
Class R Certificate by such Plan will not
result in the assets of the Trust being
deemed to be Plan assets and subject to the
prohibited transaction provisions of ERISA
and the Code and will not subject the
Trustee, the Originator or the Servicer to
any obligation or liability in addition to
those undertaken in this Agreement.
(iii) Notwithstanding anything to the contrary contained
herein,
(A) no Class B-3I, Class B-2, Class P or Class R
Certificate, nor any interest therein, shall
be transferred, sold or otherwise disposed
of to a "disqualified organization," within
the meaning of Section 860E(e)(5) of the
Code (a "Disqualified Organization"),
including, but not limited to,
(1) the United States, a state or
political subdivision thereof, a
foreign government, an international
organization or an agency or
instrumentality of any of the
foregoing,
(2) an organization (other than a
cooperative described in Section 521
of the Code) which is exempt from
the taxes imposed by Chapter 1 of
the Code and not subject to the tax
imposed on unrelated business income
by Section 511 of the Code, or
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(3) a cooperative described in Section
1381(a)(2)(C) of the Code, and
(B) prior to any registration of any transfer,
sale or other disposition of a Class B-3I or
Class R Certificate, the proposed transferee
shall deliver to the Trustee, under
penalties of perjury, an affidavit that such
transferee is not a Disqualified
Organization, with respect to which the
Trustee shall have no actual knowledge that
such affidavit is false, and the transferor
and the proposed transferee shall each
deliver to the Trustee an affidavit with
respect to any other information reasonably
required by the Trustee pursuant to the
REMIC Provisions, including, without
limitation, information regarding the
transfer of non-economic residual interests
and transfers of any residual interest to or
by a foreign person; provided, however,
that, upon the delivery to the Trustee of an
Opinion of Counsel, in form and substance
satisfactory to the Trustee and rendered by
Independent counsel, to the effect that the
beneficial ownership of the Class B-3I or
Class R Certificate, as applicable, by any
Disqualified Organization will not result in
the imposition of federal income tax upon
the Trust or any Class B-3I
Certificateholder or Class R
Certificateholder or any other person or
otherwise adversely affect the status of the
Trust as a REMIC, the foregoing prohibition
on transfers, sales and other dispositions,
as well as the foregoing requirement to
deliver a certificate prior to any
registration thereof, shall, with respect to
such Disqualified Organization, terminate.
Notwithstanding any transfer, sale or other
disposition of a Class B-3I or Class R
Certificate, or any interest therein, to a
Disqualified Organization or the
registration thereof in the Certificate
Register, such transfer, sale or other
disposition and any registration thereof,
unless accompanied by the Opinion of Counsel
described in the preceding sentence, shall
be deemed to be void and of no legal force
or effect whatsoever and such Disqualified
Organization shall be deemed not to be a
Class B-3I or Class R Certificateholder, as
applicable, for any purpose hereunder,
including, but not limited to, the receipt
of distributions on such Class B-3I or Class
R Certificate, and shall be deemed to have
no interest whatsoever in such Class B-3I or
Class R Certificate. Each Class B-3I or
Class R Certificateholder, by his acceptance
thereof, shall be deemed for all purposes to
have consented to the provisions of this
Section 9.02(b)(3).
(iv) Any transfer, sale or other disposition not in
compliance with the provisions of this Section
9.02(b) shall be deemed to be void and of no legal
force or effect whatsoever and such transferee shall
be deemed not to be the Class B-3I Certificateholder
or Class R Certificateholder, as
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applicable, for any purpose hereunder, including, but
not limited to, the receipt of distributions on the
Class B-3I Certificate or Class R Certificate, and
shall be deemed to have no interest whatsoever in the
Class B-3I Certificate or Class R Certificate.
(v) The Trustee shall give notice to the Rating Agencies
promptly following any transfer, sale or other
disposition of a Class B-3I or Class R Certificate.
(c) At the option of a Certificateholder (other than the Class P
Certificateholder) or a Class R Certificateholder, Certificates (other than the
Class P Certificate) and the Class R Certificate may be exchanged for other
Certificates or Class R Certificate of authorized denominations of a like
aggregate original denomination, upon surrender of such Certificates or the
Class R Certificate to be exchanged at the Corporate Trust Office. Whenever any
Certificates or the Class R Certificate are so surrendered for exchange, the
Trustee shall execute and deliver the Certificates or Class R Certificate which
the Certificateholder or Class R Certificateholder making the exchange is
entitled to receive. Every Certificate or Class R Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the holder thereof or
his or her attorney duly authorized in writing.
(d) Except as provided in paragraph (e) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times:
(i) registration of such Certificates may not be
transferred by the Trustee except to another
Depository;
(ii) the Depository shall maintain book-entry records with
respect to the Certificate Owners and with respect to
ownership and transfers of such Certificates;
(iii) ownership and transfers of registration of such
Certificates on the books of the Depository shall be
governed by applicable rules established by the
Depository;
(iv) the Depository may collect its usual and customary
fees, charges and expenses from its Depository
Participants;
(v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating
firms as representatives of the Certificate Owners of
such Certificates for purposes of exercising the
rights of Holders under this Agreement, and requests
and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners;
and
112
(vi) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository
with respect to its Depository Participants and
furnished by the Depository Participants with respect
to indirect participating firms and persons shown on
the books of such indirect participating firms as
direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(e) If (x)
(i) the Seller or the Depository advises the Trustee in
writing that the Depository is no longer willing or
able properly to discharge its responsibilities as
Depository, and
(ii) the Trustee or the Originator is unable to locate a
qualified successor,
(y) the Originator at its sole option advises the Trustee
in writing that it elects to terminate the book-entry
system through the Depository;
the Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of definitive, fully
registered Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same.
Upon surrender to the Trustee of the Certificates by the Depository, accompanied
by registration instructions from the Depository for registration, the Trustee
shall issue the Definitive Certificates. Neither the Originator nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates all references herein to
obligations imposed upon or to be performed by the Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
(f) On or prior to the Closing Date, there shall be delivered to
the Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class
A-3 Certificate, one Class A-4 Certificate, one Class A-5 Certificate, one Class
A-IO Certificate, one Class M-1 Certificate, one Class M-2 Certificate, one
Class B-1 Certificate and one Class B-2 Certificates, each in registered form
registered in the name of the Depository's nominee, Cede & Co., the total face
amount of which represents 100% of the Original Class Principal Balance of each
Class, respectively (or in the case of the Class A-IO Certificate, the Class
A-IO Original Notional Amount). Each such Certificate registered in the name of
the Depository's nominee shall bear the following legend:
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"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
(g) Each of the Certificates (other than the Class P Certificates)
and the Class R Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(8) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the State of Minnesota from time to time.
(h) Each of the Class A-1a, Class M-1, Class M-2, Class B-1 and
Class B-2 Certificates, as beneficiaries of the Yield Maintenance Agreements,
may be sold under the Exemption only to a Qualified Plan Investor.
(i) The Class P Certificate shall be nontransferable.
SECTION 9.03. No Charge; Disposition of Void Certificates or Class R
Certificate. No service charge shall be made to a Certificateholder or Class R
Certificateholder for any transfer or exchange of a Certificate or a Class R
Certificate, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of a Certificate or a Class R
Certificate. All Certificates and Class R Certificate surrendered for transfer
and exchange shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or
Class R Certificate. If
(i) any mutilated Certificate or Class R Certificate is
surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any
Certificate or Class R Certificate, and
(ii) there is delivered to the Certificate Registrar and
the Trustee such security or indemnity as may be
required by each to save it harmless, then in the
absence of notice to the Certificate Registrar or the
Trustee that such Certificate or Class R Certificate
has been acquired by a bona fide purchaser, the
Trustee shall execute and deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or
stolen Certificate or Class R Certificate, a new
Certificate or Class R Certificate of like tenor and
original denomination.
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Upon the issuance of any new Certificate or Class R Certificate under this
Section 9.04, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses connected therewith. Any duplicate Certificate or Class R
Certificate issued pursuant to this Section 9.04 shall constitute complete and
indefeasible evidence of ownership of the Percentage Interest, as if originally
issued, whether or not the mutilated, destroyed, lost or stolen Certificate or
Class R Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners. Prior to due presentation of a
Certificate or Class R Certificate for registration of transfer, the Servicer,
the Seller, the Trustee, the Paying Agent and the Certificate Registrar may
treat the person in whose name any Certificate or Class R Certificate is
registered as the owner of such Certificate or Class R Certificate for the
purpose of receiving remittances pursuant to Section 8.01 and for all other
purposes whatsoever, and none of the Servicer, the Seller, the Trustee, the
Certificate Registrar, the Paying Agent or any agent of the Servicer, the
Seller, the Trustee, the Paying Agent or the Certificate Registrar shall be
affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' and Class R
Certificateholder's Names and Addresses. The Certificate Registrar will furnish
to the Trustee and the Servicer, within five days after receipt by the
Certificate Registrar of a request therefor from the Trustee in writing, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Certificateholders and the Class R Certificateholder as of the most
recent Record Date. If Holders of Certificates representing, in the aggregate,
25% or more of the Aggregate Certificate Principal Balance apply in writing to
the Trustee (hereinafter referred to as "Applicants"), and such application
states that the Applicants desire to communicate with other Certificateholders
or the Class R Certificateholder with respect to their rights under this
Agreement or under the Certificates or the Class R Certificate and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders and the Class R Certificateholder
held by the Trustee. If such list is as of a date more than 90 days prior to the
date of receipt of such Applicants' request, the Trustee shall promptly request
from the Certificate Registrar a current list as provided above, and shall
afford such Applicants access to such list promptly upon receipt. Every
Certificateholder and the Class R Certificateholder, by receiving and holding a
Certificate or a Class R Certificate, agrees with the Certificate Registrar and
the Trustee that none of the Originator, the Certificate Registrar or the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders or the Class
R Certificateholder hereunder, regardless of the source from which such
information was derived.
SECTION 9.07. Authenticating Agents. The Trustee may appoint one or
more Authenticating Agents with power to act on its behalf and subject to its
direction in the execution and delivery of the Certificates or the Class R
Certificate. For all purposes of this Agreement, the execution and delivery of
Certificates or the Class R Certificate by the Authenticating Agent
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pursuant to this Section shall be deemed to be the execution and delivery of
Certificates or the Class R Certificate "by the Trustee."
ARTICLE X
INDEMNITIES
SECTION 10.01. Real Estate. The Seller and Originator will jointly and
severally defend and indemnify the Trust, the Trustee (including the Custodian
and any other agents of the Trustee), the Backup Servicer, the
Certificateholders and the Class R Certificateholder against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation arising out of or resulting from
the use or ownership of any real estate related to a Loan by the Originator or
the Servicer or any Affiliate of either. Notwithstanding any other provision of
this Agreement, the obligation of the Originator under this Section shall not
terminate upon a Service Transfer pursuant to Article VII, except that the
obligation of the Originator under this Section shall not relate to the actions
of the Backup Servicer or any other subsequent Servicer after a Service
Transfer.
SECTION 10.02. Liabilities to Obligors. No obligation or liability to
any Obligor under any of the Loans is intended to be assumed by the Trust, the
Certificateholders or the Class R Certificateholder under or as a result of this
Agreement and the transactions contemplated hereby and, to the maximum extent
permitted and valid under mandatory provisions of law, the Trust, the
Certificateholders and the Class R Certificateholder expressly disclaim such
assumption.
SECTION 10.03. Tax Indemnification. The Originator agrees to pay, and
to indemnify, defend and hold harmless the Trust, the Trustee (including the
Custodian and any other agents of the Trustee), the Backup Servicer, the
Certificateholders and the Class R Certificateholders from, any taxes which may
at any time be asserted with respect to, and as of the date of, the transfer of
the Loans to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates and the Class R Certificate)
and costs, expenses and reasonable counsel fees in defending against the same,
whether arising by reason of the acts to be performed by the Originator, the
Seller, the Servicer, the Backup Servicer or the Trustee under this Agreement or
imposed against the Trust, a Certificateholder, a Class R Certificateholder or
otherwise.
SECTION 10.04. Servicer's Indemnities. The Servicer shall defend and
indemnify the Trust, the Trustee (including the Custodian and any other agents
of the Trustee), the Backup Servicer, the Certificateholders and the Class R
Certificateholder against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, in respect of any action taken or omitted to be taken by the
Servicer with respect to any Loan and, if the Backup Servicer is Servicer, such
omitted action being required to be taken under this Agreement. This indemnity
shall survive any Service Transfer (but the original Servicer's obligations
under this Section 10.04 shall not relate to any actions or omissions of any
subsequent Servicer after a Service Transfer and a subsequent
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Servicer's obligations under this Section 10.04 shall not relate to any act or
omission of any predecessor Servicer) and any payment of the amount owing under,
or any repurchase by the Originator of, any such Loan.
SECTION 10.05. Operation of Indemnities. Indemnification under this
Article shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Originator or the Servicer has made
any indemnity payments to the Trust, the Trustee, the Backup Servicer, the
Certificateholders or the Class R Certificateholder pursuant to this Article and
they thereafter collect any of such amounts from others, they will repay such
amounts collected to the Originator or the Servicer, as the case may be, without
interest.
SECTION 10.06. REMIC Tax Matters. If a Class R Certificateholder,
pursuant to Section 6.06, pays any taxes or charges imposed upon the Master
REMIC, Intermediate REMIC or Subsidiary REMIC, as the case may be, or otherwise,
such taxes or charges, except to the extent set forth in the following proviso,
shall be expenses and costs of the Trust and the Class R Certificateholder shall
be entitled to be reimbursed therefor out of the Certificate Account as provided
in Section 8.04; provided, however, that any such taxes or charges shall not be
expenses or costs of the Trust, nor will the Class R Certificateholder be
entitled to reimbursement therefor out of the Certificate Account, if and to the
extent that such taxes or charges resulted from a failure (i) by the Originator,
the Trustee or any Servicer to comply with the provisions of Section 2.05, (ii)
by any Servicer to comply with the provisions of Section 6.06, or (iii) by the
Trustee to execute any tax returns pursuant to Section 11.11.
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee. The Trustee, prior to the occurrence
of an Event of Termination and after the curing of all Events of Termination
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Termination has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Termination, and after
the curing of all such Events of Termination which may have occurred, the duties
and obligations of the Trustee shall
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be determined solely by the express provisions of this Agreement, the Trustee
shall not be liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in the
absence of bad faith on the part of the Trustee, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Agreement;
(b) The Trustee shall not be liable for an error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Certificateholders representing, in the aggregate, 25%
or more of the Aggregate Certificate Principal Balance relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Agreement; and
(d) The Trustee shall not be charged with knowledge of any event
referred to in Section 7.01 unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such event or the Trustee
receives written notice of such event from the Servicer or the
Certificateholders representing, in the aggregate, 25% or more of the Aggregate
Certificate Principal Balance.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Originator, the Seller or the Servicer under
this Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement. The Trustee shall
not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate, certificate
of a Servicing Officer, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel and any opinion of any
counsel for the Originator, the Seller or the Servicer shall be full and
complete authorization and protection in
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respect of any action taken or suffered or omitted by the Trustee hereunder in
good faith and in accordance with such Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Termination (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of an Event of Termination and after
the curing of all Events of Termination which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing so to do by Certificateholders representing, in the
aggregate, 25% or more of the Aggregate Certificate Principal Balance; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee, shall be
reimbursed by the Servicer upon demand; provided that, such obligation not be
transferred to the Backup Servicer or other successor Servicer; and
(e) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
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SECTION 11.03. Trustee Not Liable for Certificates, Class R Certificate
or Loans. The Trustee assumes no responsibility for the correctness of the
recitals contained herein, in the Certificates or in the Class R Certificate
(other than the Trustee's execution thereof). The Trustee makes no
representations as to the validity or sufficiency of this Agreement, of the
Certificates or of the Class R Certificate (other than its execution thereof) or
of any Loan, Loan File or related document. The Trustee shall not be accountable
for the use or application by the Servicer, the Originator or the Seller of
funds paid to the Originator or the Seller, as applicable in consideration of
conveyance of the Loans to the Trust by the Originator and the Seller or
deposited in or withdrawn from the Certificate Account by the Servicer.
SECTION 11.04. Trustee May Own Certificates. The Trustee in its
individual or other capacity may become the owner or pledgee of Certificates
representing less than all the beneficial interest in the Trust with the same
rights as it would have if it were not Trustee.
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to
Waive Events of Termination. Holders of Certificates representing, in the
aggregate, 25% or more of the Aggregate Certificate Principal Balance shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee, or exercising any trust or power conferred
on the Trustee; provided, however, that, subject to Section 11.01, the Trustee
shall have the right to decline to follow any such direction if the Trustee
being advised by counsel determines that the action so directed may not lawfully
be taken, or if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided,
further that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction by the Certificateholders. Holders of the Certificates
representing, in the aggregate, 51% or more of the Aggregate Certificate
Principal Balance may on behalf of all Certificateholders waive any past Event
of Termination hereunder and its consequences, except a default in respect of a
covenant or provision hereof which under Section 12.08 cannot be modified or
amended without the consent of all Certificateholders, and upon any such waiver,
such Event of Termination shall cease to exist and shall be deemed to have been
cured for every purpose of this Agreement; but no such waiver shall extend to
any subsequent or other Event of Termination or impair any right consequent
thereon.
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses. The
Servicer agrees:
(i) to pay to the Trustee reasonable compensation for all
services rendered by it hereunder (which compensation
shall not be limited by any provision of law in
regard to the compensation of a trustee of an express
trust);
(ii) except as otherwise expressly provided herein, to
reimburse the Trustee, to the extent requested by the
Trustee, for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in
accordance with any provision of this Agreement
(including the
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reasonable compensation and the expenses and
disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(iii) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising
out of or in connection with the acceptance or
administration of the Trust and its duties hereunder,
including the costs and expenses of defending itself
against any claim or liability in connection with the
exercise or performance of any of its powers or
duties hereunder.
The covenants in this Section 11.06 shall be for the benefit of the
Trustee in its capacities as Trustee, Paying Agent and Certificate Registrar
hereunder, and shall survive the termination of this Agreement. If any entity
other than the Originator or a subsidiary or affiliate of the Originator is the
Servicer, the Servicer shall be reimbursed for any costs and expenses incurred
by it in this Section 11.06 pursuant to Sections 5.08 and 8.04(b).
SECTION 11.07. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a financial institution organized and doing
business under the laws of the United States of America or any State, authorized
under such laws to exercise corporate trust powers, and shall have a combined
capital and surplus of at least $50,000,000 or shall be a member of a bank
holding system the aggregate combined capital and surplus of which is
$50,000,000, provided that the Trustee's separate capital and surplus shall at
all times be at least the amount required by Section 310(a)(2) of the Trust
Indenture Act of 1939, as amended. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 11.07, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
addition, the Trustee (or, if the Trustee is U.S. Bank National Association, the
parent company of U.S. Bank National Association) shall at all times have
(i) a long-term deposit rating from S&P of at least BBB
or as shall be otherwise acceptable to S&P, and
(ii) have a long-term deposit rating from Moody's of at
least Baa2 or as shall be otherwise acceptable to
Moody's.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 11.07, the Trustee shall resign
immediately in the manner and with the effect specified in Section 11.08.
SECTION 11.08. Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer and the Originator. Upon receiving such
notice of resignation, the Originator shall promptly appoint a successor Trustee
by written instrument, in duplicate, one copy of which instrument shall be
delivered to each of the Servicer, the Backup Servicer, and the Originator and
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one copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 11.07 and shall fail to resign after written
request therefor by the Originator, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Originator may remove the Trustee. If the Originator shall have removed the
Trustee under the authority of the immediately preceding sentence, the
Originator shall promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 11.08 shall
not become effective until acceptance of appointment by the successor Trustee as
provided in Section 11.09.
SECTION 11.09. Successor Trustee. Any successor Trustee appointed as
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Backup Servicer, the Originator and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with like effect as if originally named as Trustee. The predecessor
Trustee shall deliver or cause to be delivered to the successor Trustee the
Loans and the Loan Files and any related documents and statements held by it
hereunder; and, if the Loans are then held by a Custodian pursuant to a
custodial agreement, the predecessor Trustee and the Custodian shall amend such
custodial agreement to make the successor Trustee the successor to the
predecessor Trustee thereunder; and the Servicer, the Originator and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 11.09 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor Xxxxxxx as provided in
this Section 11.09, the Servicer shall cause notice of the succession of such
Trustee hereunder to be mailed to the Rating Agencies and to each
Certificateholder and the Class R Certificateholder at their addresses as shown
in the Certificate Register. If the Servicer fails to mail such notice within
ten days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Servicer.
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SECTION 11.10. Merger or Consolidation of Trustee. Any Person into
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such Person shall be eligible under the provisions
of Section 11.07, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee shall promptly notify the Rating Agencies in the
event it is a party to any merger, conversion or consolidation.
SECTION 11.11. Tax Returns. Upon the Servicer's request, the Trustee
will furnish the Servicer with all such information as the Servicer may
reasonably require in connection with preparing all tax returns of the Trust and
the Trustee shall execute such returns.
SECTION 11.12. Obligor Claims. In connection with any offset defenses,
or affirmative claims for recovery, asserted in legal actions brought by
Obligors under one or more Loans based upon provisions therein complying with,
or upon other rights or remedies arising from, any legal requirements applicable
to the Loans, including, without limitation, the Federal Trade Commission's
Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses
(16 C.F.R. [sec] 433) as amended from time to time:
(i) The Trustee is not, and shall not be deemed to be,
either in any individual capacity, as trustee
hereunder or otherwise, a creditor, or a joint
venturer with or an Affiliate of, or acting in
concert or cooperation with, any home equity lender,
in the arrangement, origination or making of Loans.
The Trustee is the holder of the Loans only as
trustee on behalf of the Certificateholders and the
Class R Certificateholder, and not as a principal or
in any individual or personal capacity;
(ii) The Trustee shall not be personally liable for or
obligated to pay Obligors any affirmative claims
asserted thereby, or responsible to
Certificateholders or the Class R Certificateholder
for any offset defense amounts applied against Loan
payments, pursuant to such legal actions;
(iii) The Trustee will pay, solely from available Trust
monies, affirmative claims for recovery by Obligors
only pursuant to final judicial orders or judgments,
or judicially approved settlement agreements,
resulting from such legal actions;
(iv) The Trustee will comply with judicial orders and
judgments which require its actions or cooperation in
connection with Obligors' legal actions to recover
affirmative claims against Certificateholders and the
Class R Certificateholder;
(v) The Trustee will cooperate with and assist
Certificateholders and the Class R Certificateholder
in their defense of legal actions by Xxxxxxxx to
recover affirmative claims if such cooperation and
assistance is not contrary to the
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interests of the Trustee as a party to such legal
actions and if the Trustee is satisfactorily
indemnified for all liability, costs and expenses
arising therefrom; and
(vi) The Originator hereby agrees to indemnify, hold
harmless and defend the Trustee, Certificateholders
and the Class R Certificateholder from and against
any and all liability, loss, costs and expenses of
the Trustee, Certificateholders and the Class R
Certificateholder resulting from any affirmative
claims for recovery asserted or collected by Obligors
under the Loans. Notwithstanding any other provision
of this Agreement, the obligation of the Originator
under this Section 11.12(vi) shall not terminate upon
a Service Transfer pursuant to Article VII.
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Loans or the Obligors, the Originator and the Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Originator and the Trustee may consider necessary or desirable. If
the Originator shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in case an Event of Termination
shall have occurred and be continuing, the Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
11.07 hereunder and no notice to Certificateholders or a Class R
Certificateholder of the appointment of co-trustee(s) or separate trustee(s)
shall be required under Section 11.09.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 11.13 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such co-trustee or separate trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Servicer hereunder), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such co-trustee or separate trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then co-trustees and separate trustees,
as effectively as if given to each of them. Every instrument appointing any
co-trustee or separate trustee shall refer to this Agreement and the conditions
of this Article XI. Each co-trustee and separate trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided
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therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.14. Trustee and U.S. Bancorp. In the event the Trustee
ceases to be a direct, wholly owned subsidiary of U.S. Bancorp, the Trustee
shall promptly notify the Rating Agencies.
SECTION 11.15. Trustee Advances.
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(a) If the Servicer fails to deposit into the Certificate Account
Advances as required by Section 8.02, then the Trustee shall, subject to the
provisions of paragraph (b) below, from its own funds, deposit into the
Certificate Account the amount not so deposited by the Servicer on or before the
Business Day preceding the related Payment Date (a "Trustee Advance").
(b) The Trustee shall not be required to make any Trustee Advance
if and to the extent that it determines in good faith that the funds, if
advanced, would not be recoverable by it from subsequent amounts available in
the Certificate Account in accordance with Section 8.04(b).
(c) The Trustee shall be entitled to reimbursement of a Trustee
Advance from funds subsequently available therefor in the Certificate Account in
accordance with Section 8.04(b).
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties.
The Servicer shall not resign from the obligations and duties hereby imposed on
it except upon determination that the performance of its duties hereunder is no
longer permissible under this Agreement or under applicable law. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel for the Servicer to such effect delivered to the Trustee.
No such resignation shall become effective until the Trustee or a successor
servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 7.03.
Notwithstanding the foregoing, Conseco Finance Corp., if it is the
Servicer, may delegate some or all of its servicing duties to a wholly-owned
subsidiary of the Originator, for so long as said subsidiary remains, directly
or indirectly, a wholly-owned subsidiary of Conseco Finance
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Corp. Notwithstanding any such delegation, Conseco Finance Corp. shall retain
all of the rights and obligations of the Servicer hereunder.
The Backup Servicer, if it is the Servicer, may delegate some or all of
its servicing duties to a wholly-owned subsidiary for so long as said subsidiary
remains, directly or indirectly, a wholly-owned subsidiary of the Backup
Servicer. Notwithstanding any such delegation, the Backup Servicer shall retain
all of the rights and obligations of the Servicer hereunder.
SECTION 12.02. Conseco Finance Corp. and Seller Not to Engage in
Certain Transactions with Respect to the Trust. Neither Conseco Finance Corp.
nor the Seller shall:
(i) Provide credit to any Certificateholder for the
purpose of enabling such Certificateholder to
purchase Certificates;
(ii) Purchase any Certificates in an agency or trustee
capacity; or
(iii) Loan any money to the Trust (other than Advances
pursuant to Section 8.02).
SECTION 12.03. Maintenance of Office or Agency. The Trustee will
maintain in Minneapolis or St. Xxxx, Minnesota, an office or agency where
Certificates or the Class R Certificate may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates, the Class R Certificate and this Agreement may be
served. On the date hereof the Trustee's office for such purposes is located at
000 Xxxx 0xx Xxxxxx, Xxxxxx Xxxxx, Xx. Xxxx, Xxxxxxxxx 00000. The Trustee will
give prompt written notice to the Originator, the Seller, the Servicer, the
Backup Servicer, the Certificateholders and the Class R Certificateholder of any
change in the location of the Certificate Register or any such office or agency.
SECTION 12.04. Termination.
-----------
(a) The Trust created hereby and the respective obligations and
responsibilities of the Originator, the Seller, the Servicer, the Guarantor and
the Trustee created hereby (other than the responsibility of the Trustee to make
any final distributions to Certificateholders and the Class R Certificateholder
as set forth below) shall terminate on the earlier of
(i) the Payment Date on which the principal balance of
all of the Loans is reduced to zero; or
(ii) the Payment Date occurring in the month following the
sale of the Loans pursuant to Section 8.06;
provided, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the Court of St.
Xxxxx, living on the date hereof, and provided, further, that the Servicer's and
the Originator's representations and warranties and
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indemnities by the Originator and the Servicer shall survive termination. Any
termination of the Trust must be conducted so as to qualify as a "qualified
liquidation" of the Subsidiary REMIC, Intermediate REMIC and Master REMIC, as
applicable, within the meaning of the REMIC Provisions.
(b) Any termination of the Trust must be conducted so as to
qualify as a "qualified liquidation" of the Subsidiary REMIC, Intermediate REMIC
and Master REMIC, as applicable, within the meaning of the REMIC Provisions. The
Trustee's acknowledgment of a notice given under Section 8.06(b)(iii) shall
constitute a plan of complete liquidation of the Master REMIC, Intermediate
REMIC and Subsidiary REMIC within the meaning of Section 860F of the Code.
(c) The Trustee shall give notice of the Final Payment Date to the
Certificateholders, the Rating Agencies and the Certificate Registrar. The
Servicer shall direct the Trustee to give such notice ten days prior to the date
the Trustee is to mail such notice. The Trustee shall mail the notice no later
than the fifth Business Day of the month of the Final Payment Date. The notice
shall specify:
(i) the Final Payment Date (which shall be a date that
would otherwise be a Payment Date);
(ii) the Final Payment Date upon which final payment on
the Certificates and the Class R Certificate will be
made upon presentation and surrender of Certificates
(except in the case of the Class P Certificate) and
the Class R Certificate at the office or agency of
the Trustee therein designated;
(iii) the amount of any such final payment; and
(iv) that the Record Date otherwise applicable to such
Payment Date is not applicable, payments being made
only upon presentation and surrender of the
Certificates and the Class R Certificate at the
office or agency of the Trustee therein specified.
(d) Upon presentation and surrender of the Certificates and the
Class R Certificate, the Trustee shall cause to be distributed from the
Certificate Account, in the following order of priority and to the
Certificateholders on the Final Payment Date in proportion to their respective
Percentage Interests:
(i) to the extent the Amount Available is sufficient
therefor, and in the order of priority provided for
in Section 8.04(b), an amount equal to
(A) as to Class A Certificates, the Class A
Principal Balance, together with any Unpaid
Class A Interest Carry Forward Amount and
interest accrued during the related Accrual
Period at the Interest Rate for each Class
of Class A Certificates on the Class
Principal Balance, respectively,
127
(B) as to the Class M-1 Certificates, the Class
M-1 Principal Balance, together with any
Unpaid Class M-1 Interest Carry Forward, any
Unpaid Class M-1 Realized Loss Interest
Amount, any Unpaid Class M-1 Realized Loss
Amount and interest accrued during the
related Accrual Period at the Class M-1
Interest Rate on the Class M-1 Principal
Balance,
(C) as to Class M-2 Certificates, the Class M-2
Principal Balance, together with any Unpaid
Class M-2 Interest Carry Forward Amount, any
Unpaid Class M-2 Realized Loss Interest
Amount, any Unpaid Class M-2 Realized Loss
Amount and interest accrued during the
related Accrual Period at the Class M-2
Interest Rate on the Class M-2 Principal
Balance,
(D) as to Class B-1 Certificates, the Class B-1
Principal Balance, together with any Unpaid
Class B-1 Interest Carry Forward Amount any
Unpaid Class B-1 Realized Loss Interest
Amount, any Unpaid Class B-1 Realized Loss
Amount and interest accrued during the
related Accrual Period at the Class B-1
Interest Rate on the Class B-1 Principal
Balance,
(E) as to Class B-2 Certificates, the Class B-2
Principal Balance, together with any Unpaid
Class B-2 Interest Carry Forward Amount, any
Unpaid Class B-2 Realized Loss Interest
Amount, any Unpaid Class B-2 Realized Loss
Amount and interest accrued during the
related Accrual Period at the Class B-2
Interest Rate on the Class B-2 Principal
Balance,
(F) to the Basis Risk Reserve Fund the sum of
all Unpaid Class A, Class M-1, Class M-2,
Class B-1 and Class B-2 Basis Risk Carryover
Shortfalls,
(G) as to the Class B-3I Certificate, the Class
B-3I Formula Distribution Amount, and
(H) as to the Class P Certificate, the Class P
Principal Balance.
(ii) to the Class P Certificateholder, any Prepayment
Charges; and;
(iii) to the Class R Certificateholder, the amount which
remains on deposit in the Certificate Account (other
than amounts retained to meet claims) after
application pursuant to clauses (i) and (ii) above.
128
SECTION 12.05. Acts of Certificateholders and Class R
--------------------------------------
Certificateholder.
-----------------
(a) Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates representing, in the aggregate, 51% or more of the
Aggregate Certificate Principal Balance.
(b) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or taken
by Certificateholders or the Class R Certificateholder may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders or the Class R Certificateholder in person or by an
agent duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Originator if made in
the manner provided in this Section.
(c) The fact and date of the execution by any Certificateholder or
Class R Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
(d) The ownership of Certificates and the Class R Certificate
shall be proved by the Certificate Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder or the Class R
Certificateholder shall bind every holder of every Certificate or the Class R
Certificate, as applicable, issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of anything done, or omitted
to be done by the Trustee, the Servicer or the Originator in reliance thereon,
whether or not notation of such action is made upon such Certificates or Class R
Certificate.
(f) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
129
SECTION 12.06. Assignment or Delegation by Company. Except as
specifically authorized hereunder, and except for its obligations as Servicer
which are dealt with under Article V and Article VII, the Originator may not
convey and assign or delegate any of its rights or obligations hereunder absent
the prior written consent of Holders of Certificates representing, in the
aggregate, 66-2/3% or more of the Aggregate Certificate Principal Balance, and
any attempt to do so without such consent shall be void.
SECTION 12.07. Amendment.
---------
(a) This Agreement may be amended from time to time by the
Originator, the Servicer and the Trustee, with the consent of the Backup
Servicer, if the amendment materially affects its rights and obligations herein,
but without the consent of any of the Certificateholders or the Class R
Certificateholder, to correct manifest error, to cure any ambiguity, to correct
or supplement any provisions herein which may be inconsistent with any other
provisions herein, as the case may be, to make such changes as are necessary to
maintain the status of the Trust as a "real estate mortgage investment conduit"
under the REMIC Provisions of the Code or to otherwise effectuate the benefits
of such status to the Trust, the Certificateholders or the Class R
Certificateholder, including, without limitation, to implement any provision
permitted by law that would enable a REMIC to avoid the imposition of any tax,
or to make any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel for the Servicer, adversely affect in any material respect
the interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the
Servicer, the Originator and the Trustee, with the consent of the Backup
Servicer, if the amendment materially affects its rights and obligations herein,
and with the consent of Holders of Certificates representing, in the aggregate,
66-2/3% or more of the Aggregate Certificate Principal Balance, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of such
Certificateholders; provided, however, that no such amendment shall
(i) reduce in any manner the amount of, or delay the
timing of, collections of payments on the Loans or
distributions which are required to be made on any
Certificate,
(ii) reduce the aforesaid percentage required to consent
to any such amendment, without the consent of the
holders of all Certificates then outstanding,
(iii) result in the disqualification of the Master REMIC,
Intermediate REMIC or Subsidiary REMIC under the
Code,
(iv) adversely affect the status of the Master REMIC,
Intermediate REMIC or Subsidiary REMIC as a REMIC or
the status of the Certificates as "regular interests"
in the REMIC, or
130
(v) cause any tax (other than any tax imposed on "net
income from foreclosure property" under Section
860G(c)(1) of the Code that would be imposed without
regard to such amendment) to be imposed on the Trust,
including, without limitation, any tax imposed on
"prohibited transactions" under Section 860F(a)(1) of
the Code or on "contributions after the startup date"
under Section 860G(d)(1) of the Code.
This Agreement may not be amended without the consent of the Class R
Certificateholder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement which would
modify in any manner the rights of the Class R Certificateholder.
(c) This Agreement shall not be amended under this Section without
the consent of 100% of the Certificateholders and the Class R Certificateholder
if such amendment would result in the disqualification of the Master REMIC,
Intermediate REMIC or Subsidiary REMIC under the Code.
(d) Concurrently with the solicitation of any consent pursuant to
this Section 12.08, the Trustee shall furnish written notification to the Backup
Servicer, S&P and Moody's. Promptly after the execution of any amendment or
consent pursuant to this Section 12.08, the Trustee shall furnish written
notification of the substance of such amendment to S&P and Moody's, each
Certificateholder and Class R Certificateholder, and the Backup Servicer.
(e) It shall not be necessary for the consent of
Certificateholders and the Class R Certificateholder under this Section 12.08 to
approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders and the Class R Certificateholder shall be subject
to such reasonable requirements as the Trustee may prescribe.
(f) The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement or otherwise.
(g) In connection with any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel to the Originator to
the effect that such amendment is authorized or permitted by this Agreement.
(h) Upon the execution of any amendment or consent pursuant to
this Section 12.08, this Agreement shall be modified in accordance therewith,
and such amendment or consent shall form a part of this Agreement for all
purposes, and every Certificateholder or the Class R Certificateholder hereunder
shall be bound thereby.
(i) In the absence of the consent described in subsection (d) of
this Section, in connection with any amendment pursuant to this Section, the
Trustee shall have received an unqualified Opinion of Counsel, the expense of
which shall not be an expense of the Trust, stating that any such amendment (i)
will not adversely affect the status of the Master REMIC,
131
Intermediate REMIC or Subsidiary REMIC as a REMIC or the status of the
Certificates as "regular interests" therein, and (ii) will not cause any tax
(other than any tax imposed on "net income from foreclosure property" under
Section 860G(c)(1) of the Code that would be imposed without regard to such
amendment) to be imposed on the Trust, including, without limitation, any tax
imposed on "prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
(j) Notwithstanding anything to the contrary herein, so long as
the Yield Maintenance Agreements are in effect, this Agreement may not be
amended without the consent of the LIBOR Cap Counterparty if such amendment
would (1) reduce in any manner or delay any payments to the LIBOR Cap
Counterparty, (2) adversely affect in any material respect the interests of the
LIBOR Cap Counterparty in any manner other than as described in clause (1) or
(3) modify the consents required by the immediately preceding clauses (1) and
(2).
SECTION 12.08. Notices. All communications and notices pursuant hereto
to the Seller, the Servicer, the Originator, the Trustee and the Rating Agencies
shall be in writing and delivered or mailed to it at the appropriate following
address:
If to the Seller:
Conseco Finance Securitizations Corp.
300 Landmark Towers
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-1639
Attention: Chief Financial Officer
Telecopier Number: (000) 000-0000
If to the Servicer:
Conseco Finance Corp.
1100 Landmark Towers
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-1639
Attention: Chief Financial Officer
Telecopier Number: (000) 000-0000
If to the Backup Servicer:
XXX Xxxxxxxxxxx
000 Xxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
Telecopier Number: (000) 000-0000
If to the Trustee:
132
U.S. Bank National Association
Corporate Trust Department
000 Xxxx Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx-Xxxx
Telecopier Number: (000) 000-0000
If to S&P:
Standard & Poor's
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mortgage Surveillance
If to Moody's:
Xxxxx'x Investors Service, Inc
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
or the Class R Certificateholder shall be in writing and delivered or mailed at
the address shown in the Certificate Register.
SECTION 12.09. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 12.10. Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 12.11. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Minnesota.
133
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized this 6th day of
February, 2002.
CONSECO FINANCE CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Assistant Treasurer
CONSECO FINANCE SECURITIZATIONS CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxxx
Vice President and Assistant Treasurer
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Trustee
By: /s/ Xxxxxx Xxxxxxx-Xxxx
-----------------------------------------
Xxxxxx Xxxxxxx-Xxxx
Vice President
134
STATE OF MINNESOTA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 31st day of
January, 2002, by Xxxxxxx X. Xxxxxxxx, a Vice President and Assistant Treasurer
of Conseco Finance Corp., a Delaware corporation, on behalf of the corporation.
/s/ Xxx X. Xxxxxxxxx
---------------------------------
Notary Public
[SEAL] Notary Public-Minnesota
My Comm. Expires Jan. 31, 2005
STATE OF MINNESOTA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 31st day of
January, 2002, by Xxxxxxx X. Xxxxxxxx, a Vice President and Assistant Treasurer
of Conseco Finance Securitizations Corp., a Minnesota corporation, on behalf of
the corporation.
/s/ Xxx X. Xxxxxxxxx
---------------------------------
Notary Public
[SEAL] Notary Public-Minnesota
My Comm. Expires Jan. 31, 2005
STATE OF MINNESOTA )
) ss.
COUNTY OF XXXXXX )
The foregoing instrument was acknowledged before me this 31st day of
January, 2002, by Xxxxxx Xxxxxxx-Xxxx, a Vice President of U.S. Bank National
Association, a national banking association, on behalf of the national banking
association.
/s/ Xxxxx Xxxxx
---------------------------------
Notary Public
[SEAL] Notary Public-Minnesota
My Comm. Expires Jan. 31, 2005
135
EXHIBIT A-1
FORM OF CLASS A-[1a][1b][2][3][4][5] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
Class A-[1a][1b][2][3][4][5] NO.
(Senior) Pass-Through Rate: [For A-1a: A Floating
Rate equal to the lesser of One-Month LIBOR
Cut-off Date: as defined in the plus the Class A-1a Margin or the Adjusted
Pooling and Servicing Agreement Net WAC Cap Rate, but in no event greater
dated January 1, 2002 than 15.00% per annum] [For A-1b: 3.34%,
or the Adjusted Net WAC Cap Rate, if less]
First Payment Date: [For A-2: 4.69%, or the Adjusted Net WAC
March 15, 2002 Cap Rate, if less] [For A-3: 5.33%, or the
Adjusted Net WAC Cap Rate, if less][For A-4:
Servicer: 6.32%, or the Adjusted Net WAC Cap Rate, if
Conseco Finance Corp. less] [For A-5: 7.05%, or the Adjusted Net
WAC Cap Rate, if less; provided, however,
Final Scheduled Payment Date: that if the purchase option is not exercised
[______________________] (or if pursuant to Section 8.06 of the Pooling and
such day is not a Business Day, Servicing Agreement, for any Payment Date
then the next succeeding Business thereafter, the Pass-Through Rate on this
Day) Class A-5 Certificate shall increase to
7.55%, or the Adjusted Net WAC Cap Rate,
if less]
Denomination: U.S. $__________
Aggregate Denomination of all
Class A-[1a][1b][2][3][4][5] Certificates:
$492,000,000
CUSIP No. _____________________
CERTIFICATE FOR HOME EQUITY LOANS
SERIES 2002-A, CLASS A-[1a][1b][2][3][4][5] (SENIOR)
A-1-1
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________is the registered owner
of the undivided Percentage Interest represented by the original principal
amount set forth above in the Certificates for Home Equity Loans, Series 2002-A,
Class A-[1a][1b][2][3][4][5] issued by Conseco Finance Home Equity Loan Trust
2002-A (the "Trust"), which includes among its assets a pool of closed-end home
equity loans (the "Loans") (including, without limitation, all mortgages, deeds
of trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of January 1, 2002, among Conseco Finance Corp., as
Originator and Servicer (the "Originator"), Conseco Finance Securitizations
Corp., as Seller (the "Seller") and U.S. Bank National Association, as Trustee
of the Trust (the "Trustee"). This Certificate is one of the Certificates
described in the Agreement and is issued pursuant and subject to the Agreement.
By acceptance of this Certificate the holder assents to and becomes bound by the
Agreement. To the extent not defined herein, all capitalized terms have the
meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in March,
2002, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class A-[1a][1b][2][3][4][5] Certificates with an
aggregate Percentage Interest of at least 5% of the Class A-[1a][1b][2][3][4][5]
Certificates and so desires, by wire transfer pursuant to instructions delivered
to the Trustee at least 10 days prior to such Payment Date) to the registered
Certificateholder at the address appearing on the Certificate Register as of the
Business Day immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class A-[1a][1b][2][3][4][5]
Distribution Amount for such Payment Date. Distributions of interest and
principal on the Class A-[1a][1b][2][3][4][5] Certificates will be made
primarily from amounts available in respect of the Loans. The final scheduled
Payment Date of this Certificate is [_____________________] or the next
succeeding Business Day if such [__________________] is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account [for Class
A-1a: the related Yield Maintenance Reserve Fund] and the Basis Risk Reserve
Fund to the extent available for distribution to the Certificateholder as
provided in the Agreement for payment hereunder and that the Trustee in its
individual capacity is not personally liable to the Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Certificateholder agrees to disclosure of
his, her or its name and address to other Certificateholders under the
conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds
A-1-2
and duties evidenced hereby and the rights, duties and immunities of the
Trustee. Copies of the Agreement and all amendments thereto will be provided to
any Certificateholder free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator, the
Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the state of Minnesota from time to time.
A-1-3
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-A
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: _____________________________________
Authorized Officer
A-1-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-A, and does hereby irrevocably constitute and appoint
_________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: _____________________
By: ____________________________________
Signature
A-1-5
EXHIBIT A-2
FORM OF CLASS A-IO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
Class A-IO NO.
(Senior)
Pass-Through Rate: 7.25% per year.
Cut-off Date: as defined in the
Pooling and Servicing Agreement dated
January 1, 2002 Aggregate Original Notional Amount
of all Class A-IO Certificates: the
lesser of (a) from and including the
First Payment Date: Closing Date through the December
March 15, 2002 2002 Payment Date, $211,000,000,
from and including the January 2003
Payment Date through the May 2003
Servicer: Payment Date, $191,000,000, from and
Conseco Finance Corp. including the June 2003 Payment Date
through the December 2003 Payment
Date, $95,000,000, from and
Final Scheduled Payment Date: including the January 2004 Payment
July 15, 2004 (or if such day is not a Date through the June 2004 Payment
Business Day, then the next succeeding Date, $68,120,000, and for any
Business Day) Payment Date thereafter, $0, and
(b) the Pool Scheduled Principal
Balance.
CUSIP No. 20846Q JK 5
CERTIFICATE FOR HOME EQUITY LOANS
SERIES 2002-A, CLASS A-IO (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________is the registered
owner of the undivided Percentage Interest represented by the original
principal amount set forth above in the Certificates for Home Equity Loans,
Series 2002-A, Class A-IO issued by Conseco Finance Home Equity Loan Trust
2002-A (the "Trust"), which includes among its assets a pool of closed-end home
equity loans (the "Loans") (including, without limitation, all mortgages, deeds
of trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date). The Trust
has been created pursuant to a
A-2-1
Pooling and Servicing Agreement (the "Agreement"), dated as of January 1, 2002,
among Conseco Finance Corp., as Originator and Servicer (the "Originator"),
Conseco Finance Securitizations Corp., as Seller (the "Seller") and U.S. Bank
National Association, as Trustee of the Trust (the "Trustee"). This
Certificate is one of the Certificates described in the Agreement and is issued
pursuant and subject to the Agreement. By acceptance of this Certificate the
holder assents to and becomes bound by the Agreement. To the extent not defined
herein, all capitalized terms have the meanings assigned to such terms in the
Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in March
2002, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class A-IO Certificates with an aggregate Percentage
Interest of at least 5% of the Class A-IO Certificates and so desires, by wire
transfer pursuant to instructions delivered to the Trustee at least 10 days
prior to such Payment Date) to the registered Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Payment Date, in an amount equal to the Certificateholder's
Percentage Interest of the Class A-IO Distribution Amount. Distributions of
interest on the Class A-IO Certificates will be made primarily from amounts
available in respect of the Loans. The final scheduled Payment Date of this
Certificate is July 15, 2004 or the next succeeding Business Day if such July
15, 2004 is not a Business Day.
THIS CERTIFICATE IS AN INTEREST-ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE OR AN INTEREST HEREIN SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF
PRINCIPAL WITH RESPECT TO THE LOANS.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account and the Basis
Risk Reserve Fund to the extent available for distribution to the
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the
Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder
A-2-2
hereof or his or her attorney duly authorized in writing, and thereupon one or
more new Certificates evidencing the same aggregate Percentage Interest will be
issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator,
the Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the state of Minnesota from time to time.
A-2-3
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-A
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: _____________________________
Authorized Officer
A-2-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________ the within Certificate for Home
Equity Loans, Series 2002-A, and does hereby irrevocably constitute and appoint
_________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: _____________________
By: ______________________________
Signature
A-2-5
EXHIBIT B
FORM OF CLASS M-[1][2] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES [AND THE CLASS M-1 CERTIFICATES] AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class M-[1][2] NO.
(Subordinate) Pass-Through Rate: A Floating Rate
equal to the lesser of One-Month
Cut-off Date: as defined in the LIBOR plus the Class M-[1][2] Margin
Pooling and Servicing Agreement dated or the Adjusted Net WAC Cap Rate,
January 1, 2002 but in no event greater than 15.00%
per annum
Denomination: U.S. $__________
First Payment Date:
March 15, 2002 Aggregate Denomination of all
Class M-[1][2] Certificates:
$72,000,000
Servicer: Final Scheduled Payment Date:
Conseco Finance Corp. April 15, 2032 (or if such day is
not a Business Day, then the next
succeeding Business Day)
CUSIP No. _____________________
CERTIFICATE FOR HOME EQUITY LOANS
SERIES 2002-A, CLASS M-[1][2] (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________ is the registered
owner of the undivided Percentage Interest represented by the original
principal amount set forth above in the Certificates for Home Equity Loans,
Series 2002-A, Class M-[1][2] issued by Conseco Finance
B-1
Home Equity Loan Trust 2002-A (the "Trust"), which includes among its assets a
pool of closed-end home equity loans (the "Loans") (including, without
limitation, all mortgages, deeds of trust and security deeds relating to such
Loans and any and all rights to receive payments due on the Loans after the
applicable Cut-off Date). The Trust has been created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of January 1, 2002, among
Conseco Finance Corp., as Originator and Servicer (the "Originator"), Conseco
Finance Securitizations Corp., as Seller (the "Seller") and U.S. Bank National
Association, as Trustee of the Trust (the "Trustee"). This Certificate is one
of the Certificates described in the Agreement and is issued pursuant and
subject to the Agreement. By acceptance of this Certificate the holder assents
to and becomes bound by the Agreement. To the extent not defined herein, all
capitalized terms have the meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in March,
2002, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class M-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% of the Class M-[1][2] Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder
at the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the Interest of
the Class M-[1][2] Distribution Amount for such Payment Date. Distributions of
interest and principal on the Class M-[1][2] Certificates will be made
primarily from amounts available in respect of the Loans. The final scheduled
Payment Date of this Certificate is April 15, 2032 or the next succeeding
Business Day if such April 15 is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account, the related
Yield Maintenance Reserve Fund and the Basis Risk Reserve Fund to the extent
available for distribution to the Certificateholder as provided in the
Agreement, for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Certificateholder for any amounts
payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Certificateholder agrees to disclosure of
his, her or its name and address to other Certificateholders under the
conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of,
such an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this
B-2
Certificate will be deemed to represent to the Trustee, the Originator, the
Seller and the Servicer either (i) that such person is neither a Plan, nor
acting on behalf of a Plan, subject to ERISA or to Section 4975 of the Code, or
(ii) that the purchase and holding of this Certificate by such Plan will not
result in the assets of the Trust being deemed to be Plan assets and subject to
the prohibited transaction provisions of ERISA and the Code and will not
subject the Trustee, the Originator, the Seller or the Servicer to any
obligation or liability in addition to those undertaken in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator,
the Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the state of Minnesota from time to time.
B-3
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ________________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-A
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: ______________________________
Authorized Officer
B-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________ the within Certificate for Home
Equity Loans, Series 2002-A, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: __________________________
By: ______________________________
Signature
B-5
EXHIBIT C
FORM OF CLASS B-[1][2] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M CERTIFICATES [AND THE
CLASS B-1 CERTIFICATES] AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY
(1) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH
CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM
TO AN "INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.
[THE SECURITIES REPRESENTED BY THIS CERTIFICATE, IF NOT HELD BY A
UNITED STATES PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT OF 1933,
AS AMENDED), MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OFFERED OR
OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE
C-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (II) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION.]
Class B-[1][2] NO.
(Subordinate) Pass-Through Rate: A Floating Rate
equal to the lesser of One-Month
Cut-off Date: as defined in the LIBOR plus the Class B-[1][2] Margin
Pooling and Servicing Agreement dated or the Adjusted Net WAC Cap Rate,
January 1, 2002 but in no event greater than 15.00%
First Payment Date:
March 15, 2002 Denomination: U.S. $__________
Servicer: Aggregate Denomination of all
Conseco Finance Corp. Class B-[1][2] Certificates:
$36,000,000
Final Scheduled Payment Date:
April 15, 2032 (or if such day is
not a Business Day, then the next
succeeding Business Day)
CUSIP No. _____________________
CERTIFICATES FOR HOME EQUITY LOANS
SERIES 2002-A, CLASS B-[1][2] (SUBORDINATE)
BY ACCEPTANCE OF THIS CERTIFICATE, ANY PERSON THAT ACQUIRES THIS
CERTIFICATE OR ANY INTEREST HEREIN, ON BEHALF OF OR WITH PLAN ASSETS OF ANY
EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION
4975(e)(1) OF THE CODE (EACH, A "PLAN") ACKNOWLEDGES THAT THE CERTIFICATEHOLDER
EITHER HAS DELIVERED TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN
OPINION OF COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE
PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, WILL NOT RESULT
IN THE ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT
THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH
OPINION IS DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR,
THE SELLER AND THE SERVICER EITHER (I) THAT SUCH PERSON IS NEITHER A PLAN, NOR
ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975OF THE CODE, OR
(II) THAT THE PURCHASE AND HOLDING OF THIS
C-2
CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING
DEEMED TO BE PLAN ASSETS AND SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS
OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE ORIGINATOR, THE
SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN ADDITION TO THOSE
UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________is the registered
owner of the undivided Percentage Interest represented by the original
principal amount set forth above in the Certificates for Home Equity Loans,
Series 2002-A, Class B-[1][2], issued by Conseco Finance Home Equity Loan Trust
2002-A (the "Trust"), which includes among its assets a pool of closed-end home
equity loans (the "Loans") (including, without limitation, all mortgages, deeds
of trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of January 1, 2002, among Conseco Finance Corp., as
Originator and Servicer (the "Originator"), Conseco Finance Securitizations
Corp., as Seller (the "Seller") and U.S. Bank National Association as Trustee
of the Trust (the "Trustee"). This Certificate is one of the Certificates
described in the Agreement and is issued pursuant and subject to the Agreement.
By acceptance of this Certificate the holder assents to and becomes bound by
the Agreement. To the extent not defined herein, all capitalized terms have the
meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in March
2002, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B-[1][2] Certificates with an aggregate
Percentage Interest of at least 5% of the Class B-[1][2] Certificates and so
desires, by wire transfer pursuant to instructions delivered to the Trustee at
least 10 days prior to such Payment Date) to the registered Certificateholder
at the address appearing on the Certificate Register as of the Business Day
immediately preceding such Payment Date, in an amount equal to the
Certificateholder's Percentage Interest of the Class B-[1][2] Distribution
Amount for such Payment Date. Distributions of interest and principal on the
Class B-[1][2] Certificates will be made primarily from amounts available in
respect of the Loans. The final scheduled Payment Date of this Certificate is
April 15, 2032 or the next succeeding Business Day if such April 15 is not a
Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account, the related
Yield Maintenance Reserve Fund and the Basis Risk Reserve Fund, to the extent
available for distribution to the Certificateholder as provided in the
Agreement, for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Certificateholder for any amounts
payable under this Certificate or
C-3
the Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of,
such an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
the Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to
represent to the Trustee, the Originator, the Seller and the Servicer either
(i) that such person is neither a Plan, nor acting on behalf of a Plan, subject
to ERISA or to Section 4975 of the Code, or (ii) that the purchase and holding
of this Certificate by such Plan will not result in the assets of the Trust
being deemed to be Plan assets and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee, the
Originator, the Seller or the Servicer to any obligation or liability in
addition to those undertaken in the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. Xxxx, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
C-4
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator,
the Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent,
the Certificate Registrar nor any such agent shall be affected by any notice to
the contrary.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the state of Minnesota from time to time.
C-5
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: _______________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-A
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: ______________________________
Authorized Officer
C-6
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________ the within Certificate for Home
Equity Loans, Series 2002-A, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: _____________________
By: ______________________________
Signature
C-7
EXHIBIT D
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of January 1, 2002, among the undersigned, Conseco
Finance Corp. and U.S. Bank National Association as Trustee (the "Trustee"),
the undersigned does hereby transfer, convey and assign, set over and otherwise
convey, without recourse, to Conseco Finance Home Equity Loan Trust 2002-A,
created by the Agreement, to be held in trust as provided in the Agreement, (i)
all right, title and interest in the home equity loans identified in the List
of Loans attached to the Agreement (including, without limitation, all related
mortgages, deeds of trust and security deeds and any and all rights to receive
payments on or with respect to the Loans due after the applicable Cut-off
Date), (ii) all rights under any hazard, flood or other individual insurance
policy on the real estate securing a Loan for the benefit of the creditor of
such Initial Loan, (iii) all rights Conseco Finance Securitizations Corp. may
have against the originating lender with respect to Initial and Additional
Loans originated by a lender other than Conseco Finance Securitizations Corp.,
(iv) all rights of the Seller under the Transfer Agreement, (v) all rights
under the Errors and Omissions Protection Policy and the Fidelity Bond as such
policy and bond relate to the Initial and Additional Loans, (vi) all rights
under any title insurance policies, if applicable, on any of the properties
securing Initial and Additional Loans, (vii) all documents contained in the
Loan Files relating to the Initial and Additional Loans, (viii) all rights
under the Yield Maintenance Agreements, (ix) amounts in the Certificate
Account, the Basis Risk Reserve Fund, the Yield Maintenance Reserve Funds and
the Pre-Funding Account (including all proceeds of investments of the funds in
Certificate Account) and (x) all proceeds and products of the foregoing.
This Assignment is made pursuant to and upon the representations and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others. All undefined capitalized terms used in this
Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this _____ day of ___________________, 2002.
CONSECO FINANCE SECURITIZATIONS CORP.
By: _______________________________
[Name]
[Title]
[SEAL]
D-1
EXHIBIT E
FORM OF CERTIFICATE OF OFFICER
[CONSECO FINANCE CORP.]
[CONSECO FINANCE SECURITIZATIONS CORP.]
I, _______________________, hereby certify that I am a [title] of
[Conseco Finance Corp., a Delaware corporation] [Conseco Finance
Securitizations Corp., a Minnesota corporation] (the "Company"), and that as
such I am duly authorized to execute and deliver this certificate on behalf of
[Conseco Finance Corp.] [Conseco Finance Securitizations Corp.] in connection
with the Pooling and Servicing Agreement dated as of January 1, 2002 (the
"Agreement") among Conseco Finance Corp., Conseco Finance Securitizations Corp.
and U.S. Bank National Association as Trustee (all capitalized terms used
herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
(i) attached hereto as Exhibit I are true and correct
copies of the [Restated] [Articles] [Certificate] of Incorporation of
[Conseco Finance Corp.] [Conseco Finance Securitizations Corp.],
[together with all amendments thereto] as in effect on the date
thereof;
(ii) attached hereto as Exhibit II are true and correct
copies of the Bylaws of [Conseco Finance Corp.] [Conseco Finance
Securitizations Corp.], as amended, as in effect on the date hereof;
(iii) the representations and warranties of [Conseco
Finance Securitizations Corp.] contained in Sections 3.01 and 3.03 of
the Agreement are true and correct on and as of the date hereof and,
to the best of my knowledge, the representations and warranties of
[Conseco Finance Corp.] contained in Sections 3.02, 3.04 and 3.05 of
the Agreement are true and correct on and as of the date hereof;
(iv) no event with respect to [Conseco Finance Corp.]
[Conseco Finance Securitizations Corp.] has occurred and is continuing
which would constitute an Event of Termination or an event that with
notice or lapse of time or both would become an Event of Termination
under the Agreement; and
(v) each of the agreements and conditions of [Conseco
Finance Corp.] [Conseco Finance Securitizations Corp.] to be performed
on or before the date hereof pursuant to the Agreement have been
performed in all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____
day of _______________________, 2002.
___________________________________
[Name]
[Title]
E-1
EXHIBIT F
FORM OF OPINION OF COUNSEL FOR THE ORIGINATOR
The opinion of Xxxxxx & Xxxxxxx LLP shall be to the effect that
(capitalized terms have the meanings set forth in the Pooling and Servicing
Agreement):
1. the Originator is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, with
corporate power to execute, deliver and perform its obligations under the
Pooling and Servicing Agreement, the Certificates and the Class R Certificate.
2. The Pooling and Servicing Agreement has been duly authorized by
all requisite corporate action, duly executed and delivered by the Originator,
and constitutes the valid and binding obligation of the Originator enforceable
in accordance with its terms. The Certificates have been duly authorized by all
requisite corporate action and, when duly and validly executed by the Trustee
in accordance with the Pooling and Servicing Agreement, will be validly issued
and outstanding and entitled to the benefits of the Pooling and Servicing
Agreement.
3. No consent, approval, authorization or order of any state or
federal court or governmental agency or body is required to be obtained by the
Originator for the consummation of the transactions contemplated by the Pooling
and Servicing Agreement, except such as may be required under blue sky laws
under any jurisdiction in connection with the offering of the Certificates by
the Underwriters pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as now in effect, and the
Trust is not required to be registered as an investment company under the
Investment Company Act of 1940.
5. Neither the transfer of the Loans to the Trustee acting on behalf
of the Trust, nor the assignment of the Originator's lien on the related real
estate which is the subject of a home equity loan, nor the issuance or sale of
the Certificates and the Class R Certificate, nor the execution and delivery of
the Pooling and Servicing Agreement, nor the consummation of any other of the
transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates, the Class R Certificate or the
Pooling and Servicing Agreement by the Originator will conflict with, or result
in a breach, violation or acceleration of, or constitute a default under, any
term or provision of the Restated Certificate of Incorporation or Bylaws of the
Originator or of any indenture or other agreement or instrument known to us to
which the Originator is a party or by which it is bound, or result in a
violation of, or contravene the terms of any statute, order or regulation,
applicable to the Originator, of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it.
6. There are no actions or proceedings pending, nor to the best of
our knowledge, are there any investigations pending or overtly threatened
against the Originator before any court, administrative agency or other
tribunal (A) asserting the invalidity of the Pooling and Servicing Agreement,
the Certificates, the Class R Certificate, the hazard or flood insurance
policies
F-1
applicable to any Loans or the Errors and Omissions Protection Policy, (B)
seeking to prevent the issuance of the Certificates or the Class R Certificate
or the consummation of any of the transactions contemplated by the Pooling and
Servicing Agreement, (C) which is likely materially and adversely to affect the
performance by the Originator of its obligations under, or the validity or
enforceability of the Pooling and Servicing Agreement, the Certificates or the
Class R Certificate, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates or the Class R Certificate described in the
Prospectus and the Prospectus Supplement under the heading "Certain Federal
Income Tax Consequences."
7. The transfer of the Loans to the Trust in accordance with Section
2.01 of the Pooling and Servicing Agreement would not be avoidable as a
preferential transfer under Section 547 of the United States Bankruptcy Code
(11 U.S.C. [sec] 547), as in effect on the date hereof, in the event that the
Originator became a debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Originator has
transferred to the Trustee acting on behalf of the Trust all of the Originator's
right, title and interest in the Loans, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Loans, and has delivered the Loan Files to the Trustee or its custodian.
No filing or other action, other than the filing of a financing statement on
Form UCC-1 with the Secretary of State of the State of Minnesota identifying the
Loans as collateral and naming the Originator as debtor and the Trust as secured
party, and the filing of continuation statements as required by Section 4.01 of
the Pooling and Servicing Agreement, is necessary to perfect as against third
parties the assignment of the Loans by the Originator to the Trust. We have
separately provided you with our opinion concerning whether such assignment
could be recharacterized as a pledge rather than a sale in the event the
Originator became a debtor under the United States Bankruptcy Code. However, in
the event such assignment were characterized as a pledge securing a loan from
the Certificateholders to the Originator, it is our opinion that the Trustee
would be deemed to have a valid and perfected security interest in the Loans and
the proceeds thereof, which security interest would be prior to any other
security interest that may be perfected under the Uniform Commercial Code as in
effect in the State of Minnesota and over any "lien creditor" (as defined in
Minn. Stat. [sec]336.9-301(3)) who becomes such after the Closing Date, except
that a subsequent purchaser of any Loan who gives new value and takes possession
thereof in the ordinary course of his business would have priority over the
Trustee's security interest in such Loan, if such purchaser acts without
knowledge that such Loan was subject to a security interest. We have assumed for
the purposes of this opinion that during the term of the Pooling and Servicing
Agreement the Trustee, or its custodian, shall maintain possession of the Loan
Files for the purpose of perfecting the assignment to the Trustee of the Loans.
We express no opinion with respect to the enforceability of any individual Loan
or the existence of any claims, rights or other matters in favor of any Obligor
or the owner of any financed home improvement.
9. In reliance upon certain representations and warranties set forth
in the Pooling and Servicing Agreement and assuming that the Originator and the
Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing on behalf of the REMIC of a proper election to be taxed as
a REMIC, as of the date hereof the REMIC created
F-2
pursuant to the Pooling and Servicing Agreement will qualify as a REMIC.
Further, the Certificates will evidence ownership of the "regular interests" in
the Master REMIC and the Class R-I, Class R-II and Class R-III Certificates will
evidence ownership of the single Class of "residual interest" in the Subsidiary
REMIC, Intermediate REMIC and Master REMIC, respectively. For Minnesota income
tax purposes, and subject to the foregoing assumptions, and the provisions of
Minnesota law as of the date hereof, the Trust (excluding the Yield Maintenance
Reserve Funds, the Basis Risk Reserve Fund and the Pre-Funding Account) will not
be subject to tax and the income of the Trust will be taxable to the holders of
interests therein, all in accordance with the provisions of the Code concerning
REMICs. Moreover, ownership of Certificates will not be a factor in determining
whether such owner is subject to Minnesota income taxes. Therefore, if the owner
of Certificates is not otherwise subject to Minnesota income or franchise taxes
in the State of Minnesota, such owner will not become subject to such Minnesota
taxes solely by virtue of owning Certificates.
10. The transfer of the Loans and the proceeds thereof by the
Originator to the Trustee on the date hereof pursuant to the Pooling and
Servicing Agreement would not be avoidable as a fraudulent transfer under the
Uniform Fraudulent Transfer Act as in effect in Minnesota on the date hereof
(Minn. Stat. [sec][sec] 513.41 through 513.51), nor, should the Originator
become a debtor under the United States Bankruptcy Code, as a fraudulent
transfer under Section 548 of the United States Bankruptcy Code
(11 U.S.C. [sec] 548) as in effect on the date hereof.
F-3
EXHIBIT G
FORM OF TRUSTEE'S ACKNOWLEDGMENT
U.S. Bank National Association, a national banking association
organized under the laws of the United States, acting as trustee (the "Trustee")
of Conseco Finance Home Equity Loan Trust 2002-A (the "Trust") created pursuant
to the Pooling and Servicing Agreement dated as of January 1, 2002 among Conseco
Finance Corp., Conseco Finance Securitizations Corp. (the "Seller") and the
Trustee (the "Agreement") (all capitalized terms used herein without definition
having the respective meanings specified in the Agreement) acknowledges,
pursuant to Section 2.04 of the Agreement, that the Trustee has received the
following: (i) all right, title and interest in the home equity loans identified
in the List of Loans attached to the [Agreement] [Subsequent Transfer Instrument
of even date herewith] (the ["Initial and Additional Loans"] ["Subsequent
Loans"]), including, without limitation, all related mortgages and deeds of
trust and any and all rights to receive payments on or with respect to the
[Initial and Additional/Subsequent] Loans (due after the [Cut-off Date]
[Subsequent Cut-off Date]), (ii) all rights under any hazard, flood or other
individual insurance policy on the real estate securing [an Initial and
Additional] [a Subsequent] Loan for the benefit of the creditor of such [Initial
and Additional/Subsequent] Loan, (iii) all rights the Seller may have against
the originating lender with respect to [Initial and Additional/Subsequent] Loans
originated by a lender other than the Seller, (iv) all rights under the Errors
and Omissions Protection Policy and the Fidelity Bond as such policy and bond
relate to the [Initial and Additional/Subsequent] Loans, (v) all rights under
any title insurance policies, if applicable, on any of the properties securing
[Initial and Additional/Subsequent] Loans and all rights under the Transfer
Agreement dated January 1, 2002 between Conseco Finance Corp. and the Seller,
(vi) all documents contained in the Loan Files relating to the Initial and
Additional/Subsequent Loans, (vii) amounts in the Certificate Account, Basis
Reserve Fund, Yield Maintenance Reserve Funds and the Pre-Funding Account
(including all proceeds of investments of funds in the Certificate Account,
(viii) all rights of Seller under the Transfer Agreement, and (ix) all proceeds
and products of the foregoing; and declares that, directly or through a
Custodian, it will hold all Loan Files that have been delivered in trust, upon
the trusts set forth in the Agreement for the use and benefit of all
Certificateholders and the holders of the Residual Certificate.
[From Trustee or Custodian as applicable.] The Trustee acknowledges
that it has conducted a cursory review of the Loan Files and hereby confirms
that except as noted on the document exception listing attached hereto, each
Loan File contained (a) an original promissory note, (b) with respect to each
Loan, an original or a copy of the mortgage or deed of trust or similar evidence
of a lien on the related improved real estate, (c) in the case of Loans
originated by a lender other than the Seller, an original or a copy of an
assignment of the mortgage, deed of trust or security deed by the lender to the
Seller, and (d) any extension, modification or waiver agreement(s). The Trustee
has not otherwise reviewed the Loans and Loan Files for compliance with the
terms of the Pooling and Servicing Agreement.
G-1
IN WITNESS WHEREOF, ____________________________ as Trustee has caused
this acknowledgment to be executed by its duly authorized officer and its
corporate seal affixed hereto as of this _____, day of ________________, 2002.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By _______________________________________
[Name]
[Title]
[SEAL]
G-2
EXHIBIT H
FORM OF CERTIFICATE OF SERVICING OFFICER
CONSECO FINANCE CORP.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of January 1, 2002 between the Company, Conseco Finance
Securitizations Corp. and U.S. Bank National Association, as Trustee of Conseco
Finance Home Equity Loan Trust 2002-A (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Monthly Report for the period from ______________ to
______________ attached to this certificate is complete and accurate in
accordance with the requirements of Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of _______________________, 2002.
CONSECO FINANCE CORP.
By: _____________________________________
[Name]
[Title]
H-1
EXHIBIT I
FORM OF CLASS B-3I CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M CERTIFICATES, AND THE
CLASS B CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NO PERSON MAY ACQUIRE THIS CERTIFICATE OR ANY INTEREST HEREIN ON BEHALF
OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT
IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH, A "PLAN") UNLESS IT
DELIVERS TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, WILL NOT RESULT IN THE
ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH
OPINION IS DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE
SELLER AND THE SERVICER EITHER (I) THAT SUCH PERSON IS NEITHER A PLAN, NOR
ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE, OR
(II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT
RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO
THE PROHIBITED TRANSACTION PROVISIONS OR ERISA AND THE CODE AND WILL NOT SUBJECT
THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
I-1
THE INTERNAL REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A
PERMITTED TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN); ANY SUCH TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF
SECTION 9.02 OF SUCH POOLING AND SERVICING AGREEMENT.
Class B-3I NO.
(Subordinate) Percentage Interest:. _________%
Cut-off Date: as defined in the
Pooling and Servicing Agreement dated
January 1, 2002
CUSIP No. _____________________
First Payment Date:
March 15, 2002 Final Scheduled Payment Date:
Servicer: Conseco Finance Corp.
CERTIFICATE FOR HOME EQUITY LOANS, SERIES 2002-A
Original Aggregate Certificate Principal Balance of the Trust:
$588,000,000
This certifies that Green Tree Finance Corp.--Two is the registered
owner of the Undivided Percentage Interest represented by this Certificate, and
entitled to certain distributions out of Conseco Finance Home Equity Loan Trust
2002-A (the "Trust"), which includes among its assets a pool of closed-end home
equity loans (the "Loans") (including, without limitation, all mortgages, deeds
of trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of January 1, 2002, among Conseco Finance Corp., as
Servicer (the "Originator"), Conseco Finance Securitizations Corp., as Seller
(the "Seller") and U.S. Bank National Association, as Trustee of the Trust (the
"Trustee"). This Class B-3I Certificate is described in the Agreement and is
issued pursuant and subject to the Agreement. By acceptance of this Class B-3I
Certificate the holder assents to and becomes bound by the Agreement. To the
extent not defined herein, all capitalized terms have the meanings assigned to
such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in March
2002, so long as the Agreement has not been terminated, by check to the
registered Certificateholder at the address appearing on the Certificate
Register as of the Business Day immediately preceding such Payment Date, in an
amount equal to the Class B-3I Distribution Amount for such Payment Date. The
final scheduled Payment Date of this Class B-3I Certificate is [April 15],
[2032] or the next succeeding Business Day if such [April 15] is not a Business
Day.
I-2
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH RESPECT
TO THE CONTRACTS.
The Class B-3I Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds in the Certificate
Account to the extent available for distribution to the Class B-3I
Certificateholder as provided in the Agreement for payment hereunder and that
the Trustee in its individual capacity is not personally liable to the Class
B-3I Certificateholder for any amounts payable under this Certificate or the
Agreement or, except as expressly provided in the Agreement, subject to any
liability under the Agreement. By acceptance of this Certificate, the Class B-3I
Certificateholder agrees to disclosure of his, her or its name and address to
other Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Class B-3I Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class B-3I Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class B-3I Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class
B-3I Certificate for registration of transfer at the office or agency maintained
by the Trustee in Minneapolis or St. Xxxx, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder thereof or his or her attorney duly
authorized in writing, and thereupon a new Class B-3I Certificate evidencing the
same Class B-3I Certificate will be issued to the designated transferee or
transferees.
I-3
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Class B-3I
Certificate is registered as the owner hereof for all purposes, and neither the
Originator, the Seller, the Servicer, the Backup Servicer, the Trustee, the
Paying Agent, the Certificate Registrar nor any such agent shall be affected by
any notice to the contrary.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the state of Minnesota from time to time.
I-4
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: _________________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-A
By: U.S. BANK TRUST NATIONAL
ASSOCIATION
By: ________________________________
Authorized Officer
I-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-A, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: ______________________
By: _________________________________
Signature
I-6
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
CONSECO FINANCE CORP.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Sections 3.06 and 8.05 of the Pooling and Servicing
Agreement (the "Agreement") dated as of January 1, 2002 among the Company,
Conseco Finance Securitizations Corp. and U.S. Bank National Association, as
Trustee of Conseco Finance Home Equity Loan Trust 2002-A (all capitalized terms
used herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Loans on the attached schedule are to be repurchased by
the Company on the date hereof pursuant to Section 3.06 of the Agreement.
2. Upon deposit of the Repurchase Price for such Loans, such
Loans may, pursuant to Section 8.05 of the Agreement, be assigned by the Trustee
to the Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of _____________________, 2002.
CONSECO FINANCE CORP.
By: _________________________________
[Name]
[Title]
J-1-1
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
Conseco Finance Corp.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Sections 3.06(b) and 8.05 of the Pooling and Servicing
Agreement (the "Agreement") dated as of January 1, 2002 among the Company,
Conseco Finance Securitizations Corp. and U.S. Bank National Association, as
Trustee of Conseco Finance Home Equity Loan Trust 2002-A (all capitalized terms
used herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan
have been delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on
the date hereof pursuant to Section 3.06(b) of the Agreement and each such Loan
is an Eligible Substitute Loan [description, as to each Loan, as to how it
satisfies the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 3.05(b)(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed
assignment to the Trustee on behalf of the Trust in recordable form for each
mortgage securing such Eligible Substitute Loans.
5. The requirements of Section 3.06(b) of the Agreement have been
met with respect to each such Eligible Substitute Loan.
[6. There has been deposited in the Certificate Account the
amounts listed on the schedule attached hereto as the amount by which the
Scheduled Principal Balance of each Replaced Loan exceeds the Scheduled
Principal Balance of each Loan being substituted therefor.]
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of ______________________, 2002.
CONSECO FINANCE CORP.
By: __________________________________
[Name]
[Title]
J-2-1
EXHIBIT J-3
FORM OF CERTIFICATE REGARDING SUBSTITUTION FOR PREPAID LOANS
Conseco Finance Corp.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 2.06 of the Pooling and Servicing Agreement (the
"Agreement") dated as of January 1, 2002 among the Company, Conseco Finance
Securitizations Corp. and U.S. Bank National Association, as Trustee of Conseco
Finance Home Equity Loan Trust 2002-A (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement), and
further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan
have been delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on
the date hereof pursuant to Section 2.06 of the Agreement and each such Loan is
an Eligible Substitute Loan [description, as to each Loan, as to how it
satisfies the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 2.06(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed
assignment to the Trustee on behalf of the Trust in recordable form for each
mortgage securing such Eligible Substitute Loans.
5. The requirements of Section 2.06 of the Agreement have been
met with respect to each such Eligible Substitute Loan.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of ______________________, 2002.
CONSECO FINANCE CORP.
By: __________________________________
[Name]
[Title]
J-3-1
EXHIBIT K
FORM OF REPRESENTATION LETTER
U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Conseco Finance Securitizations Corp.
0000 Xxxxxxxx Xxxxxx
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Re: Certificates for Home Equity Loans, Series 2002-A, Class
B-2/B-3I/R]
The undersigned purchaser (the "Purchaser") understands that the
purchase of the above-referenced certificates (the "Certificates") may be made
only by institutions which are "Accredited Investors" under Regulation D, as
promulgated under the Securities Act of 1933, as amended (the "1933 Act"), which
includes banks, savings and loan associations, registered brokers and dealers,
insurance companies, investment companies, and organizations described in
Section 501(c)(3) of the Internal Revenue Code, corporations, business trusts
and partnerships, not formed for the specific purpose of acquiring the
Certificates offered, with total assets in excess of $5,000,000. The undersigned
represents on behalf of the Purchaser that the Purchaser is an "Accredited
Investor" within the meaning of such definition. The Purchaser is urged to
review carefully the responses, representations and warranties it is making
herein.
REPRESENTATIONS AND WARRANTIES
------------------------------
The Purchaser makes the following representations and warranties in
order to permit the Trustee, Conseco Finance Securitizations Corp., and
____________________________ to determine its suitability as a purchaser of
Certificates and to determine that the exemption from registration relied upon
by Conseco Finance Securitizations Corp. under Section 4(2) of the 1933 Act is
available to it.
1. The Purchaser understands that the Certificates have not been
and will not be registered under the 1933 Act and may be resold (which resale is
not currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that Conseco Finance
Securitizations Corp. is not required to register the Certificates and that any
transfer must comply with Section 9.02 of the Pooling and Servicing Agreement
relating to the Certificates.
2. The Purchaser will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the
Certificates.
3. The Purchaser is a sophisticated institutional investor and
has knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment. The
K-1
Purchaser has reviewed the Prospectus Supplement dated January 31, 2002, to the
Prospectus dated January 31, 2002 (the "Prospectus") with respect to the
Certificates, and has been given such information concerning the Certificates,
the underlying home equity loans and Conseco Finance Securitizations Corp. as it
has requested.
4. The Purchaser is acquiring the Certificates as principal for
its own account (or for the account of one or more other institutional investors
for which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser either (check one box):
[ ] is not, and is not acting on behalf of or with assets
of, an employee benefit plan that is subject to the
Employee Retirement Income Security Act of 1974, as
amended or that is described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended, or
[ ] has provided the Trustee and Servicer with the
opinion of counsel described in Section 9.02(b)(2) of
the Pooling and Servicing Agreement, or
[ ] acknowledges that it is deemed to make the
representation set forth in Section 9.02(b)(2) of the
Pooling and Servicing Agreement.
6. The Purchaser understands that such Certificate will bear a
legend substantially as set forth in the form of Certificate included in the
Pooling and Servicing Agreement.
7. The Purchaser, as holder of the "_______" Certificate,
acknowledges (i) it may incur tax liabilities in excess of any cash flows
generated by the interest and (ii) it intends to pay the taxes associated with
holding the "_______" Certificate as they become due.
8. The Purchaser agrees that it will obtain from any purchaser of
the Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 7 and in this paragraph 8. The
representations and warranties contained herein shall be binding upon the heirs,
executors, administrators and other successors of the undersigned. If there is
more than one signatory hereto, the obligations, representations, warranties and
agreements of the undersigned are made jointly and severally.
K-2
Executed at ___________________________, ____________________________,
this ______ day of _________________, 2002.
Purchaser's Name (Print)
By: _________________________________
Signature
Its:_____________________________
Address of Purchaser_________________
_________________________________
_________________________________
Purchaser's Taxpayer
Identification Number________________
K-3
EXHIBIT L
LIST OF INITIAL AND ADDITIONAL LOANS
[To Be Supplied]
L-1
EXHIBIT M
FORM OF MONTHLY REPORT
CERTIFICATES FOR HOME EQUITY LOANS, SERIES 2002-A
Payment Date: ________________
1. Amount Available _________
2. Servicing Fee _________
3. Backup Servicing Fee _________
4. Trustee Fee _________
5. Unreimbursed Advances _________
6. Yield Maintenance _________
7. Class X-IO Preference _________
Interest
--------
Class A Certificates
--------------------
8. Current interest
(a) Class A-1a Pass-Through Rate _________
(a floating rate per annum equal to the lesser of
one-month LIBOR plus 0.25% per annum or the Adjusted Net
WAC Cap Rate, but in no case more than 15.00% per annum)
(b) Class A-1b Pass-Through Rate _________
(3.34%, or the Adjusted Net WAC Cap Rate, if less)
(c) Class A-1a Interest _________
(d) Class A-1b Interest _________
(e) Class A-2 Pass-Through Rate (4.69%, or the Adjusted Net WAC _________
Cap Rate, if less)
(f) Class A-2 Interest _________
(g) Class A-3 Pass-Through Rate (5.33%, or the Adjusted Net WAC _________
Cap Rate, if less)
(h) Class A-3 Interest _________
(i) Class A-4 Pass-Through Rate (6.32%, or the Adjusted Net WAC _________
Cap Rate, if less)
M-1
(j) Class A-4 Interest _________
(k) Class A-5 Pass-Through Rate (7.05%*,or the Adjusted Net WAC _________
Cap Rate,
(l) Class A-5 Interest _________
(m) Class A-IO Pass-Through Rate (a rate per annum equal to 7.25%) _________
(n) Class A-IO Interest _________
9. Amount applied to Unpaid Class A Interest Carry Forward Amount _________
10. Remaining Unpaid Class A Interest Carry Forward Amount _________
11. Amount applied to Unpaid Class A-IO Interest Carry Forward Amount _________
12. Remaining Unpaid Class A-IO Interest Carry Forward Amount _________
Class M-1 Certificates
----------------------
13. Amount Available less all preceding distributions _________
14. Class M-1 Principal Balance _________
15. Class M-1 Current Interest _________
(a) Class M-1 Pass-Through Rate (the lesser of one-month LIBOR _________
plus 1.85% per annum or the Adjusted Net WAC Cap Rate, but
in no case more than 15.00% per annum)
(b) Class M-1 Interest _________
16. Amount applied to Unpaid Class M-1 Interest Carry Forward Amount _________
17. Remaining Unpaid Class M-1 Interest Carry Forward Amount _________
Class M-2 Certificates
----------------------
18. Amount Available less all preceding distributions _________
19. Class M-2 Principal Balance _________
20. Class M-2 Current Interest _________
(a) Class M-2 Pass-Through Rate (the lesser of one-month LIBOR _________
plus 2.75% per annum or the Adjusted Net WAC Cap Rate, but
in no case more than 15.00% per annum)
(b) Class M-2 Interest _________
----------------------
* If the purchase option is not exercised pursuant to Section 8.06 of the
Pooling and Servicing Agreement, the Class A-5 Pass-Through Rate shall
increase to 7.55%, or the Adjusted Net WAC Cap Rate, if less.
M-2
21. Amount applied to Unpaid Class M-2 Interest Shortfall _________
22. Remaining Unpaid Class M-2 Interest Carry Forward Amount _________
Class B-1 Certificates
----------------------
23. Amount Available less all preceding distributions _________
24. Class B-1 Principal Balance Current Interest
(a) Class B-1 Pass-Through Rate (the lesser of one-month LIBOR _________
plus 5.25% per annum or the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum)
(b) Class B-1 Interest _________
25. Amount applied to Unpaid Class B-1 Interest Shortfall _________
26. Remaining Unpaid Class B-1 Interest Shortfall _________
Class B-2 Certificates
----------------------
27. Amount Available less all preceding distributions _________
28. Class B-2 Principal Balance _________
29. Current Interest
(a) Class B-2 Pass-Through Rate (the lesser of one-month LIBOR plus 5.75% _________
per annum or the Adjusted Net WAC Cap Rate, but in no case more than
15.00% per annum)
(b) Class B-2 Interest _________
30. Amount applied to Unpaid Class B-2 Interest Shortfall _________
31. Remaining Unpaid Class B-2 Interest Shortfall _________
Principal
---------
32. Trigger Event:
(a) Average Sixty-Day Delinquency Ratio Test
(i) Sixty-Day Delinquency Ratio for current Payment Date _________
(ii) Average Sixty-Day Delinquency Ratio Test (arithmetic average of _________
ratios for this month and two preceding months
may not exceed 38% of the Senior Enhancement Percentage)
(b) Cumulative Realized Losses Test
M-3
(i) Cumulative Realized Losses for current Payment Date _________
(ii) Cumulative Realized Losses Ratio _________
(Losses as a percentage of Cut-off Date Principal: 4.75%
from March 1, 2005 to February 28, 2006, 5.75% from
March 1, 2006 to February 28, 2007, 6.25% from March 1,
2007 to February 28, 2008, and 6.50% thereafter)
33. Senior Enhancement Percentage _________
A. Prior to the Stepdown Date and where no Trigger Event is in Effect:
-------------------------------------------------------------------
Class A Certificates
34. Amount Available less all preceding distributions _________
35. Class A principal distribution:
(a) Class A-1a _________
(b) Class A-1b _________
(c) Class A-2 _________
(d) Class A-3 _________
(e) Class A-4 _________
(f) Class A-5 _________
36. (a) Class A-1 Principal Balance _________
(b) Class A-2 Principal Balance _________
(c) Class A-3 Principal Balance _________
(d) Class A-4 Principal Balance _________
(e) Class A-5 Principal Balance _________
Class M-1 Certificates
----------------------
37. Amount Available less all preceding distributions _________
38. Class M-1 principal distribution _________
39. Class M-1 Principal Balance _________
Class M-2 Certificates
----------------------
40. Amount Available less all preceding distributions _________
M-4
41. Class M-2 principal distribution _________
42. Class M-2 Principal Balance _________
Class B-1 Certificates
----------------------
43. Amount Available less all preceding distributions _________
44. Class B-1 principal distribution _________
45. Class B-1 Principal Balance _________
Class B-2 Certificates
----------------------
46. Amount Available less all preceding distributions _________
47. Class B-2 principal distribution _________
48. Class B-2 Principal Balance _________
B. Principal Distributions after the Stepdown Date and so long as a Trigger Event
------------------------------------------------------------------------------
is not then in effect:
---------------------
Class A Certificates
--------------------
49. Amount Available less all preceding distributions _________
50. Class A Formula Principal Distribution Amount:
Class A-1a _________
Class A-1b _________
Class A-2 _________
Class A-3 _________
Class A-4 _________
Class A-5 _________
51. (a) Class A-1a Principal Balance _________
(b) Class A-1b Principal Balance _________
(c) Class A-2 Principal Balance _________
(d) Class A-3 Principal Balance _________
(e) Class A-4 Principal Balance _________
M-5
(f) Class A-5 Principal Balance _________
Class M-1 Certificates
----------------------
52. Amount Available less all preceding distributions _________
53. Class M-1 Formula Principal Distribution Amount _________
54. Class M-1 Principal Balance _________
Class M-2 Certificates
----------------------
55. Amount Available less all preceding distributions _________
56. Class M-2 Formula Principal Distribution Amount _________
57. Class M-2 Principal Balance _________
Class B-1 Certificates
----------------------
58. Amount Available less all preceding distributions _________
59. Class B-1 Formula Principal Distribution Amount _________
60. Class B-1 Principal Balance _________
Class B-2 Certificates
----------------------
61. Amount Available less all preceding distributions _________
62. Class B-2 Formula Principal Distribution Amount _________
63. Class B-2 Principal Balance _________
Excess Cashflows
----------------
64. Extra Principal Distribution Amount _________
65. Unpaid Class A Interest Carry Forward Amount _________
66. Unpaid Class M-1 Interest Carry Forward Amount _________
67. Unpaid Class M-1 Realized Loss Interest Amount and Unpaid _________
Class M-1 Realized Loss Amount
68. Unpaid Class M-2 Interest Carry Forward Amount _________
69. Unpaid Class M-2 Realized Loss Interest Amount and Unpaid _________
Class M-2 Realized Loss Amount
70. Unpaid Class B-1 Interest Carry Forward Amount _________
M-6
71. Unpaid Class B-1 Realized Loss Interest Amount and Unpaid _________
Class B-1 Realized Loss Amount
72. Unpaid Class B-2 Interest Carry Forward Amount _________
73. Unpaid Class B-2 Realized Loss Interest Amount and Unpaid _________
Class B-2 Realized Loss Amount
74. Class B-2 Principal Balance _________
75. Amounts Deposited in Basis Risk Reserve Fund _________
(a) Unpaid Class A Basis Risk Carry-over Shortfall
(b) Unpaid Class M-1 Basis Risk Carry-over Shortfall
(c) Unpaid Class M-2 Basis Risk Carry-over Shortfall
(d) Unpaid Class B-1 Basis Risk Carry-over Shortfall
(e) Unpaid Class B-2 Basis Risk Carry-over Shortfall
Class A, Class A-IO, Class M and Class B Certificates
-----------------------------------------------------
76. Pool Scheduled Principal Balance _________
77. Pool Factor _________
78. Loans Delinquent: _________
30 - 59 days
60 - 89 days
90 or more days
79. Principal Balance of Defaulted Loans _________
80. Principal Balance of Loans with Extensions _________
81. Number of Liquidated Loans and Net Liquidation Loss _________
82. Number of Loans Remaining _________
83. Pre-Funded Amount _________
Class B-3I Certificate
----------------------
84. Class B-3I Distribution Amount _________
Class P Certificate
-------------------
Class P Distribution Amount _________
Class R-III Certificate
-----------------------
M-7
Class R-III Distribution Amount _________
Please contact the Bondholder Relations Department of U.S. Bank
National Association at (000) 000-0000 with any questions regarding this
Statement or your Distribution.
M-8
EXHIBIT N
FORM OF ADDITION NOTICE
_____________, 2002
U.S. Bank National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of
January 1, 2002, among Conseco Finance Corp. (the
"Originator"), Conseco Finance Securitizations Corp. (the
"Seller") and U.S. Bank National Association as Trustee (the
"Trustee") relating to Certificates for Home Equity Loans,
Series 2002-A
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the
meanings given them in the Agreement. The Seller hereby notifies the Trustee of
an assignment to the Trust of Subsequent Loans on the date and in the amounts
set forth below:
Subsequent Transfer Date: _______________
Cut-off Date Principal Balance of Subsequent Loans to be assigned to
Trust on Subsequent Transfer Date: $_______________.
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
CONSECO FINANCE CORP.
By: ______________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK NATIONAL ASSOCIATION
By: __________________________
Name:
Title:
N-1
EXHIBIT O
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of January 1, 2002, among the undersigned, Conseco Finance
Securitizations Corp. (the "Seller") and U.S. Bank National Association as
Trustee (the "Trustee"), the undersigned does hereby transfer, assign, set over
and otherwise convey, without recourse, to Conseco Finance Home Equity Loan
Trust 2002-A, created by the Agreement, to be held in trust as provided in the
Agreement, (i) all right, title and interest in the home equity loans identified
in the List of Loans attached hereto (each a "Subsequent Loan"), including,
without limitation, all related mortgages, deeds of trust, security deeds and
any and all rights to receive payments on or with respect to the Subsequent
Loans (excluding principal due before the Subsequent Cut-off Date), (ii) all
rights under any hazard, flood or other individual insurance policy on the real
estate securing a Subsequent Loan for the benefit of the creditor of such Loan,
(iii) all rights the Originator may have against the originating lender with
respect to the Subsequent Loans originated by a lender other than the
Originator, (iv) all rights under the Errors and Omissions Protection Policy and
the Fidelity Bond as such policy and bond relate to the Subsequent Loans, (v)
all rights under any title insurance policies, if applicable, on any of the
properties securing Subsequent Loans, (vi) all documents contained in the
related Loan Files, and (vii) all proceeds and products of the foregoing and all
rights of the Seller under the Subsequent Transfer Agreement between the Seller
and the undersigned and all rights of the Seller under the Subsequent Transfer
Agreement with Conseco Finance Corp.
Each of the Subsequent Loans constitutes a Subsequent Loan under the
Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Section 2.03 and Article
III of the Agreement and no others. All undefined capitalized terms used in this
Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this ____ day of __________________, 2002.
CONSECO FINANCE CORP.
By: ______________________
Name:
Title:
[SEAL]
O-1
EXHIBIT P
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
I, __________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Originator in connection with the Pooling and Servicing Agreement dated as of
January 1, 2002 (the "Agreement") among the Originator, Conseco Finance
Securitizations Corp. and U.S. Bank National Association as Trustee. All
capitalized terms used herein without definition have the respective meanings
specified in the Agreement. The undersigned further certifies that:
1. This Certificate is delivered in connection with the sale to the
Trust on __________________ (the "Subsequent Transfer Date") of Loans (the
"Subsequent Loans") identified in the List of Loans attached to the Subsequent
Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and
warranties in Section 3.01, 3.02, 3.03, 3.04 and 3.05 of the Agreement are true
and correct; all representations and warranties in Sections 3.02 and 3.03 of the
Agreement with respect to the Subsequent Loans are true to the best of his
knowledge; and all representations in Section 3.04 of the Agreement with respect
to the Subsequent Loans are true and correct.
3. All conditions precedent to the sale of the Subsequent Loans to
the Trust under Section 2.03 of the Agreement have been satisfied.
4. Each of the Subsequent Loans constitutes a Subsequent Loan under
the Agreement.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of _______________________, 2002.
By: _____________________________
Name:
Title:
P-1
EXHIBIT Q
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M CERTIFICATES AND THE
CLASS B CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NO PERSON MAY ACQUIRE THIS CERTIFICATE OR ANY INTEREST HEREIN ON BEHALF
OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT
IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH, A "PLAN") UNLESS IT
DELIVERS TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL RESULT IN THE ASSETS OF THE TRUST
BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS
DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE SELLER AND
THE SERVICER EITHER (I) THAT SUCH PERSON IS NEITHER A PLAN, NOR ACTING ON BEHALF
OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THIS CODE, OR (II) THAT THE
PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE
ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE,
THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
Q-1
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
Class R NO.
(Subordinate) Percentage Interest:. ________%
Cut-off Date: as defined in the Pooling and Servicing
Agreement dated January 1, 2002
First Payment Date:
March 15, 2002 CUSIP No. _____________________
Servicer: Conseco Finance Corp.
CERTIFICATE FOR HOME EQUITY LOANS, SERIES 2002-A
ORIGINAL AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE TRUST:
$588,000,000
This certifies that Green Tree Finance Corp.--Two is the registered
owner of the Residual Interest represented by this Certificate, and entitled to
certain distributions out of Conseco Finance Home Equity Loan Trust 2002-A (the
"Trust"), which includes among its assets a pool of closed-end home equity loans
(the "Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
January 1, 2002, among Conseco Finance Corp., as Servicer (the "Originator"),
Conseco Finance Securitizations Corp., as Seller (the "Seller") and U.S. Bank
National Association, as Trustee of the Trust (the "Trustee"). This Class R
Certificate is described in the Agreement and is issued pursuant and subject to
the Agreement. The Class R Certificate will represent collectively the Class
R-III Certificates, the Class R-II Certificates and the R-I Certificates, which
represent "residual interests" in the Master REMIC, the Intermediate REMIC and
the Subsidiary REMIC, respectively. By acceptance of this Class R Certificate
the holder assents to and becomes bound by the Agreement. To the extent not
defined herein, all capitalized terms have the meanings assigned to such terms
in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each
Q-2
calendar month commencing in March 2002, so long as the Agreement has not been
terminated, by check to the registered Class R Certificateholder at the address
appearing on the Certificate Register as of the Business Day immediately
preceding such Payment Date, in an amount equal to Prepayment Charges. The final
scheduled Payment Date of this Class R Certificate is _________________ 15,
______ or the next succeeding Business Day if such _______________ 15, is not a
Business Day.
The Class R Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Class R Certificateholder as provided
in the Agreement for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Class R Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Class R Certificateholder agrees to
disclosure of his, her or its name and address to other Certificateholders under
the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Class R Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class R Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class R Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class R
Certificate for registration of transfer at the office or agency maintained by
the Trustee in Minneapolis or St. Xxxx, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly
Q-3
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon a new Class R Certificate evidencing the same Class R
Certificate will be issued to the designated transferee or transferees.
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Class R
Certificate is registered as the owner hereof for all purposes, and neither the
Originator, the Seller, the Servicer, the Backup Servicer, the Trustee, the
Paying Agent, the Certificate Registrar nor any such agent shall be affected by
any notice to the contrary.
The holder of this Class R Certificate, by acceptance hereof, agrees
that, in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of the Trust for its first taxable year shall provide that
the Trust (exclusive of the Pre-Funding Account, the Yield Maintenance Reserve
Fund and the Basis Risk Reserve Fund) elects to be treated as one or more "real
estate mortgage investment conduits" (each, a "REMIC") under the Code for such
taxable year and all subsequent taxable years. The Certificates shall be
"regular interests" in the REMIC and the Class R Certificate shall represent the
"residual interest" in the REMIC. In addition, the holder of this Class R
Certificate, by acceptance hereof, (i) agrees to file tax returns consistent
with and in accordance with any elections, decisions or other reports made or
filed with regard to federal, state or local taxes on behalf of the Trust, and
(ii) agrees to cooperate with the Originator in connection with examinations of
the Trust's affairs by tax authorities, including administrative and judicial
proceedings, and (iii) makes the additional agreements, designations and
appointments, and undertakes the responsibilities, set forth in Section 6.06 of
the Agreement.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the state of Minnesota from time to time.
Q-4
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-A has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: _______________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-A
By: U.S. BANK NATIONAL
ASSOCIATION
By: ______________________
Authorized Officer
Q-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-A, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: ______________________
By: ______________________
Signature
Q-6
