EXHIBIT 4.3
INSURANCE AND INDEMNITY AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
CONSECO FINANCE SECURITIZATIONS CORP.
and
CONSECO FINANCE CORP.
Dated as of June 1, 2000
$935,000,000
Conseco Finance Home Equity Loan
Trust 2000-D Certificates for Home Equity Loans
Class A-1, Class A-2, Class A-3, Class A-4 and Class A-5
TABLE OF CONTENTS
Page
INSURANCE AND INDEMNITY AGREEMENT..............................................1
INTRODUCTORY STATEMENTS........................................................1
ARTICLE I DEFINITIONS; LIMITED RECOURSE.....................................1
Section 1.01. Definitions.............................................1
Section 1.02. Limited Recourse........................................2
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS........................2
Section 2.01. Representations and Warranties of the Seller............2
Section 2.02. Affirmative Covenants of the Seller.....................5
Section 2.03. Negative Covenants of the Seller........................9
Section 2.04. Representations and Warranties of the Originator.......10
Section 2.05. Affirmative Covenants of the Originator................13
Section 2.06. Negative Covenants of the Originator...................17
Section 2.07. Reserved...............................................18
Section 2.08. Reserved...............................................18
Section 2.09. Reserved...............................................18
Section 2.10. Covenant of FSA........................................18
ARTICLE III THE POLICY; REIMBURSEMENT; INDEMNIFICATION.....................18
Section 3.01. Issuance of the Policy.................................18
Section 3.02. Payment of Fees and Premium............................18
Section 3.03. Reimbursement and Additional Payment Obligation........19
Section 3.04. Indemnification........................................20
Section 3.05. Subrogation............................................22
ARTICLE IV FURTHER AGREEMENTS..............................................22
Section 4.01. Effective Date; Term of Agreement......................22
Section 4.02. Obligations Absolute...................................22
Section 4.03. Assignments; Reinsurance; Third-Party Rights...........23
Section 4.04. Liability of FSA.......................................24
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ARTICLE V EVENTS OF DEFAULT; REMEDIES......................................24
Section 5.01. Events of Default......................................24
Section 5.02. Remedies; Waivers......................................26
ARTICLE VI MISCELLANEOUS...................................................27
Section 6.01. Amendments, Etc........................................27
Section 6.02. Notices................................................27
Section 6.03. Payment Procedure......................................28
Section 6.04. Severability...........................................28
Section 6.05. Governing Law..........................................28
Section 6.06. Consent to Jurisdiction................................28
Section 6.07. Consent of FSA.........................................29
Section 6.08. Counterparts...........................................29
Section 6.09. Trial by Jury Waived...................................29
Section 6.10. Limited Liability......................................30
Section 6.11. Entire Agreement.......................................30
APPENDIX I DEFINITIONS........................................................1
APPENDIX II OPINIONS OF COUNSEL...............................................1
ANNEX I Form of Financial Guaranty Insurance Policy
APPENDIX A Conditions Precedent to Issuance of Policy
ii
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of June 1, 2000 among FINANCIAL
SECURITY ASSURANCE INC. ("FSA"), CONSECO FINANCE SECURITIZATIONS CORP. (the
"Seller"), as Seller under the Pooling and Servicing Agreement (as defined
herein) and CONSECO FINANCE CORP. (the "Originator"), as originator of the Loans
(as defined herein) and as Servicer under the Pooling and Servicing Agreement
(in such capacity the "Servicer").
INTRODUCTORY STATEMENTS
Conseco Finance Home Equity Loan Trust 2000-D (the "Issuer") intends to
issue the Certificates (as defined herein), including the Securities (as defined
herein) pursuant to the Pooling and Servicing Agreement (as defined herein). The
Certificates represent an undivided interest in the Trust Fund consisting
primarily of the Loans and the Loan Files (each as defined herein), including
certain home equity loans that have been or will be originated or acquired by
the Originator, sold by the Originator to the Seller pursuant to the Transfer
Agreement dated as of June 1, 2000, between the Originator and the Seller, and
sold by the Seller to the Issuer pursuant to the Pooling and Servicing
Agreement. The Servicer will service such home equity loans pursuant to the
Pooling and Servicing Agreement.
The Seller and the Originator have requested that FSA issue a financial
guaranty insurance policy guarantying payment of the principal of and interest
on the Securities upon the terms and subject to the conditions provided herein.
The parties hereto desire to specify the conditions precedent to the
issuance of the Policy by FSA, the payment of premium in respect of the Policy,
the indemnity and reimbursement to be provided to FSA in respect of amounts paid
by FSA under the Policy or otherwise and certain other matters.
In consideration of the premises and of the agreements herein contained,
FSA, the Seller and the Originator hereby agree as follows:
Article I.
DEFINITIONS; LIMITED RECOURSE
Section 1.01 Definitions. Capitalized terms used herein shall have the
meanings provided in Appendix I hereto or, if not defined therein, in the
Pooling and Servicing Agreement, unless the context otherwise requires.
Section 1.02 Limited Recourse. Notwithstanding any provision of this
Agreement to the contrary, the payment obligations set forth herein (other than
those set forth in Sections 3.02 and 3.04) shall be non-recourse obligations
with respect to the Seller and the Originator and shall be payable only from
monies available for such payment in accordance with the provisions of the
Pooling and Servicing Agreement (except to the extent that any such payment
obligation arises
from a failure to perform or default of the Seller or the Originator under any
Transaction Document or by reason of negligence, willful misconduct or bad faith
on the part of the Seller or the Originator in the performance of its duties and
obligations thereunder or reckless disregard by the Seller or the Originator of
its duties and obligations thereunder).
Article II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 Representations and Warranties of the Seller. The Seller
represents, warrants and covenants, as of the Date of Issuance, as follows:
(a) Due Organization and Qualification. The Seller and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its formation. The Seller and each
of its Subsidiaries is duly qualified to do business, is in good standing
and has obtained all necessary licenses, permits, charters, registrations
and approvals (together, "approvals") necessary for the conduct of its
business as currently conducted and as described in the Offering Document
and the performance of its obligations under the Transaction Documents, in
each jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Loan unenforceable in any respect or would
otherwise have a material adverse effect upon the Transaction.
(b) Power and Authority. The Seller has all necessary corporate power
and authority to conduct its business as currently conducted and as
described in the Offering Document, to execute, deliver and perform its
obligations under the Transaction Documents and to consummate the
Transaction.
(c) Due Authorization. The execution, delivery and performance of the
Transaction Documents by the Seller have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents or other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity or the Seller's
shareholders.
(d) Noncontravention. Neither the execution and delivery of the
Transaction Documents by the Seller, the consummation of the transactions
contemplated thereby nor the satisfaction of the terms and conditions of
the Transaction Documents,
(i) conflicts with or results in any breach or violation of any
provision of the Certificate of Incorporation or Bylaws of the Seller
or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to the Seller or any of its properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Seller,
(ii) constitutes a default by the Seller under or a breach of any
provision of any loan agreement, mortgage, indenture or other
agreement
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or instrument to which the Seller or any of its Subsidiaries is a
party or by which it or any of their properties is or may be bound or
affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Seller's assets except as otherwise expressly
contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
against or affecting all or any of the Loans, or the Seller or any of its
Subsidiaries, or any properties or rights of the Seller or any of its
Subsidiaries, pending or, to the Seller's knowledge after reasonable
inquiry, threatened, which, in any case, if decided adversely to the
Seller, would result in a Material Adverse Change with respect to the
Seller or any Loan, except for the litigation disclosed in the Offering
Document under the caption "CONSECO FINANCE CORP.--Recent Developments,"
which is not reasonably likely to result in a Material Adverse Change with
respect to the Seller or any Loan.
(f) Valid and Binding Obligations. The Transaction Documents, when
executed and delivered by the Seller, will constitute the legal, valid and
binding obligations of the Seller, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles. The
Securities, when executed, authenticated and delivered 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 and,
together with each Class of Certificates other than the Securities, will
evidence the entire beneficial ownership interest in the Trust Fund.
(g) Financial Statements. The Financial Statements of the Seller,
copies of which have been furnished to FSA, (i) are, as of the dates and
for the periods referred to therein, complete and correct in all material
respects (except where solely due to an incorrect valuation of
interest-only securities or receivables), (ii) present fairly the financial
condition and results of operations of the Seller as of the dates and for
the periods indicated (except where solely due to an incorrect valuation of
interest-only securities or receivables) and (iii) have been prepared in
accordance with generally accepted accounting principles consistently
applied, except as noted therein (subject as to interim statements to
normal year-end adjustments). Since the date of the most recent Financial
Statements, there has been no material adverse change in such financial
condition or results of operations. Except as disclosed in the Financial
Statements, the Seller is not subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material
possibility of causing a Material Adverse Change in respect of the Seller.
(h) ERISA. Either (i) the Seller is in compliance in all material
respects with ERISA and has not incurred and does not reasonably expect to
incur any liabilities to the PBGC under ERISA in connection with any Plan
or Multiemployer Plan or to contribute now or in the future in respect of
any Plan or Multiemployer Plan, or (ii) no Accumulated
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Funding Deficiency, whether or not waived, has occurred with respect to any
Plan. No Plan has been terminated, and no Commonly Controlled Entity has
withdrawn from any Multiemployer Plan which could result in any liability
under ERISA of a Commonly Controlled Entity. No Reportable Event or other
event or condition has occurred which could result in the termination of
any Plan by the PBGC. No Plan has an Underfunding greater than $100,000.
The aggregate amount of Underfunding for all Underfunded Plans does not
exceed $100,000. The liability to which the Commonly Controlled Entities
would become subject under ERISA if they were to withdraw completely from
all Multiemployer Plans as of the most recent valuation date is not in
excess of $100,000. The Multiemployer Plans are neither in Reorganization
(as defined in Section 4241 of ERISA) nor Insolvent (as defined in Section
4245 of ERISA). The Seller is in compliance in all material respects with
ERISA and has not incurred and does not reasonably expect to incur any
liabilities to the PBGC (other than premiums due to the PBGC) in connection
with any Plan or Multiemployer Plan.
(i) Accuracy of Information. None of the Provided Documents contain
any statement of a material fact with respect to the Seller or the
Transaction that was untrue or misleading in any material respect when
made. Since the furnishing of the Provided Documents, there has been no
change, nor any development or event involving a prospective change known
to the Seller, that would render any of the Provided Documents untrue or
misleading in any material respect. There is no fact known to the Seller
which has a material possibility of causing a Material Adverse Change with
respect to the Seller or a substantial portion of the Loans.
(j) Compliance With Securities Laws. The offer and sale of the
Certificates comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limitation of the foregoing, the Offering Document does not contain
any untrue statement of a material fact and does not omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. Neither the Issuer nor the Trust Fund is
required to be registered as an "investment company" under the Investment
Company Act. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act.
(k) Transaction Documents. Each of the representations and warranties
of the Seller contained in the Transaction Documents is true and correct in
all material respects and the Seller hereby makes each such representation
and warranty to, and for the benefit of, FSA as if the same were set forth
in full herein.
(l) Compliance With Law, Etc. No practice, procedure or policy
employed or proposed to be employed by the Seller in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Seller which, if enforced, would result in a Material
Adverse Change with respect to the Seller.
(m) Good Title; Absence of Liens; Security Interest. Immediately prior
to the transfer to the Issuer, the Seller is the owner of, and has good and
marketable title to, the Loans free and clear of all Liens and Restrictions
on Transferability, and has full right,
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corporate power and lawful authority to assign, transfer and pledge the
Loans. In the event that, in contravention of the intention of the parties,
the transfer of the Loans by the Seller to the Issuer is characterized as
other than a sale, such transfer shall be characterized as a secured
financing, and the Issuer shall, for the benefit of the Trustee, have a
valid and perfected first priority security interest in the Loans free and
clear of all Liens and Restrictions on Transferability.
(n) Taxes. The Seller has and its Parent and each of its Subsidiaries
have filed all federal and state tax returns which are required to be filed
and paid all taxes, including any assessments received by it, to the extent
that such taxes have become due. Any taxes, fees and other governmental
charges payable by the Seller in connection with the Transaction, the
execution and delivery of the Transaction Documents and the issuance of the
Certificates have been paid or shall have been paid at or prior to the Date
of Issuance. The Certificates will be treated for federal income tax
purposes as evidence of ownership of "regular interests" in the assets of
the Issuer comprising a REMIC. The Issuer will not be treated as an
association taxable as a corporation or as a taxable mortgage pool for
federal or state tax purposes.
(o) Solvency; Fraudulent Conveyance. The Seller is solvent and will
not be rendered insolvent by the transactions contemplated by the
Transaction Documents and, after giving effect to such transactions, the
Seller will not be left with an unreasonably small amount of capital with
which to engage in its business. The Seller does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as
they mature. The Seller does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Seller or any of its assets. The amount of
consideration being received by the Seller upon the sale of the
Certificates to the Underwriters, together with the value of the
Certificates and Class C Certificate retained by the Seller or its
Subsidiaries, constitutes reasonably equivalent value and fair
consideration for the Loans transferred to the Issuer. The Seller is not
transferring the Loans to the Issuer or selling the Certificates to the
Underwriters, as provided in the Transaction Documents, with any intent to
hinder, delay or defraud any of the Seller's creditors.
Section 2.02 Affirmative Covenants of the Seller. The Seller hereby agrees
that during the Term of the Agreement, unless FSA shall otherwise expressly
consent in writing:
(a) Compliance With Agreements and Applicable Laws. The Seller shall
perform each of its obligations under the Transaction Documents and any
credit or loan agreements and shall comply with all material requirements
of, and the Certificates shall be offered and sold in accordance with, any
law, rule or regulation applicable to it or thereto, or that are required
in connection with its performance under any of the Transaction Documents.
(b) Financial Statements; Accountants' Reports; Other Information. The
Seller shall keep or cause to be kept in reasonable detail books and
records of account of the Seller's assets and business, and shall clearly
reflect therein the transfer of the Loans
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to the Issuer as a sale of the Seller's interest in the Loans. The Seller
shall furnish or caused to be furnished to FSA:
(i) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the
Seller, the audited balance sheets of the Seller as of the end of such
fiscal year and the audited statements of income, changes in
shareholders' equity and cash flows of the Seller for such fiscal
year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the
preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the
certificate of the Seller's independent accountants (who shall be a
nationally recognized firm or otherwise acceptable to FSA) and by the
certificate specified in Section 2.02(c) hereof.
(ii) Quarterly Financial Statements. As soon as available, and in
any event within 45 days after the close of each of the first three
quarters of each fiscal year of the Seller, the unaudited balance
sheets of the Seller as of the end of such quarter and the unaudited
statements of income, changes in shareholders' equity and cash flows
of the Seller for the portion of the fiscal year then ended, all in
reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted accounting
principles, consistently applied (subject to normal year-end
adjustments), and accompanied by the certificate specified in Section
2.02(c) hereof if such certificate is required to be provided pursuant
to such Section.
(iii) Accountants' Reports. If a Trigger Event has occurred,
copies of any reports submitted to the Seller by its independent
accountants in connection with any examination of the financial
statements of the Seller, promptly upon receipt thereof.
(iv) Other Information. Promptly upon receipt thereof, copies of
all reports, statements, certifications, schedules, or other similar
items delivered to or by the Seller pursuant to the terms of the
Transaction Documents and, promptly upon request, such other data as
FSA may reasonably request; provided, however, that the Seller shall
not be required to deliver any such items if provision by some other
party to FSA is required under the Transaction Documents unless such
other party wrongfully fails to deliver any such item. The Seller
shall, upon the request of FSA, permit FSA or its authorized agents
(A) to inspect the books and records of the Seller as they may relate
to the Certificates, the Loans, the obligations of the Seller under
the Transaction Documents, the Transaction and, but only following the
occurrence of a Trigger Event, the Seller's business; (B) to discuss
the affairs, finances and accounts of the Seller with the Chief
Operating Officer and the Chief Financial Officer of
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the Seller, no more frequently than annually unless a Trigger Event
has occurred; and (C) upon the occurrence of a Trigger Event, to
discuss the affairs, finances and accounts of the Seller with the
Seller's independent accountants, provided that an officer of the
Seller shall have the right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Seller. In addition, the Seller shall promptly (but in no case more
than 30 days following issuance or receipt by the Commonly Controlled
Entity) provide to FSA a copy of all correspondence between a Commonly
Controlled Entity and the PBGC, IRS, Department of Labor or the
administrators of a Multiemployer Plan relating to any Reportable
Event or the underfunded status, termination or possible termination
of a Plan or a Multiemployer Plan. The books and records of the Seller
will be maintained at the address of the Seller designated herein for
receipt of notices, unless the Seller shall otherwise advise the
parties hereto in writing.
(v) The Seller shall provide or cause to be provided to FSA an
executed original copy of each document executed in connection with
the transaction within 30 days after the date of closing.
All financial statements specified in clauses (i) and (ii) above shall
be furnished in consolidated form for the Seller and all Subsidiaries in
the event the Seller shall consolidate its financial statements with its
Subsidiaries.
FSA agrees that it shall keep confidential any information of which it
becomes aware through such inspections or discussions (unless such
information is readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its rights
or security under or to enforce the Transaction Documents, provided that
the foregoing shall not limit the right of FSA to make such information
available to its regulators, securities rating agencies, reinsurers, credit
and liquidity providers, counsel and accountants. If FSA is requested or
required (by oral questions, interrogatories, requests for information or
documents subpoena, civil investigative demand or similar process) to
disclose any information of which it becomes aware through such inspections
or discussions, FSA will promptly notify the Seller of such request(s) so
that the Seller may seek an appropriate protective order and/or waive FSA's
compliance with the provisions of this Agreement. If, in the absence of a
protective order or the receipt of a waiver hereunder, FSA is, nonetheless,
in the opinion of its counsel, compelled to disclose such information to
any tribunal or else stand liable for contempt or suffer other censure or
significant penalty, FSA may disclose such information to such tribunal
that FSA is compelled to disclose, provided that a copy of all information
disclosed is provided to the Seller promptly upon such disclosure.
(c) Compliance Certificate. The Seller shall deliver to FSA
concurrently with the delivery of the financial statements required
pursuant to Section 2.02(b)(i) hereof (and concurrently with the delivery
of the financial statements required pursuant to
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Section 2.02(b)(ii) hereof, if a Trigger Event has occurred), a certificate
signed by the Chief Financial Officer or other officer of the Seller
stating that:
(i) a review of the Seller's performance under the Transaction
Documents during such period has been made under such officer's
supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Trigger Event, Default or Event of Default has
occurred, or if a Trigger Event, Default or Event of Default has
occurred, specifying the nature thereof and, if the Seller has a right
to cure any such Default or Event of Default pursuant to Section 5.01,
stating in reasonable detail the steps, if any, being taken by the
Seller to cure such Default or Event of Default or to otherwise comply
with the terms of the agreement to which such Default or Event of
Default relates; and
(iii) the attached financial reports submitted in accordance with
Section 2.02(b)(i) or (ii) hereof, as applicable, are complete and
correct in all material respects and present fairly the financial
condition and results of operations of the Seller as of the dates and
for the periods indicated, in accordance with generally accepted
accounting principles consistently applied (subject as to interim
statements to normal year-end adjustments).
(d) Notice of Material Events. The Seller shall promptly inform FSA in
writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation (A)
against the Seller or the Issuer pertaining to the Loans in general,
(B) with respect to a material portion of the Loans or (C) in which a
request has been made for certification as a class action (or
equivalent relief) that would involve a material portion of the Loans;
(ii) any change in the location of the Seller's principal office
or any change in the location of the Seller's books and records;
(iii) the occurrence of any Trigger Event, Default or Event of
Default; or
(iv) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material
Adverse Change in respect of the Seller.
(e) Further Assurances. The Seller shall, upon the request of FSA,
from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, promptly, and in any event within
thirty (30) days of such request, such amendments hereto and such further
instruments and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the
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Transaction Documents or to protect the interest of the Trustee, for the
benefit of the Certificateholders and FSA, in the Loans, free and clear of
all Liens and Restrictions on Transferability except the Lien in favor of
the Trustee, for the benefit of the Certificateholders and FSA,
Restrictions on Transferability arising out of the insolvency or bankruptcy
of an individual obligor under a Loan and the Restrictions on
Transferability imposed by the Pooling and Servicing Agreement. In
addition, the Seller agrees to cooperate with S&P and Moody's in connection
with any review of the Transaction which may be undertaken by S&P and
Moody's after the date hereof.
(f) Third-Party Beneficiary. The Seller agrees that FSA shall have all
rights of a third-party beneficiary in respect of the Pooling and Servicing
Agreement and hereby incorporates and restates its representations,
warranties and covenants as set forth therein for the benefit of FSA.
(g) Corporate Existence. The Seller shall maintain its corporate
existence and shall at all times continue to be duly organized under the
laws of the State of Minnesota and duly qualified and duly authorized (as
described in Sections 2.01(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its Certificate of Incorporation
and Bylaws.
Section 2.03 Negative Covenants of the Seller. The Seller hereby agrees
that during the Term of the Agreement, unless FSA shall otherwise expressly
consent in writing:
(a) Restrictions on Liens. The Seller shall not take any action
inconsistent with the Trustee's ownership of the Loans and shall not (i)
create or consent (upon the happening of a contingency or otherwise) to the
creation, incurrence or existence of any Lien or Restriction on
Transferability on the Loans except for the Restrictions on Transferability
imposed by the Pooling and Servicing Agreement or (ii) sign or file under
the Uniform Commercial Code of any jurisdiction any financing statement
which names the Seller as a debtor, or sign any security agreement
authorizing any secured party thereunder to file such financing statement,
with respect to the Loans, except in each case any such instrument solely
securing the rights of the Trustee, for the benefit of the
Certificateholders and FSA.
(b) Impairment of Rights. The Seller shall not take any action, or
fail to take any action, if such action or failure to take action may (i)
interfere with the enforcement of any rights under the Transaction
Documents that are material to the rights, benefits or obligations of the
Trustee, the Certificateholders or FSA, (ii) result in a Material Adverse
Change in respect of any Loan or (iii) impair the ability of the Seller to
perform its obligations under the Transaction Documents.
(c) Waiver, Amendments, Etc. The Seller shall not waive, modify or
amend, or consent to any waiver, modification or amendment of, any of the
provisions of any of the Transaction Documents.
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(d) Successors. The Seller shall not terminate or designate, or
consent to the termination or designation of, any Servicer, Trustee or
Custodian without the prior approval of FSA.
Section 2.04 Representations and Warranties of the Originator. The
Originator represents, warrants and covenants, as of the Date of Issuance, as
follows:
(a) Due Organization and Qualification. The Originator and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the state of its formation. The Originator and
each of its Subsidiaries is duly qualified to do business, is in good
standing and has obtained all necessary licenses, permits, charters,
registrations and approvals (together, "approvals") necessary for the
conduct of its business as currently conducted and as described in the
Offering Document and the performance of its obligations under the
Transaction Documents, in each jurisdiction in which the failure to be so
qualified or to obtain such approvals would render any Loan unenforceable
in any respect or would otherwise have a material adverse effect upon the
Transaction.
(b) Power and Authority. The Originator has all necessary corporate
power and authority to conduct its business as currently conducted and as
described in the Offering Document, to execute, deliver and perform its
obligations under the Transaction Documents and to consummate the
Transaction.
(c) Due Authorization. The execution, delivery and performance of the
Transaction Documents by the Originator have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents or other action by or any notice to or filing with any Person,
including, without limitation, any governmental entity or the Originator's
shareholders.
(d) Noncontravention. Neither the execution and delivery of the
Transaction Documents by the Originator, the consummation of the
transactions contemplated thereby nor the satisfaction of the terms and
conditions of the Transaction Documents,
(i) conflicts with or results in any breach or violation of any
provision of the Certificate of Incorporation or Bylaws of the
Originator or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to the Originator or any of its properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Originator,
(ii) constitutes a default by the Originator under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Originator or any of its
Subsidiaries is a party or by which it or any of their properties is
or may be bound or affected, or
10
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Originator's assets except as otherwise
expressly contemplated by the Transaction Documents.
(e) Legal Proceedings. There is no action, proceeding or investigation
by or before any court, governmental or administrative agency or arbitrator
against or affecting all or any of the Loans, or the Originator or any of
its Subsidiaries, or any properties or rights of the Originator or any of
its Subsidiaries, pending or, to the Originator's knowledge after
reasonable inquiry, threatened, which, in any case, if decided adversely to
the Originator, would result in a Material Adverse Change with respect to
the Originator or any Loan , except for the litigation disclosed in the
Offering Document under the caption "CONSECO FINANCE CORP.--Recent
Developments," which is not reasonably likely to result in a Material
Adverse Change with respect to the Originator.
(f) Valid and Binding Obligations. The Transaction Documents, when
executed and delivered by the Originator, will constitute the legal, valid
and binding obligations of the Originator, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles. The
Securities, when executed, authenticated and delivered 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 and,
together with each Class of Certificates other than the Securities, will
evidence the entire beneficial ownership interest in the Trust Fund.
(g) Financial Statements. The Financial Statements of the Originator,
copies of which have been furnished to FSA, (i) are, as of the dates and
for the periods referred to therein, complete and correct in all material
respects (except where solely due to an incorrect valuation of
interest-only securities or receivables), (ii) present fairly the financial
condition and results of operations of the Originator as of the dates and
for the periods indicated (except where solely due to an incorrect
valuation of interest-only securities or receivables) and (iii) have been
prepared in accordance with generally accepted accounting principles
consistently applied, except as noted therein (subject as to interim
statements to normal year-end adjustments). Since the date of the most
recent Financial Statements, there has been no material adverse change in
such financial condition or results of operations. Except as disclosed in
the Financial Statements, the Originator is not subject to any contingent
liabilities or commitments that, individually or in the aggregate, have a
material possibility of causing a Material Adverse Change in respect of the
Originator.
(h) ERISA. Either (i) the Originator is in compliance in all material
respects with ERISA and has not incurred and does not reasonably expect to
incur any liabilities to the PBGC under ERISA in connection with any Plan
or Multiemployer Plan or to contribute now or in the future in respect of
any Plan or Multiemployer Plan, or (ii) no Accumulated Funding Deficiency,
whether or not waived, has occurred with respect to any Plan. No Plan has
been terminated, and no Commonly Controlled Entity has withdrawn from any
Multiemployer Plan which could result in any liability under ERISA
11
of a Commonly Controlled Entity. No Reportable Event or other event or
condition has occurred which could result in the termination of any Plan by
the PBGC. No Plan has an Underfunding greater than $100,000. The aggregate
amount of Underfunding for all Underfunded Plans does not exceed $100,000.
The liability to which the Commonly Controlled Entities would become
subject under ERISA if they were to withdraw completely from all
Multiemployer Plans as of the most recent valuation date is not in excess
of $100,000. The Multiemployer Plans are neither in Reorganization (as
defined in Section 4241 of ERISA) nor Insolvent (as defined in Section 4245
of ERISA). The Originator is in compliance in all material respects with
ERISA and has not incurred and does not reasonably expect to incur any
liabilities to the PBGC (other than premiums due to the PBGC) in connection
with any Plan or Multiemployer Plan.
(i) Accuracy of Information. None of the Provided Documents contain
any statement of a material fact with respect to the Originator or the
Transaction that was untrue or misleading in any material respect when
made. Since the furnishing of the Provided Documents, there has been no
change, nor any development or event involving a prospective change known
to the Originator, that would render any of the Provided Documents untrue
or misleading in any material respect. There is no fact known to the
Originator which has a material possibility of causing a Material Adverse
Change with respect to the Originator or a substantial portion of the
Loans.
(j) Compliance With Securities Laws. The offer and sale of the
Certificates comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limitation of the foregoing, the Offering Document does not contain
any untrue statement of a material fact and does not omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they
were made, not misleading. Neither the Issuer nor the Trust Fund is
required to be registered as an "investment company" under the Investment
Company Act. The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act.
(k) Transaction Documents. Each of the representations and warranties
of the Originator contained in the Transaction Documents is true and
correct in all material respects and the Originator hereby makes each such
representation and warranty to, and for the benefit of, FSA as if the same
were set forth in full herein.
(l) Compliance With Law, Etc. No practice, procedure or policy
employed or proposed to be employed by the Originator in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Originator which, if enforced, would result in a Material
Adverse Change with respect to the Originator.
(m) Taxes. The Originator has and its Parent and each of its
Subsidiaries have filed all federal and state tax returns which are
required to be filed and paid all taxes, including any assessments received
by it, to the extent that such taxes have become due. Any taxes, fees and
other governmental charges payable by the Originator in connection with the
Transaction, the execution and delivery of the Transaction Documents and
the issuance of the Certificates have been paid or shall have been paid at
or prior to the Date
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of Issuance. The Certificates will be treated for federal income tax
purposes as evidence of ownership of "regular interests" in the assets of
the Issuer comprising a REMIC. The Issuer will not be treated as an
association taxable as a corporation or as a taxable mortgage pool for
federal or state tax purposes.
(n) Solvency; Fraudulent Conveyance. The Originator is solvent and
will not be rendered insolvent by the transactions contemplated by the
Transaction Documents and, after giving effect to such transactions, the
Originator will not be left with an unreasonably small amount of capital
with which to engage in its business. The Originator does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay
such debts as they mature. The Originator does not contemplate the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of the Originator or any of its
assets.
Section 2.05 Affirmative Covenants of the Originator. The Originator hereby
agrees that during the Term of the Agreement, unless FSA shall otherwise
expressly consent in writing:
(a) Compliance With Agreements and Applicable Laws. The Originator
shall perform each of its obligations under the Transaction Documents and
any credit or loan agreements and shall comply with all material
requirements of, and the Certificates shall be offered and sold in
accordance with, any law, rule or regulation applicable to it or thereto,
or that are required in connection with its performance under any of the
Transaction Documents.
(b) Financial Statements; Accountants' Reports; Other Information. The
Originator shall keep or cause to be kept in reasonable detail books and
records of account of the Originator's assets and business, and shall
clearly reflect therein the transfer of the Loans to the Seller as a sale
of the Originator's interest in the Loans. The Originator shall furnish or
caused to be furnished to FSA:
(i) Annual Financial Statements. As soon as available, and in any
event within 90 days after the close of each fiscal year of the
Originator, the audited balance sheets of the Originator as of the end
of such fiscal year and the audited statements of income, changes in
shareholders' equity and cash flows of the Originator for such fiscal
year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the
preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the
certificate of the Originator's independent accountants (who shall be
a nationally recognized firm or otherwise acceptable to FSA) and by
the certificate specified in Section 2.05(c) hereof.
(ii) Quarterly Financial Statements. As soon as available, and in
any event within 45 days after the close of each of the first three
quarters of each fiscal year of the Originator, the unaudited balance
sheets
13
of the Originator as of the end of such quarter and the unaudited
statements of income, changes in shareholders' equity and cash flows
of the Originator for the portion of the fiscal year then ended, all
in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted accounting
principles, consistently applied (subject to normal year-end
adjustments), and accompanied by the certificate specified in Section
2.05(c) hereof if such certificate is required to be provided pursuant
to such Section.
(iii) Accountants' Reports. If a Trigger Event has occurred,
copies of any reports submitted to the Originator by its independent
accountants in connection with any examination of the financial
statements of the Originator, promptly upon receipt thereof.
(iv) Other Information. Promptly upon receipt thereof, copies of
all reports, statements, certifications, schedules, or other similar
items delivered to or by the Originator pursuant to the terms of the
Transaction Documents and, promptly upon request, such other data as
FSA may reasonably request; provided, however, that the Originator
shall not be required to deliver any such items if provision by some
other party to FSA is required under the Transaction Documents unless
such other party wrongfully fails to deliver any such item. The
Originator shall, upon the request of FSA, permit FSA or its
authorized agents (A) to inspect the books and records of the
Originator as they may relate to the Certificates, the Loans, the
obligations of the Originator under the Transaction Documents, the
Transaction and, but only following the occurrence of a Trigger Event,
the Originator's business; (B) to discuss the affairs, finances and
accounts of the Originator with the Chief Operating Officer and the
Chief Financial Officer of the Originator, no more frequently than
annually unless a Trigger Event has occurred; and (C) upon the
occurrence of a Trigger Event, to discuss the affairs, finances and
accounts of the Originator with the Originator's independent
accountants, provided that an officer of the Originator shall have the
right to be present during such discussions. Such inspections and
discussions shall be conducted during normal business hours and shall
not unreasonably disrupt the business of the Originator. In addition,
the Originator shall promptly (but in no case more than 30 days
following issuance or receipt by the Commonly Controlled Entity)
provide to FSA a copy of all correspondence between a Commonly
Controlled Entity and the PBGC, IRS, Department of Labor or the
administrators of a Multiemployer Plan relating to any Reportable
Event or the underfunded status, termination or possible termination
of a Plan or a Multiemployer Plan. The books and records of the
Originator will be maintained at the address of the Originator
designated herein for receipt of notices, unless the Originator shall
otherwise advise the parties hereto in writing.
14
(v) The Originator shall provide or cause to be provided to FSA
an executed original copy of each document executed in connection with
the transaction within 30 days after the date of closing.
All financial statements specified in clauses (i) and (ii) above shall
be furnished in consolidated form for the Originator and all Subsidiaries
in the event the Originator shall consolidate its financial statements with
its Subsidiaries.
FSA agrees that it shall keep confidential any information of which it
becomes aware through such inspections or discussions (unless such
information is readily available from public sources), except as may be
otherwise required by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to preserve its rights
or security under or to enforce the Transaction Documents, provided that
the foregoing shall not limit the right of FSA to make such information
available to its regulators, securities rating agencies, reinsurers, credit
and liquidity providers, counsel and accountants. If FSA is requested or
required (by oral questions, interrogatories, requests for information or
documents subpoena, civil investigative demand or similar process) to
disclose any information of which it becomes aware through such inspections
or discussions, FSA will promptly notify the Originator of such request(s)
so that the Originator may seek an appropriate protective order and/or
waive FSA's compliance with the provisions of this Agreement. If, in the
absence of a protective order or the receipt of a waiver hereunder, FSA is,
nonetheless, in the opinion of its counsel, compelled to disclose such
information to any tribunal or else stand liable for contempt or suffer
other censure or significant penalty, FSA may disclose such information to
such tribunal that FSA is compelled to disclose, provided that a copy of
all information disclosed is provided to the Originator promptly upon such
disclosure.
(c) Compliance Certificate. The Originator shall deliver to FSA
concurrently with the delivery of the financial statements required
pursuant to Section 2.05(b)(i) hereof (and concurrently with the delivery
of the financial statements required pursuant to Section 2.05(b)(ii)
hereof, if a Trigger Event has occurred), a certificate signed by the Chief
Financial Officer or other officer of the Originator stating that:
(i) a review of the Originator's performance under the
Transaction Documents during such period has been made under such
officer's supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Trigger Event, Default or Event of Default has
occurred, or if a Trigger Event, Default or Event of Default has
occurred, specifying the nature thereof and, if the Originator has a
right to cure any such Default or Event of Default pursuant to Section
5.01, stating in reasonable detail the steps, if any, being taken by
the Originator to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such Default
or Event of Default relates; and
(iii) the attached financial reports submitted in accordance with
Section 2.05(b)(i) or (ii) hereof, as applicable, are complete and
correct in
15
all material respects and present fairly the financial condition and
results of operations of the Originator as of the dates and for the
periods indicated, in accordance with generally accepted accounting
principles consistently applied (subject as to interim statements to
normal year-end adjustments).
(d) Notice of Material Events. The Originator shall promptly inform
FSA in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation (A)
against the Originator or the Issuer pertaining to the Loans in
general, (B) with respect to a material portion of the Loans or (C) in
which a request has been made for certification as a class action (or
equivalent relief) that would involve a material portion of the Loans;
(ii) any change in the location of the Originator's principal
office or any change in the location of the Originator's books and
records;
(iii) the occurrence of any Trigger Event, Default or Event of
Default; or
(iv) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material
Adverse Change in respect of the Originator.
(e) Further Assurances. The Originator shall, upon the request of FSA,
from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, promptly, and in any event within
thirty (30) days of such request, such amendments hereto and such further
instruments and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the Transaction
Documents or to protect the interest of the Trustee, for the benefit of the
Certificateholders and FSA, in the Loans, free and clear of all Liens and
Restrictions on Transferability except the Lien in favor of the Trustee,
for the benefit of the Certificateholders and FSA, Restrictions on
Transferability arising out of the insolvency or bankruptcy of an
individual obligor under a Loan and the Restrictions on Transferability
imposed by the Pooling and Servicing Agreement. In addition, the Originator
agrees to cooperate with S&P and Moody's in connection with any review of
the Transaction which may be undertaken by S&P and Moody's after the date
hereof.
(f) Third-Party Beneficiary. The Originator agrees that FSA shall have
all rights of a third-party beneficiary in respect of the Pooling and
Servicing Agreement and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for the
benefit of FSA.
(g) Corporate Existence. The Originator shall maintain its corporate
existence and shall at all times continue to be duly organized under the
laws of the State of Delaware and duly qualified and duly authorized (as
described in Sections 2.05(a), (b)
16
and (c) hereof) and shall conduct its business in accordance with the terms
of its Certificate of Incorporation and Bylaws.
Section 2.06 Negative Covenants of the Originator. The Originator hereby
agrees that during the Term of the Agreement, unless FSA shall otherwise
expressly consent in writing:
(a) Restrictions on Liens. The Originator shall not take any action
inconsistent with the Trustee's ownership of the Loans and shall not (i)
create or consent (upon the happening of a contingency or otherwise) to the
creation, incurrence or existence of any Lien or Restriction on
Transferability on the Loans except for the Restrictions on Transferability
imposed by the Transfer Agreement and the Pooling and Servicing Agreement
or (ii) sign or file under the Uniform Commercial Code of any jurisdiction
any financing statement which names the Originator as a debtor, or sign any
security agreement authorizing any secured party thereunder to file such
financing statement, with respect to the Loans, except in each case any
such instrument solely securing the rights of the Seller.
(b) Impairment of Rights. The Originator shall not take any action, or
fail to take any action, if such action or failure to take action may (i)
interfere with the enforcement of any rights under the Transaction
Documents that are material to the rights, benefits or obligations of the
Trustee, the Certificateholders or FSA, (ii) result in a Material Adverse
Change in respect of any Loan or (iii) impair the ability of the Originator
to perform its obligations under the Transaction Documents, except actions
taken in its capacity as Originator in accordance with the standards set
forth in the Pooling and Servicing Agreement.
(c) Waiver, Amendments, Etc. The Originator shall not waive, modify or
amend, or consent to any waiver, modification or amendment of, any of the
provisions of any of the Transaction Documents.
(d) Successors. The Originator shall not terminate or designate, or
consent to the termination or designation of, any successor Originator,
Trustee or Custodian without the prior approval of FSA.
Section 2.07 Reserved.
Section 2.08 Reserved.
Section 2.09 Reserved.
Section 2.10 Covenant of FSA. FSA hereby agrees that, notwithstanding
any provision to the contrary contained in Section 7.01 of the Pooling and
Servicing Agreement, it shall be obliged prior to the occurrence of an
Event of Default hereunder or of a Servicer Termination Event thereunder to
extend each quarterly term of the Servicer, prior to the otherwise
applicable expiration date thereof, in a manner contemplated or permitted
by such Section 7.01(b).
17
Article III.
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01 Issuance of the Policy. FSA agrees to issue the Policy subject
to satisfaction of the conditions precedent set forth in Appendix A hereto.
Section 3.02 Payment of Fees and Premium.
(a) Legal Fees. On the Date of Issuance, the Originator shall pay or
cause to be paid legal fees and disbursements incurred by FSA in connection
with the issuance of the Policy, unless otherwise agreed in writing between
the Seller and FSA.
(b) Rating Agency Fees. The initial fees of S&P and Moody's with
respect to the Securities and the transactions contemplated hereby shall be
paid by the Originator in full on the Date of Issuance, or otherwise
provided for to the satisfaction of FSA. All periodic and subsequent fees
of S&P and Moody's with respect to, and directly allocable to, the
Certificates shall be for the account of, and shall be billed to, the
Originator. The fees for any other rating agency shall be paid by the party
requesting such other agency's rating, unless such other agency is a
substitute for S&P and Moody's in the event that S&P and Xxxxx'x is no
longer rating the Certificates, in which case the cost for such agency
shall be paid by the Originator.
(c) Auditors' Fees. In the event that FSA's auditors are required to
provide information or any consent in connection with the Offering Document
prepared prior to the Date of Issuance, fees therefor in an amount set
forth in the Premium Letter shall be paid by the Originator. The Originator
shall pay on demand any additional fees of FSA's auditors payable in
respect of any Offering Document that are incurred after the Date of
Issuance. It is understood that FSA's auditors shall not incur any
additional fees in respect of future Offering Documents except at the
request of or with the consent of the Originator.
(d) Premium. In consideration of the issuance by FSA of the Policy,
FSA shall be entitled to receive the Premium as and when due in accordance
with the terms of the Premium Letter (i) in the case of Premium due on or
before the Date of Issuance, directly from the Originator by wire transfer
to an account designated by FSA, (ii) in the case of Premium due after the
Date of Issuance, pursuant to Section 8.04 of the Pooling and Servicing
Agreement and (iii) in the case of Premium Supplement due on any date, on
each Payment Date following the Premium Supplement Commencement Date. The
Premium paid hereunder or under the Pooling and Servicing Agreement shall
be nonrefundable without regard to whether FSA makes any payment under the
Policy or any other circumstances relating to the Certificates or provision
being made for payment of the Certificates prior to maturity.
Section 3.03 Reimbursement and Additional Payment Obligation.
Notwithstanding anything to the contrary in the Transaction Documents, pursuant
to Section 8.04 of the Pooling and Servicing Agreement, the following amounts
shall be payable to FSA:
18
(a) a sum equal to the total of all amounts paid by FSA under the
Policy;
(b) any and all out-of-pocket charges, fees, costs and expenses which
FSA may reasonably pay or incur, including, but not limited to, attorneys'
and accountants' fees and expenses, in connection with (i) in the event of
payments under the Policy, any accounts established to facilitate payments
under the Policy, to the extent FSA has not been immediately reimbursed on
the date that any amount is paid by FSA under the Policy, or other
administrative expenses relating to such payments under the Policy, (ii)
the enforcement, defense or preservation of any rights in respect of any of
the Transaction Documents, including defending, monitoring or participating
in any litigation or proceeding (including any insolvency or bankruptcy
proceeding in respect of any Transaction participant or any affiliate
thereof) relating to any of the Transaction Documents, any party to any of
the Transaction Documents or the Transaction, (iii) any amendment, waiver
or other action with respect to, or related to, any Transaction Document
whether or not executed or completed, (iv) any review or investigation made
by FSA in those circumstances where its approval or consent is sought under
any of the Transaction Documents;
(c) interest on any and all amounts described in this Section 3.03 or
Section 3.02 from the date due to FSA pursuant to the provisions hereof
until payment thereof in full, payable to FSA at the Late Payment Rate per
annum; and
(d) any payments made by FSA on behalf of, or advanced to, the Issuer,
including, without limitation, any amounts payable by the Issuer pursuant
to the Certificates or any other Transaction Documents; and any payments
made by FSA as, or in lieu of, any servicing, management, trustee,
custodial or administrative fees payable, in the sole discretion of FSA to
third parties in connection with the Transaction.
All such amounts are to be immediately due and payable without demand, in
full without any requirement on the part of FSA to seek reimbursement from any
other sources of indemnity therefor or to allocate expenses to other
transactions benefiting therefrom.
Section 3.04 Indemnification.
(a) Indemnification by the Seller and the Originator. In addition to
any and all rights of reimbursement, indemnification, subrogation and any
other rights pursuant hereto or under law or in equity, the Seller and the
Originator jointly and severally agree to pay, and to protect, indemnify
and save harmless, FSA and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls FSA within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages, costs
or expenses (including, without limitation, fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any
nature arising out of or relating to the transactions contemplated by the
Transaction Documents by reason of:
19
(i) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or
agent of the Seller, the Originator or the Issuer;
(ii) the breach by the Seller, the Originator or the Issuer, as
the case may be, of any representation, warranty or covenant under any
of the Transaction Documents (other than the breach of a
representation or warranty in Sections 3.02, 3.03, 3.04 or 3.05 of the
Pooling and Servicing Agreement, provided that the Seller has timely
exercised its repurchase obligation with respect thereto in accordance
with Section 3.06 of the Pooling and Servicing Agreement) or the
occurrence, in respect of the Seller, the Originator or the Issuer, as
applicable, under any of the Transaction Documents of any "event of
default" or any event which, with the giving of notice or the lapse of
time or both, would constitute any "event of default"; or
(iii) any untrue statement or alleged untrue statement of a
material fact contained in any Offering Document or any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading;
except insofar as such claims, damages, losses, liabilities, costs or
expenses arise out of or are based upon (i) Income Taxes payable by or
assessed against FSA or (ii) any untrue statement or omission in
information included in an Offering Document and furnished by FSA in
writing expressly for use therein (all such information so furnished being
referred to herein as "FSA Information"), it being understood that, in
respect of the initial Offering Document, the FSA Information is limited to
the information included under the caption "The Certificate Insurer" and
the financial statements of FSA incorporated by reference therein.
(b) Conduct of Actions or Proceedings. If any action or proceeding
(including any governmental investigation) shall be brought or asserted
against FSA, any officer, director, shareholder, employee or agent of FSA
or any Person controlling FSA (individually, an "Indemnified Party" and,
collectively, the "Indemnified Parties") in respect of which indemnity may
be sought from the Seller or the Originator (the "Indemnifying Party")
hereunder, FSA shall promptly notify the Indemnifying Party in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel satisfactory to FSA and the payment of all expenses.
An Indemnified Party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof at the expense of the
Indemnified Party; provided, however, that the fees and expenses of such
separate counsel shall be at the expense of the Indemnifying Party if (i)
the Indemnifying Party has agreed to pay such fees and expenses, (ii) the
Indemnifying Party shall have failed to assume the defense of such action
or proceeding and employ counsel satisfactory to FSA in any such action or
proceeding or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Party and
the Indemnifying Party, and the Indemnified Party shall have been advised
by counsel that (A) there may be one or more legal defenses available to it
which are different from or additional to those
20
available to the Indemnifying Party and (B) the representation of the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate or contrary to prudent practice (in which case, if the
Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such
action or proceeding on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in connection
with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at
any time for the Indemnified Parties, which firm shall be designated in
writing by FSA). The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its written
consent to the extent that any such settlement shall be prejudicial to the
Indemnifying Party, but, if settled with its written consent, or if there
be a final judgment for the plaintiff in any such action or proceeding with
respect to which the Indemnifying Party shall have received notice in
accordance with this subsection (b), the Indemnifying Party agrees to
indemnify and hold the Indemnified Parties harmless from and against any
loss or liability by reason of such settlement or judgment.
(c) Contribution. To provide for just and equitable contribution if
the indemnification provided by the Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of
this Section), the Indemnifying Party shall contribute to the losses
incurred by the Indemnified Party on the basis of the relative fault of the
Indemnifying Party, on the one hand, and the Indemnified Party, on the
other hand.
Section 3.05 Subrogation. Subject only to the priority of payment
provisions of the Pooling and Servicing Agreement, the Seller or the Originator
acknowledge that, to the extent of any payment made by FSA pursuant to the
Policy, FSA is to be fully subrogated to the extent of such payment and any
additional interest due on any late payment, to the rights of the
Securityholders to any moneys paid or payable in respect of the Securities under
the Transaction Documents or otherwise. The Seller and the Originator agree to
such subrogation and, further, agree to execute such instruments and to take
such actions as, in the sole judgment of FSA, are necessary to evidence such
subrogation and to perfect the rights of FSA to receive any moneys paid or
payable in respect of the Securities under the Transaction Documents or
otherwise.
Article IV.
FURTHER AGREEMENTS
Section 4.01 Effective Date; Term of Agreement. This Agreement shall take
effect on the Date of Issuance and shall remain in effect until the later of (a)
such time as FSA is no longer subject to a claim under the Policy and the Policy
shall have been surrendered to FSA for cancellation and (b) all amounts payable
to FSA and the Securityholders under the Transaction Documents and under the
Certificates have been paid in full; provided, however, that the provisions of
Sections 3.02, 3.03 and 3.04 hereof shall survive any termination of this
Agreement.
21
Section 4.02 Obligations Absolute. (a) Subject to Section 1.02 above, the
payment obligations of the Seller and the Originator hereunder shall be absolute
and unconditional, and shall be paid strictly in accordance with this Agreement
under all circumstances irrespective of (i) any lack of validity or
enforceability of, or any amendment or other modifications of, or waiver with
respect to, any of the Transaction Documents, the Certificates or the Policy;
(ii) any exchange or release of any other obligations hereunder; (iii) the
existence of any claim, setoff, defense, reduction, abatement or other right
which the Seller or the Originator may have at any time against FSA or any other
Person; (iv) any document presented in connection with the Policy proving to be
forged, fraudulent, invalid or insufficient in any respect, including any
failure to strictly comply with the terms of the Policy, or any statement
therein being untrue or inaccurate in any respect; (v) any failure of the Seller
or the Originator, as applicable, to receive the proceeds from the sale of the
Certificates; (vi) any breach by the Seller or the Originator, as applicable, of
any representation, warranty or covenant contained in any of the Transaction
Documents; or (vii) any other circumstances, other than payment in full, which
might otherwise constitute a defense available to, or discharge of, the Seller
or the Originator, as applicable, in respect of any Transaction Document.
(b) The Seller and the Originator and any and all others who are now
or may become liable for all or part of the obligations of the Seller or
the Originator under this Agreement agree to be bound by this Agreement and
(i) to the extent permitted by law, waive and renounce any and all
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness, if any, and obligations
evidenced by any Transaction Document or by any extension or renewal
thereof; (ii) waive presentment and demand for payment, notices of
nonpayment and of dishonor, protest of dishonor and notice of protest;
(iii) waive all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default or
enforcement of any payment hereunder except as required by the Transaction
Documents; (iv) waive all rights of abatement, diminution, postponement or
deduction, or to any defense other than payment, or to any right of setoff
or recoupment arising out of any breach under any of the Transaction
Documents, by any party thereto or any beneficiary thereof, or out of any
obligation at any time owing to the Seller or the Originator, as
applicable; (v) agree that any consent, waiver or forbearance hereunder
with respect to an event shall operate only for such event and not for any
subsequent event; (vi) consent to any and all extensions of time that may
be granted by FSA with respect to any payment hereunder or other provisions
hereof and to the release of any security at any time given for any payment
hereunder, or any part thereof, with or without substitution, and to the
release of any Person or entity liable for any such payment; and (vii)
consent to the addition of any and all other makers, endorsers, guarantors
and other obligors for any payment hereunder, and to the acceptance of any
and all other security for any payment hereunder, and agree that the
addition of any such obligors or security shall not affect the liability of
the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Seller or the
Originator from pursuing any rights or remedies it may have against any
Person other than FSA in a separate legal proceeding.
22
Section 4.03 Assignments; Reinsurance; Third-Party Rights. (a) This
Agreement shall be a continuing obligation of the parties hereto and shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, provided, however, that the representations
and warranties of the Originator shall not be binding upon any Successor
Servicer. Neither the Seller nor the Originator may assign its rights under this
Agreement, or delegate any of its duties hereunder, without the prior written
consent of FSA. Any assignment made in violation of this Agreement shall be null
and void.
(b) FSA shall have the right to give participations in its rights
under this Agreement and to enter into contracts of reinsurance with
respect to the Policy upon such terms and conditions as FSA may in its
discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve FSA of any of its
obligations hereunder or under the Policy.
(c) In addition, FSA shall be entitled to assign or pledge to any bank
or other lender providing liquidity or credit with respect to the
Transaction or the obligations of FSA in connection therewith any rights of
FSA under the Transaction Documents or with respect to any real or personal
property or other interests pledged to FSA, or in which FSA has a security
interest, in connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or
claim, express or implied, upon any Person, including, particularly, any
Certificateholder, other than FSA, against the Seller, or the Originator,
and all the terms, covenants, conditions, promises and agreements contained
herein shall be for the sole and exclusive benefit of the parties hereto
and their successors and permitted assigns. Neither the Trustee nor any
Certificateholder shall have any right to payment from any premiums paid or
payable hereunder or from any other amounts paid by the Seller, or the
Originator pursuant to Section 3.02, 3.03 or 3.04 hereof.
Section 4.04 Liability of FSA. Neither FSA nor any of its officers,
directors or employees shall be liable or responsible for: (a) the use which may
be made of the Policy by the Trustee or for any acts or omissions of the Trustee
in connection therewith or (b) the validity, sufficiency, accuracy or
genuineness of documents delivered to FSA (or its Fiscal Agent) in connection
with any claim under the Policy, or of any signatures thereon, even if such
documents or signatures should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged (unless FSA had actual knowledge
thereof). In furtherance and not in limitation of the foregoing, FSA (or its
Fiscal Agent) may accept documents that appear on their face to be in order,
without responsibility for further investigation.
Article V.
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default. The occurrence of any of the following
events with respect to the Seller or the Originator shall constitute an Event of
Default hereunder:
23
(a) any representation or warranty made by the Seller or the
Originator, as applicable, under any of the Transaction Documents, or in
any certificate or report furnished under any of the Transaction Documents,
shall prove to be untrue or incorrect in any material respect; provided,
however, that (i) if the Seller or the Originator, as applicable,
effectively cures any such defect in any representation or warranty under
any Transaction Document, or certificate or report furnished under any
Transaction Document, within the time period specified in the relevant
Transaction Document as the cure period therefor, such defect shall not in
and of itself constitute an Event of Default hereunder; (ii) with respect
to any Loan, no Event of Default shall exist if the Originator has timely
repurchased such Loan in accordance with Section 3.06 of the Pooling and
Servicing Agreement;
(b) (i) the Seller or the Originator shall fail to pay when due any
amount payable by it under any of the Transaction Documents; (ii) the
Seller or the Originator shall have asserted that any of the Transaction
Documents to which it is a party is not valid and binding on the parties
thereto; or (iii) any court, governmental authority or agency having
jurisdiction over any of the parties to any of the Transaction Documents or
any property thereof shall find or rule that any material provision of any
of the Transaction Documents is not valid and binding on the parties
thereto;
(c) the Seller or the Originator shall fail to perform or observe any
other covenant or agreement contained in any of the Transaction Documents
(except for the obligations described under clause (b) above or clause (f)
below) and such failure shall continue for a period of 30 days after
written notice is given to it; provided, however, that, if such failure
shall be of a nature that it cannot be cured within 30 days, such failure
shall not constitute an Event of Default hereunder if within such 30-day
period the Seller or the Originator, as applicable, shall have given notice
to FSA of corrective action it proposes to take, which corrective action is
agreed in writing by FSA to be satisfactory and the Seller or the
Originator, as applicable, shall thereafter pursue such corrective action
diligently until such default is cured;
(d) any demand for payment shall be made under the Policy;
(e) the Seller or the Originator shall fail to pay its debts generally
as they come due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors,
or shall institute any proceeding seeking to adjudicate the Seller or the
Originator insolvent or seeking a liquidation, or shall take advantage of
any insolvency act, or shall commence a case or other proceeding naming the
Seller or the Originator as debtor under the United States Bankruptcy Code
or similar law, domestic or foreign, or a case or other proceeding shall be
commenced against the Seller or the Originator under the United States
Bankruptcy Code or similar law, domestic or foreign, or any proceeding
shall be instituted against the Seller or the Originator seeking
liquidation of the assets of the Seller or the Originator, as applicable,
and it shall fail to take appropriate action resulting in the withdrawal or
dismissal of such proceeding within 30 days or there shall be appointed or
the Seller or the Originator shall consent to, or acquiesce in, the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Seller or the Originator, as applicable, or the
whole or
24
any substantial part of its properties or assets or the Seller or the
Originator shall take any corporate action in furtherance of any of the
foregoing;
(f) the Backup Servicing Commencement Date contemplated by Section
1.C. of the Backup Servicer Agreement shall not have occurred prior to
August 28, 2000, unless FSA gives prior written notice to the Seller, the
Originator and the Trustee that it does not require the Backup Servicer to
commence its duties described therein; and
(g) the occurrence of an "event of default" under any of the
Transaction Documents or "Servicer Termination Event" under the Pooling and
Servicing Agreement.
Section 5.02 Remedies; Waivers. (a) Upon the occurrence of an Event of
Default, FSA may exercise any one or more of the rights and remedies set forth
below:
(i) exercise any rights and remedies available under the
Transaction Documents in its own capacity or in its capacity as the
Person entitled to exercise the rights of the Certificateholders in
respect of the Certificates; or
(ii) take whatever action at law or in equity may appear
necessary or desirable in its judgment to enforce performance of any
obligation of the Seller or the Originator under the Transaction
Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy,
but each remedy shall be cumulative and shall be in addition to other
remedies given under the Transaction Documents or existing at law or in
equity. No delay or failure to exercise any right or power accruing under
any Transaction Document upon the occurrence of any Event of Default or
otherwise shall impair any such right or power or shall be construed to be
a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle FSA to
exercise any remedy reserved to FSA in this Article, it shall not be
necessary to give any notice, other than such notice as may be expressly
required in this Article.
(c) If any proceeding has been commenced to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to FSA, then and
in every such case the parties hereto shall, subject to any determination
in such proceeding, be restored to their respective former positions
hereunder, and, thereafter, all rights and remedies of FSA shall continue
as though no such proceeding had been instituted.
(d) FSA shall have the right, to be exercised in its complete
discretion, to waive any covenant, Default or Event of Default by a writing
setting forth the terms, conditions and extent of such waiver signed by FSA
and delivered to the Seller or the Originator, as applicable. Any such
waiver may only be effected in writing duly executed by FSA, and no other
course of conduct shall constitute a waiver of any provision hereof. Unless
such writing expressly provides to the contrary, any waiver so
25
granted shall extend only to the specific event or occurrence so waived and
not to any other similar event or occurrence.
Article VI.
MISCELLANEOUS
Section 6.01 Amendments, Etc. This Agreement may be amended, modified or
terminated only by written instrument or written instruments signed by the
parties hereto. No act or course of dealing shall be deemed to constitute an
amendment, modification or termination hereof.
Section 6.02 Notices. All demands, notices and other communications to be
given hereunder shall be in writing (except as otherwise specifically provided
herein) and shall be mailed by registered mail or personally delivered or
telecopied to the recipient as follows:
(a) To FSA: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Re: Conseco Finance Home Equity
Loan Trust 2000-D
Certificates for Home Equity Loans
Confirmation: (000) 000-0000
Telecopy Nos.: (000) 000-0000, (000) 000-0000
(in each case in which notice or other communication
to FSA refers to an Event of Default, a claim on the
Policy or with respect to which failure on the part
of FSA to respond shall be deemed to constitute
consent or acceptance, then a copy of such notice or
other communication should also be sent to the
attention of each of the General Counsel and the
Head-Financial Guaranty Group and shall be marked to
indicate "URGENT MATERIAL ENCLOSED.")
(a) To the Seller: Conseco Finance Securitizations Corp.
300 Landmark Towers
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Chief Financial Officer
Confirmation:
Telecopy No.:
26
(b) To the Originator: Conseco Finance Corp.
1100 Landmark Towers
000 Xx. Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
Attention: Chief Financial Officer
Confirmation:
Telecopy No.:
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such
notices and other communications shall be effective upon receipt.
Section 6.03 Payment Procedure. In the event of any payment by FSA for
which it is entitled to be reimbursed or indemnified as provided above, each of
the Seller and the Originator agrees to accept the voucher or other evidence of
payment as prima facie evidence of the propriety thereof and the liability
therefor to FSA. All payments to be made to FSA under this Agreement shall be
made to FSA in lawful currency of the United States of America in immediately
available funds to the account number provided in the Premium Letter before 1:00
p.m. (New York, New York time) on the date when due or as FSA shall otherwise
direct by written notice to the Seller or the Originator, as applicable. In the
event that the date of any payment to FSA or the expiration of any time period
hereunder occurs on a day which is not a Business Day, then such payment or
expiration of time period shall be made or occur on the next succeeding Business
Day with the same force and effect as if such payment was made or time period
expired on the scheduled date of payment or expiration date. Payments to be made
to FSA under this Agreement shall bear interest at the Late Payment Rate from
the date due to the date paid.
Section 6.04 Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.05 Governing La. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.06 Consent to Jurisdiction. (a) THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED
IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN CONNECTION WITH
ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREUNDER OR
FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY
27
AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
OR DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW,
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THE TRANSACTION DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT
BE LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of
any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
(c) Nothing contained in the Agreement shall limit or affect FSA's
right to serve process in any other manner permitted by law or to start
legal proceedings relating to any of the Transaction Documents against the
Seller or the Originator or any of their property in the courts of any
jurisdiction.
Section 6.07 Consent of FSA. In the event that FSA's consent is required
under any of the Transaction Documents, the determination whether to grant or
withhold such consent shall be made by FSA in its sole discretion without any
implied duty towards any other Person, except as otherwise expressly provided
therein.
Section 6.08 Counterparts. This Ageement may be executed in counterparts by
the parties hereto, and all such counterparts shall constitute one and the same
instrument.
Section 6.09 Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH
ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10 Limited Liability. (a) No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate
28
or shareholder of any party hereto, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise in respect of any of the Transaction Documents, the Certificates or
the Policy, it being expressly agreed and understood that each Transaction
Document is solely a corporate obligation of each party hereto, and that any and
all personal liability, either at common law or in equity, or by statute or
constitution, of every such officer, employee, director, affiliate or
shareholder for breaches by any party hereto of any obligations under any
Transaction Document is hereby expressly waived as a condition of and in
consideration for the execution and delivery of this Agreement.
Section 6.11 Entire Agreement. This Agreement, the Premium Letter and the
Policy set forth the entire agreement between the parties with respect to the
subject matter thereof, and this Agreement supersedes and replaces any agreement
or understanding that may have existed between the parties prior to the date
hereof in respect of such subject matter.
29
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: ______________________________
Name:
Title:
CONSECO SECURITIZATIONS FINANCE CORP.
By: ______________________________
Name:
Title:
CONSECO FINANCE CORP.
By: ______________________________
Name:
Title:
[Signature Page to Insurance and Indemnity Agreement: Consceo 2000-D]
APPENDIX I
DEFINITIONS
"Accumulated Funding Deficiency" shall have the meaning provided in Section
412 of the Code and Section 302 of ERISA, whether or not waived.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such former
Person. As used in this definition of "Affiliate," the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Backup Servicer" means the party serving as such under the Backup Servicer
Agreement.
"Backup Servicer Agreement" means the letter agreement dated June 28, 2000
among FSA, the Servicer, the Trustee and Fairbanks Capital Corp.
"Business Day" means any day other than (a) a Saturday or Sunday or (b) a
day on which banking institutions in the City of New York, New York or St. Xxxx,
Minnesota are authorized or obligated by law or executive order to be closed.
"Certificateholders" means registered holders of the Certificates.
"Certificates" has the meaning provided in the Pooling and Servicing
Agreement.
"Code" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Commonly Controlled Entity" means the Seller, the Originator and each
entity, whether or not incorporated, which is affiliated with the Seller or the
Originator pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Date of Issuance" means June 28, 2000.
"Default" means any event which results, or which with the giving of notice
or the lapse of time or both would result, in an Event of Default.
"Determination Date" has the meaning provided in the Pooling and Servicing
Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Event of Default" means any event of default specified in Section 5.01 of
the Insurance Agreement.
"Expiration Date" means the final date of the Term of the Policy, as
specified in the Policy.
"Financial Statements" means with respect to the Seller or the Originator,
each of their consolidated balance sheets as of December 31, 1999 and 1998 and
consolidated statements of income, retained earnings and cash flows for the
12-month period then ended and the notes thereto and each of their balance
sheets as of March 31, 2000 and March 31, 1999 and the statements of income,
retained earnings and cash flows for the fiscal quarter then ended.
"Fiscal Agent" means the Fiscal Agent, if any, designated pursuant to the
terms of the Policy.
"FSA" means Financial Security Assurance Inc., a New York stock insurance
company, its successors and assigns.
"Income Taxes" means any present or future income or franchise taxes now or
hereafter imposed, levied, collected, withheld or assessed by any governmental
authority or administrative agency, based on the net income of the FSA or
measured by income, gross receipts, assets or capital of FSA.
"Indemnification Agreement" means the Indemnification Agreement dated as of
June 21, 2000 among FSA, the Seller, the Originator and the Underwriters, as the
same may be amended from time to time.
"Insurance Agreement" means the Insurance and Indemnity Agreement dated as
of June 1, 2000, among FSA, the Seller and the Originator, as the same may be
amended from time to time.
"Investment Company Act" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"IRS" means the Internal Revenue Service.
"Issuer" means Conseco Finance Home Equity Loan Trust 2000-D.
"Late Payment Rate" means the lesser of (a) the greater of (i) the per
annum rate of interest, publicly announced from time to time by The Chase
Manhattan Bank at its principal office in the City of New York, as its prime or
base lending rate (any change in such rate of interest to be effective on the
date such change is announced by The Chase Manhattan Bank) plus 3%, and (ii) the
then applicable highest rate of interest on the Securities and (b) the maximum
rate permissible under applicable usury or similar laws limiting interest rates.
The Late Payment Rate shall be computed on the basis of the actual number of
days elapsed over a year of 360 days.
2
"Lien" means, as applied to the property or assets (or the income or
profits therefrom) of any Person, in each case whether the same is consensual or
nonconsensual or arises by contract, operation of law, legal process or
otherwise: (a) any mortgage, lien, pledge, attachment, charge, lease,
conditional sale or other title retention agreement, or other security interest
or encumbrance of any kind or (b) any arrangement, express or implied, under
which such property or assets are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.
"Loan" has the meaning provided in the Pooling and Servicing Agreement.
"Loan Files" has the meaning provided in the Pooling and Servicing
Agreement.
"Material Adverse Change" means, (a) in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or any of its material Subsidiaries or (ii) the
ability of such Person to perform its obligations under any of the Transaction
Documents to which it is a party and (b) in respect of any Loan, a material
adverse change in (i) the value or marketability of such Loan or (ii) the
probability that amounts now or hereafter due in respect of such Loan will be
collected on a timely basis.
"Moody's" means Xxxxx'x Investors Service, Inc., a Delaware corporation,
and any successor thereto, and, if such corporation shall for any reason no
longer perform the functions of a securities rating agency, "Moody's" shall be
deemed to refer to any other nationally recognized rating agency designated by
FSA.
"Multiemployer Plan" means a multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.
"Notice of Claim" means a Notice of Claim and Certificate in the form
attached as Exhibit A to Endorsement No. 1 to the Policy.
"Offering Document" means the Prospectus dated June 21, 2000 and the
Prospectus Supplement dated June 21, 2000, in respect of the Certificates and
any amendment or supplement thereto and any other offering document in respect
of the Certificates that makes reference to the Policy.
"Originator" means Conseco Finance Corp., a Delaware corporation.
"Parent" means Conseco, Inc., an Indiana corporation.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.
"Person" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, partnership or
other organization or entity (whether governmental or private).
3
"Plan" means any pension plan (other than a Multiemployer Plan) covered by
Title IV of ERISA, which is maintained by a Commonly Controlled Entity or in
respect of which a Commonly Controlled Entity has liability.
"Policy" means the financial guaranty insurance policy, including any
endorsements thereto, issued by FSA with respect to the Securities,
substantially in the form attached as Annex I to this Agreement.
"Pooling and Servicing Agreement" means the Pooling and Servicing Agreement
dated as of June 1, 2000 among the Seller, the Originator and the Trustee on
behalf of FSA and the Certificateholders, pursuant to which the Certificates are
to be issued, as the same may be amended from time to time.
"Premium" means the premium payable in accordance with Section 3.02 of the
Insurance Agreement.
"Premium Letter" means the side letter between FSA, the Seller, the
Originator and the Trustee dated the Date of Issuance in respect of the Premium
and any Premium Supplement payable by the Seller and the Originator .
"Premium Supplement" means a non-refundable premium in addition to the
premium payable in accordance with Section 3.02(d)(i) and (ii) of this
Agreement, which shall automatically accrue to FSA commencing on the Premium
Supplement Commencement Date and be payable on each Payment Date in accordance
with the terms set forth in Section 3.02(d)(iii) of this Agreement.
"Premium Supplement Commencement Date" means the date of occurrence of an
Event of Default, regardless of whether FSA shall have declared an "Event of
Default" or shall have exercised, or be entitled to exercise, any other rights
or remedies hereunder.
"Prospectus" means the form of prospectus, as supplemented, relating to the
Certificates, as first filed with the Commission pursuant to Rule 424 under the
Securities Act.
"Provided Documents" means the Transaction Documents and any documents,
agreements, instruments, schedules, certificates, statements, cash flow
schedules, number runs or other writings or data furnished to FSA by or on
behalf of the Originator with respect to itself, its Parent, its Subsidiaries or
the Transaction.
"Registration Statement" means the registration statement on Form S-3,
including a form of prospectus, relating to the Certificates, as amended to the
date hereof.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder.
"Restrictions on Transferability" means, as applied to the property or
assets (or the income or profits therefrom) of any Person, in each case whether
the same is consensual or nonconsensual or arises by contract, operation of law,
legal process or otherwise, any material condition to, or restriction on, the
ability of such Person or any transferee therefrom to sell,
4
assign, transfer or otherwise liquidate such property or assets in a
commercially reasonable time and manner or which would otherwise materially
deprive such Person or any transferee therefrom of the benefits of ownership of
such property or assets.
"Securities" means the $935,000,000 Conseco Finance Home Equity Loan Trust
2000-D Certificates for Home Equity Loans, Class A-1, Class A-2, Class A-3,
Class A-4 and Class A-5, issued pursuant to the Pooling and Servicing Agreement.
"Securities Act" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"Securityholders" means the registered holders of the Securities.
"Seller" means Conseco Finance Securitizations Corp., a Delaware
corporation.
"Servicer" means Conseco Finance Corp., a Delaware corporation.
"S&P" means Standard & Poor's Ratings Services, a division of XxXxxx-Xxxx
Inc., a New York corporation, and any successor thereto, and, if such
corporation shall for any reason no longer perform the functions of a securities
rating agency, "S&P" shall be deemed to refer to any other nationally recognized
rating agency designated by FSA.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company or other entity of which a majority of
the outstanding capital stock or other equity interests having ordinary voting
power for the election of directors or other persons performing similar
functions is at the time owned or controlled by such Person directly or through
one or more Subsidiaries.
"Term of the Agreement" shall be determined as provided in Section 4.01 of
the Insurance Agreement.
"Term of the Policy" has the meaning provided in the Policy.
"Transaction" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"Transaction Documents" means the Insurance Agreement, the Indemnification
Agreement, the Pooling and Servicing Agreement, the Underwriting Agreement and
the Premium Letter.
"Trigger Event" means the occurrence of any one of the following: (a) an
Event of Default under the Insurance Agreement has occurred and is continuing,
(b) any legal proceeding or binding arbitration is instituted with respect to
the Transaction or (c) any governmental or administrative investigation, action
or proceeding is instituted that has resulted in or has a
5
material possibility of resulting in a Material Adverse Change in respect of the
Seller or the Originator or of a material portion of the Loans.
"Trustee" means U.S. Bank Trust National Association, a national banking
association, as trustee under the Pooling and Servicing Agreement, and any
successor thereto as trustee under the Pooling and Servicing Agreement.
"Trust Fund" has the meaning provided in the Pooling and Servicing
Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"Underfunded Plan" means any Plan that has an Underfunding.
"Underfunding" means, with respect to any Plan, the excess, if any, of (a)
the present value of all benefits under the Plan (based on the assumptions used
to fund the Plan pursuant to Section 412 of the Code) as of the most recent
valuation date over (b) the fair market value of the assets of such Plan as of
such valuation date.
"Underwriters" means Xxxxxx Brothers Inc., Credit Suisse First Boston
Corporation, First Union Securities, Inc. and Merrill, Lynch, Xxxxxx, Xxxxxx &
Xxxxx Incorporated.
"Underwriting Agreement" means the Underwriting Agreement among the
Underwriters, the Seller and the Originator with respect to the offer and sale
of the Securities, as the same may be amended from time to time.
6
APPENDIX II
OPINIONS OF COUNSEL
There shall be delivered to FSA, S&P and Moody's opinions of counsel as
follows:
(i) opinions to the effect that the Certificates have been duly
issued, and the Transaction Documents have been duly executed and
delivered, and each constitutes legal, valid and binding obligations,
enforceable in accordance with their respective terms;
(ii) opinions as to compliance with applicable securities laws,
including, but not limited to, opinions to the effect that:
(A) to the best of counsel's knowledge, no filing or registration
with or notice to or consent, approval, authorization or order of any
court or governmental authority or agency is required for the
consummation of the Transaction, except such as may be required and
have been obtained under the Securities Act and state securities or
"blue sky" laws;
(B) the Registration Statement is effective under the Securities
Act and, to the best of counsel's knowledge and information, no stop
order suspending the effectiveness of the Registration Statement has
been issued under the Securities Act or proceedings therefor initiated
or threatened by the Commission; and
(C) neither the Issuer not the Trust Fund is required to be
registered under the Investment Company Act.
(iii) an opinion to the effect that (A) the Issuer is the owner of the
Loans, holding good and marketable title thereto; (B) the Loans would not
be included as part of the estate of the Seller in the event of any
receivership or insolvency proceedings in respect thereof; and (C) the
transfer of the Loans would be characterized by a court of competent
jurisdiction as a sale of such Loans and not as a borrowing by the Seller
or a relationship of joint ownership, partnership, joint venture or similar
arrangement;
(iv) an opinion to the effect that the transfer of the Loans to the
Issuer does not constitute either a fraudulent conveyance or a preferential
transfer by the Seller;
(v) an opinion to the effect that the Securities will be characterized
as evidence of ownership of the "regular interests" in the assets of the
Issuer comprising a REMIC under the Code and for Minnesota income and
franchise tax purposes the Issuer will not be subject to tax.
ANNEX I
TO
INSURANCE AND INDEMNITY AGREEMENT
FORM OF FINANCIAL GUARANTY INSURANCE POLICY
APPENDIX A
TO INSURANCE AND INDEMNITY AGREEMENT
CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICY
(a) Payment of Initial Premium and Expenses; Premium Letter. FSA shall have
been paid, by or on behalf of Seller or the Originator, as applicable, a
nonrefundable Premium and shall have been reimbursed, by or on behalf of the
Originator, for other fees and expenses identified in Section 3.02 as payable at
closing and FSA shall have received a fully executed copy of the Premium Letter.
(b) Transaction Documents. FSA shall have received a copy of each of the
Transaction Documents, in form and substance satisfactory to FSA, duly
authorized, executed and delivered by each party thereto. Without limiting the
foregoing, the provisions of the Pooling and Servicing Agreement relating to the
payment to FSA of Premium due on the Policy and the reimbursement to FSA of
amounts paid under the Policy shall be in form and substance acceptable to FSA
in its sole discretion.
(c) Certified Documents and Resolutions. FSA shall have received a copy of
(i) the Certificate of Incorporation and Bylaws of each of the Seller and the
Originator and any organizational document of the Issuer and (ii) the
resolutions of the Seller's and the Originator's Boards of Directors and proper
evidence of necessary trust action by the Issuer, in each case authorizing the
issuance of the Certificates and the execution, delivery and performance by the
Seller and the Originator, as applicable, of the Transaction Documents and the
transactions contemplated thereby, certified by the Secretary or an Assistant
Secretary of each of the Seller and the Originator (which certificates shall
state that the related Certificate of Incorporation, Bylaws, resolutions and
other items are in full force and effect without modification on the Date of
Issuance).
(d) Incumbency Certificate. FSA shall have received a certificate of the
Secretary or an Assistant Secretary of each of the Seller and the Originator
certifying the name and signatures of the officers of the Seller and the
Originator authorized to execute and deliver the Transaction Documents and that
shareholder consent to the execution and delivery of such documents is not
necessary.
(e) Representations and Warranties; Certificate. The representations and
warranties of the Seller and the Originator in the Insurance Agreement shall be
true and correct as of the Date of Issuance as if made on the Date of Issuance
and FSA shall have received certificates of appropriate officers of the Seller
and of the Originator to that effect.
(f) Opinions of Counsel. FSA shall have received opinions of counsel
addressed to FSA, S&P and Moody's in respect of the Seller, the Originator, the
other parties to the Transaction Documents and the Transaction in form and
substance satisfactory to FSA, addressing such matters as FSA may reasonably
request, including without limitation, the items set forth in Appendix II
hereto, and the counsel providing each such opinion shall have been instructed
by its client to deliver such opinion to the addressees thereof.
(g) Approvals, Etc. FSA shall have received true and correct copies of all
approvals, licenses and consents, if any, including, without limitation, the
approval of the shareholders of the Seller and the Originator, required in
connection with the Transaction.
(h) No Litigation, Etc. No suit, action or other proceeding, investigation,
or injunction or final judgment relating thereto, shall be pending or threatened
before any court or governmental agency in which it is sought to restrain or
prohibit or to obtain damages or other relief in connection with any of the
Transaction Documents or the consummation of the Transaction.
(i) Legality. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated by
any of the Transaction Documents illegal or otherwise prevent the consummation
thereof.
(j) Satisfaction of Conditions of Underwriting Agreement. All conditions in
the Underwriting Agreement to the Underwriter's obligation to purchase the
Securities shall have been satisfied.
(k) Issuance of Ratings. FSA shall have received confirmation that the risk
secured by the Policy constitutes an investment grade risk by S&P and an
insurable risk by Moody's and that the Securities, when issued, will be rated
"AAA" by S&P and "Aaa" by Moody's.
(l) Delivery of Loan Files. FSA shall have received evidence satisfactory
to it that: (i) delivery has been made to the Trustee of the Loan Files required
to be so delivered pursuant to Section 4.01(a) of the Pooling and Servicing
Agreement; and (ii) each such instrument is endorsed as necessary to permit the
true and timely delivery under the Pooling and Servicing Agreement of the
certificate in the form of Exhibit D to the Pooling and Servicing Agreement.
(m) Retention of Backup Servicer. The Seller and the Originator shall have
entered into the Backup Servicer Agreement; and
(m) No Default. No Default or Event of Default shall have occurred.
(n) Additional Items. FSA shall have received such other documents,
instruments, approvals or opinions requested by FSA as may be reasonably
necessary to effect the Transaction, including but not limited to evidence
satisfactory to FSA that all conditions precedent, if any, in the Transaction
Documents have been satisfied.
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