EXHIBIT 4.2
CONSECO FINANCE VEHICLE TRUST 1999-B
SALE AND SERVICING AGREEMENT
among
CONSECO FINANCE VEHICLE TRUST 1999-B
as Issuer
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller
and
CONSECO FINANCE CORP.
as Originator, Servicer and Guarantor
Dated as of December 1, 1999
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS......................................................1-1
SECTION 1.01. General..................................................1-1
SECTION 1.02. Specific Terms...........................................1-1
ARTICLE II TRANSFER OF CONTRACTS............................................2-1
SECTION 2.01. Transfer of Contracts....................................2-1
SECTION 2.02. Conditions to Acceptance by Owner Trustee................2-1
SECTION 2.03. Conveyance of the Subsequent Contracts...................2-3
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................3-1
SECTION 3.01. Representations and Warranties Regarding the Seller
and Originator and Covenants of the Originator...........3-1
SECTION 3.02. Representations and Warranties Regarding Each
Contract.................................................3-2
SECTION 3.03. Representations and Warranties Regarding the
Contracts in the Aggregate...............................3-5
SECTION 3.04. Representations and Warranties Regarding the
Contract Files...........................................3-6
SECTION 3.05. Repurchase of Contracts for Breach of
Representations and Warranties...........................3-6
ARTICLE IV PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS................................4-1
SECTION 4.01. Custody of Contracts.....................................4-1
SECTION 4.02. Filings..................................................4-2
SECTION 4.03. Name Change or Relocation................................4-2
SECTION 4.04. Chief Executive Office...................................4-2
SECTION 4.05. Costs and Expenses.......................................4-2
ARTICLE V SERVICING OF CONTRACTS...........................................5-1
SECTION 5.01. Responsibility for Contract Administration...............5-1
SECTION 5.02. Standard of Care.........................................5-1
SECTION 5.03. Records..................................................5-1
SECTION 5.04. Inspection; Computer Tape................................5-1
SECTION 5.05. Collections..............................................5-2
SECTION 5.06. Enforcement..............................................5-3
SECTION 5.07. Satisfaction of Contracts................................5-4
SECTION 5.08. Costs and Expenses.......................................5-4
SECTION 5.09. Maintenance of Insurance.................................5-4
SECTION 5.10. Repossession.............................................5-5
SECTION 5.11. Commingling of Funds.....................................5-6
SECTION 5.12. Retitling; Security Interests............................5-6
SECTION 5.13. Servicer Advances........................................5-6
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer........5-6
-i-
SECTION 5.15. Annual Report of Accountants.............................5-7
SECTION 5.16. Certain Duties of the Servicer Under the Trust
Agreement................................................5-7
SECTION 5.17. Annual Statement as to Compliance; Notice of
Servicer Termination Event...............................5-7
SECTION 5.18. Maintenance of Security Interests in Products............5-8
SECTION 5.19. Covenants, Representations, and Warranties of Servicer...5-8
SECTION 5.20. Purchase of Contracts Upon Breach of Covenant...........5-10
ARTICLE VI DISTRIBUTIONS; TRUST ACCOUNTS;
STATEMENTS TO SECURITYHOLDERS...................................6-1
SECTION 6.01. Trust Accounts...........................................6-1
SECTION 6.02. Collection Account Deposits..............................6-2
SECTION 6.03. Permitted Withdrawals....................................6-2
SECTION 6.04. Distributions............................................6-3
SECTION 6.05. Statements to Securityholders............................6-4
SECTION 6.06. Pre-Funding Account......................................6-5
SECTION 6.07. Capitalized Interest Account.............................6-6
ARTICLE VII SERVICE TRANSFER...............................................7-1
SECTION 7.01. Event of Termination.....................................7-1
SECTION 7.02. Transfer.................................................7-2
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor.......7-2
SECTION 7.04. Notification to Securityholders..........................7-3
SECTION 7.05. Effect of Transfer.......................................7-3
SECTION 7.06. Transfer of Collection Account...........................7-4
SECTION 7.07. Limits on Liability......................................7-4
SECTION 7.08. Waiver of Past Defaults..................................7-4
ARTICLE VIII TERMINATION..................................................8-1
SECTION 8.01. Class B Certificateholder's Purchase Option;
Auction Sale; Accelerated Principal Distribution
Amount...................................................8-1
SECTION 8.02. Liquidation or Sale of Trust Estate......................8-2
ARTICLE IX INDEMNITIES.....................................................9-1
SECTION 9.01. Originator's Indemnities.................................9-1
SECTION 9.02. Liabilities to Obligors..................................9-1
SECTION 9.03. Servicer's Indemnities...................................9-1
SECTION 9.04. Operation of Indemnities.................................9-2
ARTICLE X MISCELLANEOUS...................................................10-1
SECTION 10.01. Servicer Not to Assign Duties or Resign;
Delegation of Servicing Duties..........................10-1
SECTION 10.02. Assignment or Delegation by Originator..................10-1
SECTION 10.03. Amendment...............................................10-2
SECTION 10.04. Notices.................................................10-3
SECTION 10.05. Merger and Integration..................................10-4
-ii-
SECTION 10.06. Headings................................................10-5
SECTION 10.07. Governing Law...........................................10-5
SECTION 10.08. Limitation of Liability.................................10-5
Exhibit A -- Form of Assignment
Exhibit B -- Form of Certificate Regarding Repurchased Contracts
Exhibit C -- Form of Monthly Report
Exhibit D -- Form of Certificate of Servicing Officer
Exhibit E -- Form of Addition Notice
Exhibit F -- Form of Subsequent Transfer Instrument
Exhibit G -- Form of Officer's Certificate (Subsequent Transfer)
-iii-
THIS SALE AND SERVICING AGREEMENT, dated as of December 1, 1999, among
Conseco Finance Vehicle Trust 1999-B (the "Trust"), Conseco Finance
Securitizations Corp., a corporation organized and existing under the laws of
the State of Minnesota, as Seller (the "Seller") and Conseco Finance Corp., a
corporation organized and existing under the laws of the State of Delaware, as
originator of the Contracts described herein (the "Originator"), and as Servicer
(the "Servicer").
WHEREAS, in the regular course of its business, Conseco Finance Corp.
purchases, originates and services certain retail installment sales contracts
and promissory notes for the purchase of commercial trucks and trailers (the
"Products"), each of which contracts provides for installment payments by or on
behalf of the purchaser and grants a lien on or security interest in a Product;
and
WHEREAS, the Seller, in the ordinary course of its business, acquires
pools of Contracts, as hereinafter defined, from Conseco Finance Corp. and
arranges the securitization of those Contracts; and
WHEREAS, the Seller, the Originator, the Servicer and the Trust wish to
set forth the terms and conditions pursuant to which the Trust will acquire the
"Contracts," as hereinafter defined, and the Servicer will service the
Contracts;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as provided herein:
ARTICLE I
DEFINITIONS
SECTION 1.01. General.
(a) For the purpose of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, the terms defined in this
Article include the plural as well as the singular, the words "herein," "hereof"
and "hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision, and
Section references refer to Sections of this Agreement.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Indenture.
(c) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(d) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person include its permitted successors and assignees.
SECTION 1.02. Specific Terms.
All terms defined in any Related Document and not otherwise defined in
this Agreement shall have the meanings given them in such Related Document.
"Accelerated Principal Distribution Amount" means, as to any
Distribution Date, the Amount Available remaining after payment of the amounts
described in clauses (i) through (iv)
1-1
of Section 6.04(a) and the payment of the Total Principal Distribution Amount;
provided that the Accelerated Principal Distribution Amount for any Distribution
Date shall be zero unless:
(i) the aggregate Accelerated Principal Distribution Amount distributed
on prior Distribution Dates does not equal or exceed $3,093,065, and
the Accelerated Principal Distribution Amount to be distributed on such
Distribution Date, when added to the aggregate Accelerated Principal
Distribution Amount distributed on prior Distribution Dates, shall be
limited such that the aggregate Accelerated Principal Distribution
Amount distributed on that and all prior Distribution Dates is equal to
$3,093,065; or
(ii) such Accelerated Principal Distribution Amount is being
distributed in accordance with to Section 8.01(e).
"Addition Notice" means, with respect to the transfer of Subsequent
Contracts to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit E, which shall be given not later than five
Business Days prior to the related Subsequent Transfer
Date, of the Seller's designation of Subsequent Contracts to be sold to the
Trust and the aggregate Cut-off Date Principal Balance of such Subsequent
Contracts.
"Advance Payment" means, with respect to any Monthly Period, any
payment by an Obligor that was not due under the related Contract during or
before such Monthly Period and which payment is not a Principal Prepayment.
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Agreement" means this Sale and Servicing Agreement as the same may be
amended or supplemented from time to time.
"Amount Available" means, as to any Distribution Date, an amount equal
to the Collected Funds for that Distribution Date plus any amounts required to
be deposited in the Collection Account on or before such Distribution Date
pursuant to Sections 6.02, 6.06, 8.01 and 8.02 of this Agreement, Section 10.04
of the Indenture or Section 9.3 of the Trust Agreement.
"Amount Held for Future Distribution" means, as to any Distribution
Date, the total of the amounts held in the Collection Account on the last day of
the related Monthly Period on account of Advance Payments in respect of such
Monthly Period.
"Assignment" means the Assignment from the Seller to the Trust
substantially in the form of Exhibit A, whereby the Seller assigns the Initial
Contracts to the Trust.
1-2
"Business Day" means any day other than (a) a Saturday, Sunday, legal
holiday or other day on which commercial banking institutions in Minneapolis,
Minnesota, New York, New York, Wilmington, Delaware or any other location of any
successor Servicer, successor Owner Trustee or successor Trustee are authorized
or obligated by law, executive order or governmental decree to be closed.
"Capitalized Interest Account" means the account established and
maintained pursuant to Section 6.07.
"Certificate Distribution Account" means the account established and
maintained pursuant to Section 6.01(c).
"Certificate Majority" means Holders of Certificates representing more
than 50% of the interest of the Certificates as a whole.
"Certificates" means the Class B Asset-Backed Certificates issued under
the Trust Agreement.
"CFVSC Note Purchase Agreement" means the Note Purchase Agreement,
dated as of December 16, 1999, between Credit Suisse First Boston, New York
Branch, and Conseco Finance Vehicle Securitizations Corp.
"Class" means pertaining to each Class of Notes or Certificates, as
applicable.
"Class A Notes" means the Class A Asset-Backed Notes issued by the
Trust pursuant to the Indenture.
"Class A Final Scheduled Distribution Date" means January 10, 2001,
subject to extension on or after the Mandatory Tender Date to the Distribution
Date in the month that is six months after the maturity date of the
then-outstanding Contract with the latest maturity date by 100% of the
Noteholders as provided in Section 9.07 of the Indenture.
"Class A Interest Amount" means, with respect to any Distribution Date,
an amount equal to interest accrued at the Class A Interest Rate on the Class A
Principal Balance from the preceding Distribution Date (or, in the case of the
first Distribution Date, from the Closing Date).
"Class A Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class A Notes on such Distribution Date pursuant to Section
8.02(c)(1)(i) of the Indenture is less than the Class A Interest Amount for such
Distribution Date.
"Class A Interest Rate" means a per annum rate of interest equal to one
month LIBOR plus 0.160%, but in no case more than 9.96%, calculated on the basis
of the actual number of days elapsed and a year of 360 days.
1-3
"Class A LIBOR Carryforward Amount" means, with respect to any
Distribution Date (or the Mandatory Tender Date), an amount equal to the product
of
(i) the difference (but not less than zero) of (A) LIBOR for the
related Interest Accrual Period plus 0.160%, minus (B) the
Class A Interest Rate, times
(ii) the Class A Principal Balance, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360,
plus any Unpaid Class A LIBOR Carryforward Shortfall with respect to the
immediately preceding Distribution Date, plus an amount equal to the product of
(i) the Unpaid Class A LIBOR Carryforward Shortfall with respect
to the immediately preceding Distribution Date, times
(ii) LIBOR for the related Interest Accrual Period plus 0.160%, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360.
"Class A Principal Balance" means, as to any Distribution Date, the
Original Class A Principal Balance less all amounts distributed to Holders of
Class A Notes on any prior Distribution Date on account of principal pursuant to
Section 8.02(c) of the Indenture.
"Class M Final Scheduled Distribution Date" means January 10, 2001,
subject to extension on or after the Mandatory Tender Date to the Distribution
Date in the month that is six months after the maturity date of the
then-outstanding Contract with the latest maturity date by 100% of the
Noteholders as provided in Section 9.07 of the Indenture.
"Class M Interest Amount" means, with respect to any Distribution Date,
an amount equal to interest accrued at the Class M Interest Rate on the Class M
Principal Balance from the preceding Distribution Date (or, in the case of the
first Distribution Date, from the Closing Date).
"Class M Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the amount distributed to
Holders of the Class M Notes on such Distribution Date pursuant to Section
8.02(c)(2)(i) of the Indenture is less than the Class M Interest Amount for such
Distribution Date.
"Class M Interest Rate" means a per annum rate of interest equal to one
month LIBOR plus 0.420%, but in no case more than 9.96%, calculated on the basis
of the actual number of days elapsed and a year of 360 days.
1-4
"Class M LIBOR Carryforward Amount" means, with respect to any
Distribution Date, an amount equal to the product of
(i) the difference (but not less than zero) of (A) LIBOR for the
related Interest Accrual Period plus 0.420%, minus (B) the
Class M Interest Rate, times
(ii) the Class M Principal Balance, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360,
plus any Unpaid Class M LIBOR Carryforward Shortfall with respect to the
immediately preceding Distribution Date, plus an amount equal to the product of
(i) the Unpaid Class M LIBOR Carryforward Shortfall with respect
to the immediately preceding Distribution Date, times
(ii) LIBOR for the related Interest Accrual Period plus 0.420%, times
(iii) the actual number of days from but excluding the immediately
preceding Distribution Date to and including the current
Distribution Date (or the Mandatory Tender Date), divided by
360.
"Class M Notes" means the Class M Asset-Backed Notes issued by the
Trust pursuant to the Indenture.
"Class M Principal Balance" means, as to any Distribution Date, the
Original Class M Principal Balance less all amounts distributed to Holders of
Class M Notes on prior Distribution Dates on account of principal pursuant to
Section 8.02(c) of the Indenture.
"Class Percentage Interest" means, as to any Note or Certificate, the
percentage interest evidenced thereby in distributions made on the related
Class, such percentage interest being equal to the percentage (carried to eight
places) obtained from dividing the denomination of such Note or Certificate by
the aggregate denomination of all Notes or Certificates of the related Class
(which equals the Original Class A Principal Balance in the case of a Class A
Note, and the Original Class M Principal Balance in the case of a Class M Note).
The aggregate Class Percentage Interests for each Class of Notes or Certificates
shall equal 100%.
"Class Principal Balance" means, as to any date, the Class A Principal
Balance or the Class M Principal Balance, as appropriate.
"Closing Date" means December 16, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
1-5
"Collateral Security" means, with respect to any Contract, (i) the
security interests, if any, granted by or on behalf of the related Obligor with
respect thereto, including a first priority perfected security interest in the
related Product, (ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Contract, whether
pursuant to the agreement giving rise to such Contract or otherwise, together
with all financing statements signed by the Obligor describing any collateral
securing such Contract, (iii) all security agreements granting a security
interest in the related Product and all guarantees, insurance and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of such Contract whether pursuant to the agreement giving rise
to such Contract or otherwise, and (iv) all records in respect of such Contract.
"Collected Funds" means, as to any Distribution Date, an amount equal
to (a) the sum of (i) the amount on deposit in the Collection Account as of the
close of business on the last day of the related Monthly Period (exclusive of
any amounts deposited therein pursuant to Sections 8.01 or 8.02 of this
Agreement or Section 10.04 of the Indenture, (ii) any amounts required to be
deposited in the Collection Account on or before the Business Day immediately
preceding such Distribution Date pursuant to Sections 5.09 or 5.13, (iii) any
amounts deposited in the Collection Account pursuant to Section 6.07, and (iv)
any amount deposited in the Collection Account in respect of principal on the
Contracts (exclusive of any amounts deposited therein pursuant to Sections 6.06,
8.01 or 8.02 of this Agreement, Section 10.04 of the Indenture or Section 9.3 of
the Trust Agreement) after the last day of the related Monthly Period through
and including the third Business Day prior to the Distribution Date, but in no
event later than the 10th day of the month in which such Distribution Date
occurs, reduced by (b) the sum as of the close of business on the last day of
the related Monthly Period of (i) the Amount Held for Future Distribution, (ii)
amounts permitted to be withdrawn by the Trustee from the Collection Account
pursuant to clauses (b) - (e), inclusive, of Section 6.03; and (iii) with
respect to all Distribution Dates other than the Distribution Date in December
1999, any amount deposited in the Collection Account in respect of principal on
the Contracts (exclusive of any amounts deposited therein pursuant to Sections
6.06, 8.01 or 8.02 of this Agreement, Section 10.04 of the Indenture or Section
9.3 of the Trust Agreement) on or after the first day of the related Monthly
Period and through and including the third Business Day of the preceding
Distribution Date, but in no event later than the 10th day of the related
Monthly Period.
"Collection Account" means the account established and maintained
pursuant to Section 6.01(a).
"Computer Tape" means the computer tape generated by the Originator
which provides information relating to the Contracts and which was used by the
Originator in selecting the Contracts, and includes the master file and the
history file.
"Contract File" means, as to each Contract, (a) the original copy of
the Contract, including the executed evidence of the obligation of the Obligor;
(b) either (i) the original title document for the related Product or a
duplicate certified by the appropriate governmental authority which issued the
original thereof or the application for such title document or (ii) if the laws
of the jurisdiction in which the related Product is located do not provide for
the issuance of title documents for goods of the type including the Product,
other evidence of ownership of the
1-6
related Product which is customarily relied upon in such jurisdiction as
evidence of title to such goods; (c) evidence of one or more of the following
types of perfection of the security interest in the related Product granted by
such Contract, as appropriate: (i) notation of such security interest on the
title document, (ii) a financing statement meeting the requirements of the UCC,
with evidence of recording indicated thereon (if required to perfect a security
interest in the related Product under the UCC as in force in the relevant
state), or (iii) such other evidence of perfection of a security interest in
goods of the type including the Product as is customarily relied upon in the
jurisdiction in which the related Product is located; (d) the assignment of the
Contract from the originator (if other than the Originator or a wholly-owned
subsidiary of the Originator) to the Originator or a wholly-owned subsidiary of
the Originator; (e) any extension, modification or waiver agreement(s); (f) a
credit application signed by the Obligor, or a copy thereof; and (g) if required
by Section 5.09, a certificate of insurance or application form for insurance
signed by the Obligor, or copies thereof.
"Contract Rate" means, with respect to any particular Contract, the
rate of interest specified in that Contract and computed in accordance with the
method specified in that Contract.
"Contracts" means the retail installment sales contracts and promissory
notes described in the List of Contracts and constituting part of the corpus of
the Trust, which Contracts are to be assigned and conveyed by the Company to the
Trust, and includes, without limitation, all related security interests and any
and all rights to receive payments which are due pursuant thereto on or after
the Cutoff Date, but excluding any rights to receive payments which are due
pursuant thereto prior to the Cutoff Date.
"Corporate Trust Office" means with respect to the Owner Trustee, the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the Closing Date
is located at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust Administration; the telecopy
number for the Corporate Trust Office of the Owner Trustee on the date of the
execution of this Agreement is ▇▇▇-▇▇▇-▇▇▇▇; with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at U.S. Bank Trust National Association, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: Corporate Trust Department;
the telecopy number for the Corporate Trust Office of the Indenture Trustee on
the date of execution of this Agreement is ▇▇▇-▇▇▇-▇▇▇▇.
"Counsel for the Originator" means ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP or other legal
counsel for the Originator.
"CSFB Note Purchase Agreement" means the Note Purchase Agreement, dated
as of December 16, 1999, among the Trust, the Indenture Trustee and Credit
Suisse First Boston, New York Branch, as the same may be amended from time to
time.
"Cutoff Date" means the Initial Cutoff Date with respect to the Initial
Contracts or the Subsequent Cutoff Date with respect to the Subsequent
Contracts.
1-7
"Cutoff Date Pool Principal Balance" means the aggregate of the Cutoff
Date Principal Balances of the Contracts.
"Cutoff Date Principal Balance" means, as to any Contract, the unpaid
principal balance thereof at the Cutoff Date after giving effect to all
installments of principal due prior thereto.
"Defaulted Contract" means a Contract with respect to which the
Servicer commenced repossession or foreclosure procedures, made a sale of such
Contract to a third party for repossession, foreclosure or other enforcement, or
as to which there was a payment delinquent 180 or more days (excluding any
Contract deemed delinquent solely because the Obligor's required monthly payment
was reduced as a result of bankruptcy or similar proceedings).
"Delinquent Payment" means, as to any Contract, with respect to any
Monthly Period, any payment or portion of a payment of principal or interest
that was originally scheduled to be made during such Monthly Period under such
Contract and was not received or applied during such Monthly Period, whether or
not any payment extension has been granted by the Servicer.
"Determination Date" means the third Business Day prior to each
Distribution Date during the term of this Agreement.
"Distribution Date" means the fifteenth day of each calendar month
during the term of this Agreement, or if such day is not a Business Day, the
next succeeding Business Day, commencing on January 18, 2000; provided that the
Distribution Date in January 2001 shall be January 10, 2001.
"Due Date" means, as to any Contract, the date of the month on which
the scheduled monthly payment for such Contract is due.
"Electronic Ledger" means the electronic master record of installment
sale contracts of the Originator.
"Eligible Account" means, at any time, an account which is any of the
following: (i) an account maintained with an Eligible Institution; (ii) a trust
account (which shall be a "segregated trust account") maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company with trust powers and acting in its fiduciary
capacity for the benefit of the Indenture Trustee, which depository institution
or trust company shall have capital and surplus (or, if such depository
institution or trust company is a subsidiary of a bank holding company system,
the capital and surplus of the bank holding company) of not less than
$50,000,000 and the securities of such depository institution (or, if such
depository institution is a subsidiary of a bank holding company system and such
depository institution's securities are not rated, the securities of the bank
holding company) shall have a credit rating from Standard & Poor's (if rated by
Standard & Poor's) and Fitch (if rated by Fitch) in one of its generic credit
rating categories which signifies investment grade; or (iii) an account that
will not cause Standard & Poor's and Fitch to downgrade or withdraw their
then-current ratings assigned to the Notes, as confirmed in writing by Standard
& Poor's and Fitch.
1-8
"Eligible Institution" means any depository institution (which may be
the Owner Trustee, the Indenture Trustee or an Affiliate of either) organized
under the laws of the United States or any State, the deposits of which are
insured to the full extent permitted by law by the Bank Insurance Fund
(currently administered by the Federal Deposit Insurance Corporation), which is
subject to supervision and examination by federal or state authorities and whose
short-term deposits have been rated A-1+ by Standard & Poor's and F-1 by Fitch
(if rated by Fitch), or whose unsecured long-term debt has been rated in one of
the two highest rating categories by Standard & Poor's and Fitch (if rated by
Fitch) in the case of unsecured long-term debt, or who shall otherwise be
acceptable to Standard & Poor's and Fitch.
"Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed
by, the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, or any agency
or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of
America and which are noncallable;
(ii) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or any
Affiliate of the Indenture Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of America or any
State thereof and subject to supervision and examination by federal
and/or state authorities, so long as, at the time of such investment or
contractual commitment providing for such investment, the commercial
paper or other short-term deposits of such depository institution or
trust company (or, in the case of a depository institution which is the
principal subsidiary of a holding company, the commercial paper or
other short-term debt obligations of such holding company) are rated at
least A-1+ by Standard & Poor's and at least F-1+ by Fitch (if rated by
Fitch);
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered under the
Securities Act of 1933 and have the highest credit rating then
available from Fitch (if rated by Fitch) and Standard & Poor's and
whose only investments are in securities described in clauses (i) and
(ii) above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) above;
(v) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any State thereof which have a credit rating of at least AAA
by Standard & Poor's and in one of the two highest rating categories
from Fitch (if rated by Fitch) at the time of such investment;
provided, however, that securities issued by any particular corporation
will not be Eligible
1-9
Investments to the extent that investment therein will cause the then
outstanding principal amount of securities issued by such corporation
and held as part of the corpus of the Trust to exceed 10% of amounts
held in the Collection Account; and
(vi) commercial paper having a rating of at least A-1+ from
Standard & Poor's and at least F-1+ by Fitch (if rated by Fitch) at the
time of such investment or pledge as a security.
Notwithstanding the foregoing, securities that represent the right to receive
payments only of interest due on underlying obligations shall not be included as
Eligible Investments, whether or not such securities otherwise fall within (i)
through (vi) above.
Each of the Indenture Trustee and the Owner Trustee may trade with
itself or an Affiliate in the purchase or sale of such Eligible Investments.
"Eligible Servicer" means Conseco Finance Corp. or any Person qualified
to act as Servicer of the Contracts under applicable federal and state laws and
regulations, which Person services not less than an aggregate of $100,000,000 in
outstanding principal amount of retail installment sales contracts and/or
consumer installment Contracts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Errors and Omissions Protection Policy" means the employee errors and
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Contracts comprising
a portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or
any similar replacement bond, meeting the requirements of Section 5.09, as such
bond relates to Contracts comprising a portion of the corpus of the Trust.
"Fitch" means Fitch IBCA, Inc., or any successor thereto; provided that
if Fitch no longer has a rating outstanding on any Class of Notes, then
references herein to "Fitch" shall be deemed to refer to the NRSRO then rating
any Class of the Notes (or, if more than one such NRSRO is then rating any Class
of the Notes, to such NRSRO as may be designated by the Servicer), and
references herein to ratings by or requirements of Fitch's shall be deemed to
have the equivalent meanings with respect to ratings by or requirements of such
NRSRO.
"Formula Principal Distribution Amount" means, as of any Distribution
Date (but subject to the last sentence of this definition), the sum of the
following amounts with respect to the related Monthly Period, in each case
computed in accordance with the method specified in the relevant Contract:
1-10
(i) all scheduled payments of principal due on each
outstanding Contract during the related Monthly Period as specified in
the amortization schedule at the time applicable thereto (after
adjustments for previous Partial Principal Prepayments and after any
adjustment to such amortization schedule by reason of any bankruptcy of
an Obligor or similar proceeding or any moratorium or similar waiver or
grace period); plus
(ii) the Scheduled Principal Balance of each Contract which,
during the related Monthly Period, was purchased by the Originator
pursuant to this Agreement on account of a breach of a representation
or warranty; plus
(iii) all Partial Principal Prepayments applied and all
Principal Prepayments in Full received on Contracts during the related
Monthly Period; plus
(iv) the aggregate Scheduled Principal Balance of all
Contracts that became Liquidated Contracts during the related Monthly
Period; plus the amounts of any reduction in the outstanding principal
balance of a Contract during such Monthly Period ordered as a result of
a bankruptcy or similar proceeding involving the related Obligor; plus
(v) all collections in respect of principal on the Contracts
received during the current month up to and including the third
Business Day prior to such Distribution Date (but in no event later
than the 10th day of the month in which such Distribution Date occurs),
minus
(vi) with respect to all Distribution Dates other than the
Distribution Date in January 2000, all collections of principal on the
Contracts received during the related Monthly Period up to and
including the third Business Day prior to the preceding Distribution
Date (but in no event later than the 10th day of the prior month).
"Formula Principal Shortfall" means, with respect to any Distribution
Date, the Total Principal Distribution Amount for such Distribution Date less
the funds available to pay such Total Principal Distribution Amount pursuant to
Section 6.04(a)(v) of this Agreement.
"Indenture" means the Indenture, dated as of December 1, 1999, between
the Trust and U.S. Bank Trust National Association, as Indenture Trustee, as the
same may be amended and supplemented from time to time.
"Indenture Trustee" means the Person acting as Trustee under the
Indenture, its successors in interest and any successor Trustee under the
Indenture.
"Independent" means, when used with respect to any specified Person,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, or any Person who (i) is in fact independent of the Seller
and the Servicer, (ii) does not have any direct financial interest or any
material indirect financial interest in the Seller or the Servicer or in an
Affiliate of either and (iii) is not connected with the Seller or the Servicer
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided herein that any
Independent Person's opinion or certificate
1-11
shall be furnished to the Trustee, such opinion or certificate shall state that
the signatory has read this definition and is Independent within the meaning set
forth herein.
"Initial Cutoff Date" means December 1, 1999.
"Insurance Policy" means, with respect to each Contract, the policy of
insurance (if any) required to be maintained for the related Product by Section
5.09, and which, as provided in said Section 5.09, may be a blanket policy
maintained by the Servicer in accordance with the terms and conditions of said
Section 5.09.
"Insurance Proceeds" means proceeds paid by any insurer pursuant to any
insurance policy or contract.
"Interest Accrual Period" means, with respect to a Distribution Date,
the period from and including the preceding Distribution Date (or, in the case
of the first Distribution Date, from and including the Closing Date) to but
excluding such Distribution Date.
"LIBOR" means, for any Interest Accrual Period, the London interbank
offered quotations for one-month Dollar deposits on the related LIBOR
Determination Date determined by the Trustee in accordance with the provisions
of Section 8.04 of the Indenture.
"LIBOR Determination Date" means, for any Interest Accrual Period
following the initial Interest Accrual Period, the second Business Day prior to
the commencement of the second and each subsequent Interest Accrual Period. For
purposes of this definition, the term "Business Day" means any day on which
banks in London and New York are open for the transaction of international
business.
"Liquidated Contract" means any Defaulted Contract as to which the
Servicer has determined that all amounts which it expects to recover from or on
account of such Contract through the date of disposition of the related Product
have been recovered; provided that any defaulted Contract in respect of which
the related Product has been realized upon and disposed of and the proceeds of
such disposition have been received shall be deemed to be a Liquidated Contract.
"Liquidation Expenses" means out-of-pocket expenses (exclusive of any
overhead expenses) which are incurred by the Servicer in connection with the
liquidation of any Defaulted Contract, on or prior to the date on which the
related Product is disposed of, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for property taxes,
property preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including Insurance Proceeds and
proceeds realized on the repurchase of any Product by the originating dealer for
breach of warranties) received in connection with the liquidation of Defaulted
Contracts, whether through repossession, foreclosure sale or otherwise,
including any rental income realized from any repossessed Product.
1-12
"List of Contracts" means the list identifying each Contract
constituting part of the corpus of the Trust, which list (a) identifies each
Contract and (b) sets forth as to each Contract (i) the Cutoff Date Principal
Balance, (ii) the amount of monthly payments due from the Obligor, (iii) the
Contract Rate and (iv) the maturity date, the List of Contracts as of the
Closing Date is attached to the Assignment , and shall be revised on each
Subsequent Transfer Date to add the Subsequent Contracts then being transferred
to the Trust.
"Minimum Purchase Price" has the meaning assigned in Section 8.01.
"Monthly Period" means a calendar month during the term of this
Agreement. With respect to a Distribution Date, "related Monthly Period" means
the calendar month immediately preceding the month in which the Distribution
Date occurs.
"Monthly Report" has the meaning assigned in Section 5.14.
"Monthly Servicing Fee" means, as of any Distribution Date, one-twelfth
of the product of 0.75% and the Pool Scheduled Principal Balance for the
immediately preceding Distribution Date.
"Net Liquidation Loss" means, as to a Liquidated Contract, the amount,
if any, by which (a) the outstanding principal balance of such Liquidated
Contract plus accrued and unpaid interest thereon to the date on which such
Liquidated Contract became a Liquidated Contract exceeds (b) the Net Liquidation
Proceeds for such Liquidated Contract.
"Net Liquidation Proceeds" means, as to a Liquidated Contract, all
Liquidation Proceeds received on or prior to the last day of the Monthly Period
in which such Contract became a Liquidated Contract, net of Liquidation
Expenses.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 6.01(b).
"Note Majority" means, as to each Class of Notes, Holders of Notes
representing a majority of the Principal Balance of such Class of Notes.
"Note Pool Factor" means, with respect to any Distribution Date and
each Class of Notes, an eight-digit decimal figure equal to the outstanding
principal balance of such class of Notes as of such Distribution Date (after
giving effect to all distributions on such date) divided by the Original
Principal Balance of such Class of Notes as of the Closing Date.
"Note Principal Balance" means, as of any Distribution Date, the sum of
the Class A Principal Balance and the Class M Principal Balance.
"Note Purchase Agreements" means the CSFB Note Purchase Agreement and
the CFVSC Note Purchase Agreement.
"Notes" means the Class A Notes or Class M Notes.
1-13
"NRSRO" means any nationally recognized statistical rating o
rganization.
"MN UCC" means the Uniform Commercial Code as in effect in the State of
Minnesota.
"Obligor" means a Product buyer or other Person who is indebted under a
Contract.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, President or any Vice President
of such Person and delivered to the Owner Trustee and/or the Trustee as
applicable.
"Opinion of Counsel" means a written opinion of counsel, who may,
except as expressly provided herein, be salaried counsel for the Servicer,
acceptable to the Indenture Trustee, the Owner Trustee and the Seller.
"Original Class A Principal Balance" means $536,957,000.
"Original Class M Principal Balance" means $38,043,000.
"Original Class Principal Balance" means, with respect to any Class,
the Original Class A Principal Balance or the Original Class M Principal
Balance, as appropriate.
"Original Note Principal Balance" means the sum of the Original Class A
Principal Balance and Original Class M Principal Balance.
"Owner Trustee" means Wilmington Trust Company, acting not individually
but solely as trustee, or its successor in interest, and any successor appointed
as provided in the Trust Agreement.
"Partial Principal Prepayment" means (a) any Principal Prepayment other
than a Principal Prepayment in Full and (b) any cash amount deposited in the
Collection Account pursuant to the proviso in Section 3.05(a).
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Pool Scheduled Principal Balance" means, as of any Distribution Date,
the aggregate Scheduled Principal Balance of all Contracts that were outstanding
during the related Monthly Period.
"Post-Funding Payment Date" means the Payment Date on, or the first
Payment Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means with respect to any date of determination,
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Contracts to the Trust on such date.
1-14
"Pre-Funding Account" means the account so designated, established and
maintained pursuant to Section 6.06.
"Pre-Funding Period" means the period beginning on the Closing Date and
ending on the earliest of (a) the date on which the amount on deposit in the
Pre-Funding Account is less than $10,000.00, or (b) the close of business on
February 1, 2000, or (c) the date on which a Servicer Termination Event occurs.
"Principal Prepayment" means a payment or other recovery of principal
on a Contract (exclusive of Liquidation Proceeds) which is received in advance
of its scheduled due date and applied upon receipt (or, in the case of a Partial
Principal Prepayment, upon the next scheduled payment date on such Contract) to
reduce the outstanding principal amount due on such Contract prior to the date
or dates on which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
entire principal balance of a Contract.
"Products" means commercial trucks and trailers or other vehicles or
property financed by and securing the Contracts.
"Record Date" means the Business Day immediately preceding the related
Distribution Date.
"Related Documents" means the Transfer Agreement, the Trust Agreement,
the Indenture, the Administration Agreement, the Note Purchase Agreements, the
Certificates, the Notes and the Underwriting Agreement. The Related Documents
executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Repurchase Price" means, with respect to a Contract to be repurchased
pursuant to Section 3.05 or Section 5.20, an amount equal to (a) the remaining
principal amount outstanding on such Contract, plus (b) interest at the Contract
Rate on such Contract from the end of the Monthly Period with respect to which
the Obligor last made a payment through the end of the immediately preceding
Monthly Period.
"Responsible Officer" means, with respect to the Owner Trustee, the
chairman and any vice chairman of the board of directors, the president, the
chairman and vice chairman of any executive committee of the board of directors,
every vice president, assistant vice president, the secretary, every assistant
secretary, cashier or any assistant cashier, controller or assistant controller,
the treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
1-15
"Sale Date" means the Distribution Date as of which the corpus of the
Trust is sold pursuant to Section 10.04 of the Indenture or Section 9.03 of the
Trust Agreement.
"Scheduled Principal Balance" means, as to any Contract and any
Distribution Date or the Cutoff Date, the principal balance of such Contract as
of the Due Date in the Monthly Period immediately preceding such Distribution
Date or as of the Due Date immediately preceding the Cutoff Date, as the case
may be, as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
of an Obligor or similar proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous Partial Principal Prepayments and to
the payment of principal due on such Due Date and irrespective of any
delinquency in payment by, or extension granted to, the related Obligor.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and the Certificateholders.
"Service Transfer" has the meaning assigned in Section 7.02.
"Servicer" means the Conseco Finance Corp., a Delaware corporation,
until any Service Transfer hereunder and thereafter means the new servicer
appointed pursuant to Article VII.
"Servicer Advance" means, with respect to any Distribution Date, the
amount, if any, deposited by the Servicer in the Collection Account pursuant to
Section 5.13.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Trustee by the Servicer, as the same may be amended from time
to time.
"Standard & Poor's" means Standard & Poor's Ratings Service, or any
successor thereto; provided that if Standard & Poor's no longer has a rating
outstanding on any Class of Notes or Certificates, then references herein to
"Standard & Poor's" shall be deemed to refer to the NRSRO then rating any Class
of the Notes or Certificates (or, if more than one such NRSRO is then rating any
Class of the Notes or Certificates, to such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Standard &
Poor's shall be deemed to have the equivalent meanings with respect to ratings
by or requirements of such NRSRO.
"Subsequent Cut-off Date" means the date specified as such in the
applicable Subsequent Transfer Instrument.
"Subsequent Contract" means a Contract sold by the Seller to the Trust
pursuant to Section 2.03, such Contract being identified as such in the
Subsequent Transfer Instrument.
1-16
"Subsequent Transfer Date" means, with respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Contracts are sold
to the Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Owner Trustee,
the Originator and the Seller substantially in the form of Exhibit F, by which
the Seller sells Subsequent Contracts to the Trust.
"Total Principal Distribution Amount" means, for any Distribution Date,
the sum of:
(i) the Formula Principal Distribution Amount for such
Distribution Date, plus
(ii) the aggregate of all Formula Principal Shortfalls, if
any, for prior Distribution Dates.
"Trust" means the Conseco Finance Vehicle Trust 1999-B.
"Trust Accounts" means the Collection Account, the Note Distribution
Account, the Certificate Distribution Account and the Pre-Funding Account.
"Trust Agreement" means the Trust Agreement dated as of December 1,
1999 between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Property" means the property conveyed to the Trust pursuant to
Section 2.01(a).
"Uncollectible Advance" means, with respect to any Determination Date,
the portion of any Servicer Advances which the Servicer has determined in good
faith will not be ultimately recoverable by the Servicer from insurance policies
on the Product, the Obligor or out of Net Liquidation Proceeds. The
determination by the Servicer that it has made an Uncollectible Advance shall be
evidenced by an Officer's Certificate delivered to the Trustee.
"Underwriter" means Credit Suisse First Boston Corporation.
"Underwriting Agreement" means the Underwriting Agreement and related
Terms Agreement, each dated December 10, 1999, among the Originator, the Seller
and the Underwriter.
"Unpaid Class A Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class A Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class A
Notes on account of any Unpaid Class A Interest Shortfall pursuant to Section
8.02(c)(1)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent
1-17
payment thereof is legally permissible) at the Class A Interest Rate on such
remainder from such immediately prior Distribution Date to the current
Distribution Date.
"Unpaid Class A LIBOR Carryforward Shortfall" means, with respect to
any Distribution Date, the difference, if any, between (A) the Class A LIBOR
Carryforward Amount for such Distribution Date, and (B) the amount actually paid
with respect to the Class A LIBOR Carryforward Amount pursuant to Section
6.04(a)(vi) on such Distribution Date.
"Unpaid Class M Interest Shortfall" means, as to any Distribution Date,
the amount, if any, of the remainder of (x) the Class A-2 Interest Carryover
Shortfall, if any, for the immediately prior Distribution Date, plus (y) the
Unpaid Class M Interest Shortfall determined as of such immediately prior
Distribution Date, minus (z) all amounts distributed to the Holders of Class M
Notes on account of any Unpaid Class M Interest Shortfall pursuant to Section
8.02(c)(2)(ii) of the Indenture on such immediately prior Distribution Date,
plus accrued interest (to the extent payment thereof is legally permissible) at
the Class M Interest Rate on such remainder from such immediately prior
Distribution Date to the current Distribution Date.
"Unpaid Class M LIBOR Carryforward Shortfall" means, with respect to
any Distribution Date, the difference, if any, between (A) the Class M LIBOR
Carryforward Amount for such Distribution Date, and (B) the amount actually paid
with respect to the Class M LIBOR Carryforward Amount pursuant to Section
6.04(a)(vii) on such Distribution Date.
"Weighted Average Contract Rate" means, as to any Distribution Date,
the weighted average (determined by Scheduled Principal Balance) of the Contract
Rates of all Contracts that were outstanding during the prior related Monthly
Period.
1-18
ARTICLE II
TRANSFER OF CONTRACTS
SECTION 2.01. Transfer of Contracts.
(a) Subject to the terms and conditions of this Agreement, the Seller
hereby irrevocably and unconditionally transfers, assigns, sets over and
otherwise conveys to the Trust by execution of an Assignment substantially in
the form of Exhibit A hereto all right, title and interest of the Seller in and
to (1) the Initial Contracts (including, without limitation, the Collateral
Security), and all moneys payable thereon or in respect to the Initial
Contracts, including any liquidation proceeds therefrom but excluding payments
due on the Initial Contracts prior to the Initial Cutoff Date, (2) the Insurance
Policies on any Products securing an Initial Contract for the benefit of the
creditor of such Initial Contract and all blanket insurance policies to the
extent they relate to the Initial Contracts, (3) the Transfer Agreement and each
Subsequent Transfer Agreement, (4) the Errors and Omissions Protection Policy as
such policy relates to the Contracts, (5) all items contained in the Contract
Files, (6) the Trust Accounts and all funds on deposit therein from time to time
and all investments and proceeds thereof (including all income thereon), and (7)
all proceeds and products of the foregoing.
(b) Although the parties intend that the conveyance pursuant to this
Agreement of the Seller's right, title and interest in and to the Contracts and
the Collateral Security pursuant to this Agreement and each Subsequent Transfer
Instrument shall constitute a purchase and sale and not a pledge of security for
loans from the Certificateholders and/or the Noteholders, if such conveyances
are deemed to be a pledge of security for contracts from the Certificateholders,
the Noteholders or any other Persons (the "Secured Obligations"), the parties
intend that the rights and obligations of the parties to the Secured Obligations
shall be established pursuant to the terms of this Agreement. The parties also
intend and agree that the Seller shall be deemed to have granted to the Trust,
and the Seller does hereby grant to the Trust, a perfected first-priority
security interest in the items designated in Section 2.01(a)(1) through
2.01(a)(6) above, and all proceeds thereof, to secure the Secured Obligations,
and that this Agreement shall constitute a security agreement under applicable
law. If the trust created by this Agreement terminates prior to the satisfaction
of the claims of any Person under any Certificates, any Notes or the Secured
Obligations, the security interest created hereby shall continue in full force
and effect and the Owner Trustee shall be deemed to be the collateral agent for
the benefit of such Person.
SECTION 2.02. Conditions to Acceptance by Owner Trustee.
As conditions to the Owner Trustee's execution and delivery of the
Notes on behalf of the Trust and the execution, authentication and delivery of
the Certificates on behalf of the Trust on the Closing Date, the Owner Trustee
on behalf of the Trust shall have received the following on or before the
Closing Date:
(a) The List of Contracts, certified by the Chairman of the
Board, President or any Vice President of the Originator (which
certification may be part of the Assignment delivered pursuant to
Section 2.02(f)).
2-1
(b) A letter from PricewaterhouseCoopers LLP or another
nationally recognized accounting firm, stating that such firm has
reviewed the Initial Contracts on a statistical sampling basis and,
based on such sampling, concluding that, except with respect to those
Initial Contracts so specified in the letter, the Contracts conform in
all material respects to the List of Contracts, to a confidence level
of 97.5%, with an error rate generally not in excess of 1.8%.
(c) Copies of resolutions of the board of directors of the
Seller and the Originator or of the executive committee of the board of
directors of the Seller and the Originator approving the execution,
delivery and performance of this Agreement, its Related Documents and
the transactions contemplated hereunder, certified in each case by the
secretary or an assistant secretary of the Seller and the Originator,
as applicable.
(d) Officially certified recent evidence of due incorporation
and good standing of the Seller under the laws of the State of
Minnesota and of the Servicer under the laws of the State of Delaware.
(e) Evidence of filing with the Secretary of State of
Minnesota of (i) a UCC-1 financing statement, executed by the
Originator as debtor, naming the Seller as secured party and listing
the Contracts as collateral, and (ii) a UCC-1 financing statement,
executed by the Seller as debtor, naming the Trust as secured party and
listing the Contracts as collateral.
(f) An executed copy of the Assignment substantially in the
form of Exhibit A hereto.
(g) Evidence of continued coverage of the Servicer under the
Errors and Omissions Protection Policy.
(h) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts prior to the Closing
Date which were due on or after the Initial Cutoff Date, together with
an Officer's Certificate of the Servicer to the effect that such amount
is correct.
(i) An Officer's Certificate of the Originator confirming that
the Originator's internal audit department has reviewed the original or
a copy of each Contract and each Contract File, that each Contract and
Contract File conforms in all material respects with the List of
Contracts and that each Contract File is complete in all material
respects and that each Product securing a Contract is covered by an
Insurance Policy as required by Section 3.02(f).
(j) Evidence of the deposit of $9,202,870.91 in the
Pre-Funding Account and $-0- in the Capitalized Interest Account.
(k) Such other documents and certificates as the Trust may
request.
2-2
SECTION 2.03. Conveyance of the Subsequent Contracts.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Indenture Trustee's delivery on the related Subsequent
Transfer Dates to or upon the order of the Seller of the purchase price
therefor, the Seller shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey to the Trust by execution and delivery of a
Subsequent Transfer Instrument, all the right, title and interest of the Seller
in and to the Subsequent Contracts identified on the List of Contracts attached
to the Subsequent Transfer Instrument, including all rights to receive payments
on or with respect to the Subsequent Contracts due after the related Subsequent
Cut-off Date, all items with respect to such Subsequent Contracts in the related
Contract Files, and all rights of the Seller under the related Subsequent
Transfer Agreement. The transfer to the Trust by the Seller of the Subsequent
Contracts shall be absolute and is intended by the Seller, the Owner Trustee,
the Indenture Trustee, the Noteholders and the Certificateholders to constitute
and to be treated as a sale of the Subsequent Contracts by the Seller to the
Trust.
The purchase price paid by the Trust shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balance of such Subsequent
Contracts. The purchase price of Subsequent Contracts shall be paid solely from
amounts in the Pre-Funding Account.
(b) The Seller shall transfer to the Trust the Subsequent Contracts,
and the Trust shall release funds equal to the purchase price therefor from the
Pre-Funding Account only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Owner Trustee and the
Indenture Trustee with an Addition Notice at least five Business Days
prior to the Subsequent Transfer Date and shall have provided any
information reasonably requested by the Owner Trustee and the Indenture
Trustee with respect to the Subsequent Contracts;
(ii) the Seller shall have delivered to the Owner Trustee a
duly executed Subsequent Transfer Instrument substantially in the form
of Exhibit F, which shall include a List of Contracts identifying the
related Subsequent Contracts;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, the Seller shall not be
insolvent nor shall it have been made insolvent by such transfer nor
shall it be aware of any pending insolvency;
(iv) the Pre-Funding Period shall not have ended;
(v) the Seller shall have delivered to the Trustee an
Officer's Certificate, substantially in the form attached hereto as
Exhibit G, confirming the satisfaction of each condition precedent and
the representations specified in this Section 2.03 and in Sections
3.01, 3.02, 3.03 and 3.04; and
2-3
(vi) the Seller and the Originator shall have delivered to the
Trustee Opinions of Counsel addressed to S&P, Fitch, the Owner Trustee
and the Indenture Trustee with respect to the transfer of the
Subsequent Contracts substantially in the form of the Opinions of
Counsel delivered on the Closing Date regarding certain bankruptcy,
corporate and tax matters.
(c) Before the last day of the Pre-Funding Period, the Seller shall
deliver to the Trustee evidence that, as a result of the purchase by the Trust
of the Subsequent Contracts, none of the ratings assigned to the Securities as
of the Closing Date by S&P or Fitch will be reduced, withdrawn or qualified.
(d) Although the parties intend that the conveyance pursuant to each
Subsequent Transfer Instrument of the Seller's right, title and interest in and
to the related Subsequent Contracts shall constitute a purchase and sale and not
a pledge of security for Contracts from the Certificateholders and/or the
Noteholders, if such conveyance is deemed to be a pledge of security for Secured
Obligations, the parties intend that the rights and obligations of the parties
to the Secured Obligations shall be established pursuant to the terms of this
Agreement and the related Subsequent Transfer Instrument and that the Seller
shall be deemed to have granted to the Trust, and the Seller hereby grant to the
Trust, a perfected first-priority security interest in the items designated in
the related Subsequent Transfer Instrument, and all proceeds thereof, to secure
the Secured Obligations, and that this Agreement and the related Subsequent
Transfer Instrument shall constitute a security agreement under applicable law.
If the Trust terminates prior to the satisfaction of the claims of any Person
under any Certificate, any Note or the Secured Obligations, the security
interest created hereby shall continue in full force and effect and the Owner
Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
2-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Seller and the Originator makes the following
representations and warranties, effective as of the Closing Date, on which the
Trust will rely in accepting the Contracts and the other Trust Property in trust
and on which the Owner Trustee relies in executing and delivering, on behalf of
the Trust, the Certificates and the Notes. The repurchase obligation of the
Originator set forth in Section 3.05 constitutes the sole remedy available to
the Trust, the Owner Trustee, the Indenture Trustee, and the Securityholders for
a breach of a representation or warranty of the Originator set forth in the
Officer's Certificate delivered pursuant to Section 2.02(i) or Section 3.02,
3.03 or 3.04 of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Seller and
Originator and Covenants of the Originator.
The representations and warranties set forth in this Section 3.01 shall
survive delivery by the Seller of the Contracts and the Contract Files. As
promptly as practicable, but in any event within 60 days of its discovery or its
receipt of notice from any Person of a material breach of any representation or
warranty in this Section 3.01, the Originator shall cure such breach in all
material respects.
(a) Organization and Good Standing. Each of the Seller and the
Originator, as applicable, is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and has
the corporate power to own its assets and to transact the business in which it
is currently engaged. Each of the Seller and the Originator, as applicable, is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the business,
properties, assets, or condition (financial or other) of the Seller.
(b) Authorization; Binding Obligations. Each of the Seller and the
Originator has the power and authority to make, execute, deliver and perform
this Agreement and its Related Documents and all of the transactions
contemplated under this Agreement and thereunder and to sell and assign the
Trust Property to be sold and assigned to the Trust by it and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement and its Related Documents. When executed and delivered, this
Agreement and its Related Documents will constitute the legal, valid and binding
obligations of each of the Seller and the Originator enforceable in accordance
with their terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally and by the availability of equitable remedies.
(c) No Consent Required. Neither the Seller nor the Originator is
required to obtain the consent of any other party or any consent, license,
approval or authorization from, or
3-1
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
(d) No Violations. The execution, delivery and performance by the
Seller and the Originator of this Agreement and its Related Documents and the
fulfillment of their terms will not violate any provision of any existing law or
regulation or any order or decree of any court or the related Articles of
Incorporation or Bylaws of the Seller and the Originator, or constitute a
material breach of any mortgage, indenture, contract or other agreement to which
either the Seller or the Originator is a party or by which either the Seller or
the Originator may be bound.
(e) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller and the Originator threatened, against the Seller and
the Originator or any of its properties or with respect to this Agreement, the
Related Documents, or the Securities which, if adversely determined, would in
the opinion of the Seller and the Originator have a material adverse effect on
the transactions contemplated by this Agreement and Related Documents.
(f) Licensing. Each of the Seller and the Originator is duly registered
as a finance company in each state in which Contracts were originated, to the
extent such registration is required by applicable law.
(g) Chief Executive Office. The chief executive office of each of the
Seller and the Originator is at 1100 Landmark Towers, ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
(h) Absolute Sale. The Seller intends that the transfer of Contracts
and the Collateral Security constitute a complete and absolute sale, removing
the Contracts and the Collateral Security from the Seller's estate, for purposes
of ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Bankruptcy Code, as amended.
(i) No Default. Neither the Seller nor the Originator is in default
with respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or governmental agency, which default
would materially and adversely affect its condition (financial or other) or
operations or its properties or the consequences of which would materially and
adversely affect its performance hereunder and under its other Related
Documents. Neither the Seller nor the Originator is in default under any
agreement involving financial obligations or on any outstanding obligation which
would materially adversely impact its financial condition or operations or legal
documents associated with the transaction contemplated by this Agreement or the
other Related Documents.
SECTION 3.02. Representations and Warranties Regarding Each Contract.
The Originator has made the following representations and warranties to
the Seller in the Transfer Agreement, which representations and warranties the
Seller has assigned to the Trust for the benefit of the Noteholders and the
Certificateholders, as of the Closing Date with respect to each Initial Contract
and, as of each Subsequent Transfer Date, with respect to each Subsequent
3-2
Contract identified on the List of Contracts attached to the related Subsequent
Transfer Instrument:
(a) List of Contracts. The information set forth in the List of
Contracts is true and correct as of its date.
(b) Payments. The most recent scheduled payment was made by or on
behalf of the Obligor (without any advance from the Seller, the Originator or
any Person acting at the request of the Seller or the Originator) or was not
delinquent for more than 59 days.
(c) No Waivers. The terms of the Contract have not been waived, altered
or modified in any respect, except by instruments or documents identified in the
Contract File.
(d) Binding Obligation. The Contract is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Contract is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the Contract or the exercise of any right
thereunder will not render the Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and no such right of rescission, setoff, counterclaim or
defense has been asserted with respect thereto.
(f) Insurance Coverage. The Product securing the Contract is covered by
an Insurance Policy to the extent (if any) required by Section 5.09. All
premiums due as of the Closing Date on such insurance have been paid in full.
(g) Origination. The Contract was originated by a dealer of commercial
trucks and trailers, or by the Originator, in the regular course of its business
and, if originated by a dealer, was purchased by the Originator in the regular
course of its business.
(h) Lawful Assignment. The Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the Contract or an interest therein pursuant to the Transfer Agreement or this
Agreement, or pursuant to transfers of the Securities, unlawful or render the
Contract unenforceable.
(i) Compliance with Law. At the date of origination of the Contract,
all requirements of any federal and state laws, rules and regulations applicable
to the Contract, including, without limitation, usury, truth in lending and
equal credit opportunity laws, have been complied with, and the Originator shall
for at least the period of this Agreement, maintain in its possession, available
for the Owner Trustee's inspection, and shall deliver to the Owner Trustee upon
demand, evidence of compliance with all such requirements. Such compliance is
not affected by the Trust's ownership of the Contract.
3-3
(j) Contract in Force. The Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the Product securing the
Contract has not been released from the lien of the Contract in whole or in
part.
(k) Valid Security Interest. The Contract creates a valid and
enforceable perfected first priority security interest in favor of the
Originator in the Product covered thereby as security for payment of the Cutoff
Date Principal Balance of such Contract. The Originator has assigned all of its
right, title and interest in such Contract, including the security interest in
the Product covered thereby, to the Seller. The Seller has and will have a valid
and perfected and enforceable first priority security interest in such Contract
and Product.
(l) Capacity of Parties. The signature(s) of the Obligor(s) on the
Contract are genuine and all parties to the Contract had full legal capacity to
execute the Contract.
(m) Good Title. In the case of a Contract purchased from a dealer, the
Originator purchased the Contract for fair value and took possession thereof in
the ordinary course of its business, without knowledge that the Contract was
subject to a security interest. The Originator has not sold, assigned or pledged
the Contract to any person and prior to the transfer of the Contract by the
Originator to the Seller, the Originator had good and marketable title thereto
free and clear of any encumbrance, equity, contract, pledge, charge, claim or
security interest and was the sole owner thereof with full right to transfer the
Contract to the Seller. No financing statement describing or referring to any
Contract (other than any financing statement naming the Seller as secured party,
or filed by the Originator as secured party to perfect its interest in a
Contract purchased from a dealer) is on file in any public office.
(n) No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such Contract
(except payment delinquencies permitted by clause (b) above). The Originator has
not waived any such default, breach, violation or event permitting acceleration
except payment delinquencies permitted by clause (b) above. As of the Closing
Date, the related Product is, to the best of the Originator's knowledge, free of
damage and in good repair.
(o) No Liens. There are, to the best of the Originator's knowledge, no
liens or claims which have been filed for work, labor or materials affecting the
Product securing the Contract which are or may be liens prior to, or equal or
coordinate with, the lien of the Contract.
(p) Equal Installments. Each Contract has a fixed Contract Rate and
provides for substantially level monthly payments which fully amortize the
contract over its term, except for (a) $30,648,677.81 of the Initial Contracts,
or 5.30% of the Initial Contracts by Cutoff Date Principal Balance, that have a
final payment that is substantially higher than the regular payment amount, and
(b) $32,120,813.08 of the Initial Contracts, or 5.55% of the Initial Contracts
by Cutoff Date Principal Balance, that do not require monthly payments for a
one- to three-month "skip period" during each calendar year.
3-4
(q) Enforceability. The Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security provided thereby.
(r) One Original. There is only one original executed Contract (other
than an original in the possession of the relevant Obligor), which Contract has
been delivered to the Trust or its custodian on or before the Closing Date. Each
Contract has been stamped to reflect the assignment of such Contract to the
Trust.
(s) Notation of Security Interest. With respect to each Contract, if
the related Product is located in a state in which notation of a security
interest on the title document is required or permitted to perfect such security
interest, the title document shows, or if a new or replacement title document
with respect to such Product is being applied for such title document will be
issued within 180 days and will show, the Originator as the holder of a first
priority security interest in such Product; if the related Product is located in
a state in which the filing of a financing statement under the UCC is required
to perfect a security interest in goods of the type including the Product, such
filings or recordings have been duly made and show the Originator as secured
party. In any case, the Trust has the same rights as the secured party of record
would have (if such secured party were still the owner of the Contract) against
all Persons (including the Originator and any trustee in bankruptcy of the
Originator) claiming an interest in such Product.
(t) No Government Contracts. No Obligor is the United States government
or an agency, authority, instrumentality or other political subdivision of the
United States government.
SECTION 3.03. Representations and Warranties Regarding the Contracts in
the Aggregate.
(a) Amounts. The aggregate principal amounts payable by Obligors under
the Contracts as of the Cutoff Date equal the Cutoff Date Pool Principal
Balance.
(b) Characteristics. Following the end of the Pre-Funding Period, the
Contracts will have the following characteristics as of the Cutoff Date:
(i) the Weighted Average Contract Rate will be at least 10.71%;
(ii) the aggregate Cutoff Date Principal Balance of Contracts
secured by trucks that were new at the time of origination of
the related Contract will represent not less than 66% of the
Cutoff Date Pool Principal Balance;
(iii) the aggregate Cutoff Date Principal Balance of Contracts with
balloon payments at the end of their stated term will
represent not more than 5.5% of the Cutoff Date Pool Principal
Balance;
(iv) the aggregate Cutoff Date Principal Balance of Contracts with
original scheduled maturities of greater than 60 months will
represent not more than 6% of the Cutoff Date Pool Principal
Balance;
3-5
(v) the aggregate Cutoff Date Principal Balance of Contracts that
provide for a one- to three-month "skip period" will represent
not more than 5.6% of the Cutoff Date Pool Principal Balance;
and
(vi) the aggregate Cutoff Date Principal Balance of Contracts whose
Obligors are located in any single state (by billing address)
will represent not more than 17% of the Cutoff Date Pool
Principal Balance
(c) Computer Tape. The Computer Tape made available by the Originator
was complete and accurate as of its date and includes a description of the same
Contracts that are described in the List of Contracts.
(d) Marking Records. By the Closing Date, the Originator has caused the
portions of the Electronic Ledger relating to the Contracts to be clearly and
unambiguously marked to indicate that such Contracts constitute part of the
Trust and are owned by the Trust in accordance with the terms of the trust
created hereunder.
(e) No Adverse Selection. Except for the effect of the representations
and warranties made in Sections 3.02 and 3.03 hereof, no adverse selection
procedures have been employed in selecting the Contracts.
SECTION 3.04. Representations and Warranties Regarding the Contract
Files.
(a) Possession. Immediately prior to the Closing Date, the Originator
will have possession of each original Contract and the related Contract File and
there are and there will be no custodial agreements in effect materially and
adversely affecting the rights of the Originator to make, or cause to be made,
any delivery required hereunder.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of the
Contracts and the Contract Files by the Originator pursuant to the Transfer
Agreement, and by Seller pursuant to this Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any applicable
jurisdiction.
SECTION 3.05. Repurchase of Contracts for Breach of Representations and
Warranties.
(a) The Originator shall repurchase a Contract, at its Repurchase
Price, not later than the last day of the Monthly Period prior to the Monthly
Period that is 90 days after the day on which the Originator, the Seller, the
Servicer, the Owner Trustee or the Indenture Trustee first discovers, or the
Originator or the Servicer should have discovered, a breach of a representation
or warranty of the Originator set forth in Sections 3.02, 3.03 or 3.04 of this
Agreement or the Officer's Certificate delivered pursuant to Section 2.02(i)
that materially adversely affects the interest of the Trust or the
Securityholders in such Contract and which breach has not been cured; provided,
however, that (i) in the event that a party other than the Originator first
becomes aware of such a breach, such discovering party shall notify the
Originator in writing within five Business Days of the date of such discovery
and (ii) with respect to any Contract incorrectly described on the List of
Contracts with respect to unpaid principal balance, which the Originator
3-6
would otherwise be required to repurchase pursuant to this Section, the
Originator may, in lieu of repurchasing such Contract, deposit in the Collection
Account no later than the first Determination Date that is 90 or more days from
the date of such discovery cash in an amount sufficient to cure such deficiency
or discrepancy. Any such cash so deposited shall be accounted for as a
collection of principal or interest on such Contract, according to the nature of
the deficiency or discrepancy. Notwithstanding any other provision of this
Agreement, the obligation of the Originator under this Section shall not
terminate upon a Service Transfer pursuant to Article VII.
(b) Upon receipt by the Trust by deposit in the Collection Account of
the Repurchase Price under subsection (a) above, and upon receipt of a
certificate of a Servicing Officer in the form attached hereto as Exhibit B, the
Indenture Trustee shall release its security interest in such Contract and the
Owner Trustee on behalf of the Trust shall convey and assign to the Originator
all of the Securityholders' right, title and interest in the repurchased
Contract without recourse, representation or warranty, except as to the absence
of liens, charges or encumbrances created by or arising as a result of actions
of the Trust.
(c) The Originator shall defend and indemnify the Owner Trustee, the
Trust, the Indenture Trustee, and the Securityholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, arising out of any claims which may be asserted against or
incurred by any of them as a result of any third-party action arising out of any
breach of any representation set forth in the Officer's Certificate delivered
pursuant to Section 2.02(i) or Section 3.02, 3.03 or 3.04 of this Agreement.
SECTION 3.06. Covenants Regarding the Seller and Class B
Certificateholder.
With respect to the Seller and, for so long as CFVSC is the Class B
Certificateholder, with respect to CFVSC, the Originator covenants that:
(a) it will at all times hold out to the public, including the
respective creditors of the Originator, the Seller and CFVSC, that it
is a separate entity from the others. The Originator, the Seller and
CFVSC will not share a common logo. The Originator will not hold out or
consider the Seller or CFVSC as a department or division of the
Originator.
(b) Other than the payment of certain of the organizational
expenses of the Seller and CFVSC by the Originator, each of the Seller
and CFVSC will be responsible for the payment of all its losses,
obligations and expenses, and it will be adequately capitalized to
conduct its business.
(c) All transactions and dealings between the Originator and
the Seller or CFVSC will be on such terms and conditions as would be
generally available to entities unaffiliated with the Originator in
comparable transactions. All such transactions have been and will be
made only with prior approval of the Seller's or CFVSC's (as
applicable) Board of Directors, at arm's length, in good faith, and
without the intent to hinder, delay or defraud creditors of either
entity, and transfers between the Originator,
3-7
the Seller or CFVSC will not be made if the party making the transfer
is insolvent or would be rendered insolvent by the transfer.
(d) Following the formation of the Trust, the Originator will
disclose all material transactions associated with the transaction in
communications to its shareholders and in public announcements which
will disclose the separate corporate identity of the Seller and CFVSC
and that the assets of the Seller and CFVSC will not be available for
payment of creditors' claims in the event of the insolvency of the
Originator.
(e) Each of the Seller and CFVSC will comport itself in a
manner consistent with the factual assumptions contained in the
"nonconsolidation opinions" of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP dated December 16,
1999 rendered in connection with the issuance of the Notes.
3-8
ARTICLE IV
PERFECTION OF TRANSFER AND
PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Custody of Contracts.
(a) Subject to the terms and conditions of this Section, the Trust
appoints the Servicer to maintain custody of the Contract Files for the benefit
of the Trust and the Servicer shall maintain custody of the Contract Files for
the benefit of the Trust and shall act as custodian therefor.
(b) The Servicer agrees to maintain the related Contract Files at its
office where they are currently maintained, or at such other offices of the
Servicer in the State of Minnesota as shall from time to time be identified to
the Trust by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Trust, Indenture
Trustee and the Securityholders, maintain accurate records pertaining
to each Contract to enable it to comply with the terms and conditions
of this Agreement, maintain a current inventory thereof, conduct annual
physical inspections of Contract Files held by it under this Agreement
and certify to the Trust and the Indenture Trustee annually that it
continues to maintain possession of such Contract Files;
(ii) implement policies and procedures, in writing and signed
by a Servicing Officer, with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes; and
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Trust, the Indenture
Trustee and the Securityholders.
(d) In performing its duties under this Section, the Servicer agrees to
act with reasonable care, using that degree of skill and care that it exercises
with respect to similar contracts owned and/or serviced by it. The Servicer
shall promptly report to the Trust and the Indenture Trustee any failure by it
to hold the Contract Files as herein provided and shall promptly take
appropriate action to remedy any such failure. In acting as custodian of the
Contract Files, the Servicer agrees further not to assert any beneficial
ownership interests in the Contracts or the Contract Files. The Servicer agrees
to indemnify the Trust, Owner Trustee, the Indenture Trustee and the
Securityholders for any and all liabilities, obligations, losses, damages,
payments, costs or expenses of any kind whatsoever which may be imposed on,
incurred or
4-1
asserted against them as the result of any act or omission by the Servicer
relating to the maintenance and custody of the Contract Files; provided,
however, that the Servicer will not be liable for any portion of any such amount
resulting from the negligence or willful misconduct of any indemnified party.
SECTION 4.02. Filings.
On or prior to the Closing Date, the Seller shall cause the UCC-1
financing statement referred to in Section 2.02(e)(ii) to be filed. The Servicer
on behalf of the Trust shall cause to be filed all necessary continuation
statements of such UCC-1 financing statement. From time to time the Servicer
shall take and cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Securityholders' interests in the Contracts
and their proceeds and the Products against all other persons, including,
without limitation, the filing of financing statements, amendments thereto and
continuation statements, the execution of transfer instruments and the making of
notations on or taking possession of all records or documents of title. The
Servicer will maintain the first priority perfected security interest of the
Trust in each Product so long as the related Contract is property of the Trust.
SECTION 4.03. Name Change or Relocation.
(a) During the term of this Agreement, the Seller shall not change its
name, identity or structure or relocate its chief executive office without first
giving notice thereof to the Owner Trustee, the Indenture Trustee and the
Servicer. In addition, following any such change in the name, identity,
structure or location of the chief executive office of the Seller, the Seller
shall given written notice of any such change to Standard & Poor's and Fitch.
(b) If any change in the Seller's name, identity or structure or the
relocation of its chief executive office would make any financing or
continuation statement or notice of lien filed under this Agreement seriously
misleading within the meaning of applicable provisions of the UCC or any title
statute or would cause the security interest evidenced by any such financing or
continuation statement or notice of lien to become unperfected (whether
immediately or with lapse of time), the Seller, no later than five days after
the effective date of such change, shall file, or cause to be filed, such
amendments or financing statements as may be required to preserve, perfect and
protect the Securityholders' interests in the Contracts, including the
Collateral Security and all proceeds thereof.
SECTION 4.04. Chief Executive Office.
During the term of this Agreement, the Seller will maintain its chief
executive office in one of the States of the United States, except Tennessee.
SECTION 4.05. Costs and Expenses.
The Servicer agrees to pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Securityholders'
4-2
right, title and interest in and to the Contracts, including the Collateral
Security and all proceeds thereof.
4-3
ARTICLE V
SERVICING OF CONTRACTS
SECTION 5.01. Responsibility for Contract Administration.
The Servicer will have the sole obligation to manage, administer,
service and make collections on the Contracts and perform or cause to be
performed all contractual and customary undertakings of the holder of the
Contracts to the Obligor. The Servicer may delegate duties under this Agreement
to any of the Servicer's Affiliates. In addition, the Servicer may at any time
perform the specific duty of repossessing Products through subcontractors who
are in the business of servicing consumer receivables. The Servicer may also
perform other specific duties through subcontractors; provided that the Servicer
gives notice to each of the Trust, the Indenture Trustee, Standard & Poor's and
Fitch of the use of any such subcontractors; and provided further that no such
delegation of duties by the Servicer shall relieve the Servicer of its
responsibility with respect thereto. The Owner Trustee, on behalf of the Trust
and at the request of a Servicing Officer, shall furnish the Servicer with any
powers of attorney or other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. Conseco
Finance Corp. is hereby appointed the Servicer until such time as any Service
Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care.
In managing, administering, servicing and making collections on the
Contracts pursuant to this Agreement, the Servicer will exercise that degree of
skill and care consistent with the highest degree of skill and care that the
Servicer exercises with respect to similar contracts serviced by the Servicer;
provided, however, that notwithstanding the foregoing, the Servicer shall not
release or waive the right to collect the unpaid balance on any Contract.
SECTION 5.03. Records.
The Servicer shall, during the period it is servicer hereunder,
maintain such books of account and other records as will enable the Trust and
the Indenture Trustee to determine the status of each Contract.
SECTION 5.04. Inspection; Computer Tape.
(a) At all times during the term hereof, the Servicer shall afford the
Trust and Indenture Trustee and their authorized agents reasonable access during
normal business hours to the Servicer's records relating to the Contracts and
will cause its personnel to assist in any examination of such records by the
Trust and Indenture Trustee or their authorized agents. The examination referred
to in this Section will be conducted in a manner which does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations. Without otherwise limiting the scope of the examination the Trust and
Indenture Trustee may make, the Trust and Indenture Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Electronic Ledger and records relating thereto for
5-1
conformity to Monthly Reports prepared pursuant to Section 5.14 and compliance
with the standards represented to exist as to each Contract in this Agreement.
The Servicer shall provide to any Securityholder such access to the
records relating to the Contracts only in such cases where the Servicer is
required by applicable statutes or regulations, whether applicable to the
Servicer or to such Securityholder, to permit Securityholder to review such
documentation. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section. Any
Securityholder, by its acceptance of a Certificate or Note (or by acquisition of
its beneficial interest therein), as applicable, shall be deemed to have agreed
to keep confidential and not to use for its own benefit any information obtained
by it pursuant to this Section, except as may be required by applicable law.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by the Trust and the Indenture Trustee.
(c) On or before the ninth Business Day of each month, the Servicer
will provide to the Indenture Trustee a Computer Tape setting forth a list of
all the outstanding Contracts and the outstanding principal balance of each such
Contract as of the end of the next preceding Monthly Period.
SECTION 5.05. Collections.
(a) The Servicer shall pay into the Collection Account: (i) as promptly
as practicable (not later than the next Business Day) following receipt thereof
all payments from Obligors and Net Liquidation Proceeds (other than late payment
penalty fees, extension fees and assumption fees, which shall be retained by the
Servicer as additional compensation for servicing the Contracts, and any
payments that were due prior to the Cutoff Date, which shall be remitted to the
Originator); and (ii) on the Business Day immediately prior to each Distribution
Date, all Servicer Advances required to be made with respect to such
Distribution Date pursuant to Section 5.13.
(b) If the Servicer so directs, the institution maintaining the
Collection Account shall, in the name of the Indenture Trustee in its capacity
as such, invest the amounts in the Collection Account in Eligible Investments
that mature not later than one Business Day prior to the next succeeding
Distribution Date. Once such funds are invested, such institution shall not
change the investment of such funds. All income and gain from such investments
shall be added to the Collection Account and distributed on such Distribution
Date pursuant to Section 6.04(a). The Trustee and the Indenture Trustee shall in
no way be liable for losses on amounts invested in accordance with the
provisions hereof. The Servicer shall deposit in the Collection Account an
amount equal to any net loss on such investments immediately as realized. Funds
in the
5-2
Collection Account not so invested must be insured to the extent permitted by
law by the Federal Deposit Insurance Corporation.
SECTION 5.06. Enforcement.
(a) The Servicer shall, consistent with customary servicing procedures
and the terms of this Agreement, act with respect to the Contracts in such
manner as will maximize the receipt of principal and interest on such Contracts
and Liquidation Proceeds with respect to Liquidated Contracts.
(b) The Servicer may ▇▇▇ to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trust. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract to the Servicer for
purposes of collection only. If, however, in any enforcement suit or legal
proceeding it is held that the Servicer may not enforce a Contract on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Owner Trustee on behalf of the Trust shall, at the Servicer's
expense, take such steps as the Servicer deems necessary to enforce the
Contract, including bringing suit in its name or the names of the
Securityholders.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Contract in accordance with the
Servicer's usual practice. Without limitation of the foregoing, in exercising
recourse rights, the Servicer is authorized on behalf of the Trust to reassign
the Contract or to resell the related Product to the person against whom
recourse exists at the price set forth in the document creating the recourse.
(d) So long as the Originator is the Servicer, the Servicer may grant
to the Obligor on any Contract any rebate, refund or adjustment out of the
Collection Account that the Servicer in good faith believes is required because
of prepayment in full of the Contract. The Servicer will not permit any
rescission or cancellation of any Contract.
(e) So long as Conseco Finance Corp. is the Servicer, the Servicer may,
consistent with its customary servicing procedures and consistent with Section
5.02, grant to the Obligor on any Contract an extension of payments due under
such Contract, provided that Obligors may not be solicited for extensions and no
more than one extension of payments under a Contract may be granted in any
twelve-month period. The Servicer may not permit the extension of any payment
beyond the last scheduled maturity date of any Contract as of the applicable
Cutoff Date.
(f) The Servicer shall enforce any due-on-sale clause in a Contract if
such enforcement is called for under its then current servicing policies for
obligations similar to the Contracts, provided that such enforcement is
permitted by applicable law and will not adversely affect any applicable
insurance policy. If an assumption of a Contract is permitted by the Servicer,
upon conveyance of the related Product the Servicer shall use its best efforts
to obtain an assumption agreement in connection therewith.
5-3
(g) Any provision of this Agreement to the contrary notwithstanding,
the Servicer shall not agree to the modification or waiver of any provision of a
Contract, if such modification or waiver, when aggregated with all previous
modifications or waivers of the provisions of Contracts, would cause any Notes
to be treated as having been exchanged for other Notes in a taxable exchange
under Section 1001 of the Code or any proposed, temporary or final Treasury
Regulations issued thereunder.
SECTION 5.07. Satisfaction of Contracts.
Upon payment in full on any Contract, the Servicer will notify the
Trust, the Indenture Trustee, and the Originator (if the Originator is not the
Servicer) on the next succeeding Distribution Date by certification of a
Servicing Officer (which certification shall include a statement to the effect
that all amounts received in connection with such payments which are required to
be deposited in the Collection Account pursuant to Section 5.05 have been so
deposited). The Servicer is authorized to execute an instrument in satisfaction
of such Contract and to do such other acts and execute such other documents as
the Servicer deems necessary to discharge the Obligor thereunder and eliminate
the lien on the related Product. The Servicer shall determine when a Contract
has been paid in full; to the extent that insufficient payments are received on
a Contract credited by the Servicer as prepaid or paid in full and satisfied,
the shortfall shall be paid by the Servicer out of its own funds.
SECTION 5.08. Costs and Expenses.
All costs and expenses incurred by the Servicer in carrying out its
duties hereunder, including all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of defaulted Contracts and
repossessions of Products securing such Contracts) shall be paid by the Servicer
and the Servicer shall not be entitled to reimbursement hereunder, except that
the Servicer shall be reimbursed out of the Liquidation Proceeds of a Liquidated
Contract for Liquidation Expenses incurred by it. The Servicer shall not incur
such Liquidation Expenses unless it determines in its good faith business
judgment that incurring such expenses will increase the Net Liquidation Proceeds
on the related Contract.
SECTION 5.09. Maintenance of Insurance.
(a) Except as otherwise provided in subsection (b) of this Section
5.09, the Servicer shall cause to be maintained one or more physical damage
insurance policies; in each case, issued by a company authorized to issue such
policies in the state in which the related Product is located and in an amount
which is not less than the maximum insurable value of such Product or the
principal balance due from the Obligor on the related Contract, whichever is
less; provided, however, that the amount of coverage provided by each Insurance
Policy shall be sufficient to avoid the application of any co-insurance clause
contained therein; and provided, further, that such Insurance Policies may
provide for customary deductible amounts. Each Insurance Policy caused to be
maintained by the Servicer shall contain a standard loss payee clause in favor
of the Servicer and its successors and assigns. If any Obligor is in default in
the payment of premiums on its Insurance Policy or Policies, the Servicer shall
pay such premiums out of its own funds and
5-4
may separately add such premium to the Obligor's obligation as provided by the
Contract, but shall not add such premium to the remaining principal balance of
the Contract.
(b) The Servicer may, in lieu of causing individual Insurance Policies
to be maintained pursuant to subsection (a) of this Section 5.09, maintain one
or more blanket insurance policies covering any losses caused by damage to such
Product that would have been covered by an individual Insurance Policy. Any such
blanket policy shall be substantially in the form and in the amount carried by
the Servicer as of the date of this Agreement. The Servicer shall pay the
premium for such policy on the basis described therein and shall deposit into
the Collection Account from its own funds any deductible amount with respect to
claims under such blanket insurance policy relating to the Contracts. The
Servicer shall not, however, be required to deposit any deductible amount with
respect to claims under individual Insurance Policies maintained pursuant to
subsection (a) of this Section. If the insurer under such blanket insurance
policy shall cease to be acceptable to the Servicer, the Servicer shall exercise
its best reasonable efforts to obtain from another insurer a replacement policy
comparable to such policy.
(c) With respect to each Product that has been repossessed in
connection with a defaulted Contract, the Servicer shall either (i) maintain one
or more Insurance Policies thereon or (ii) self-insure such Products and deposit
into the Collection Account from its own funds any losses caused by damage to
such Product that would have been covered by an Insurance Policy.
(d) The Servicer shall keep in force throughout the term of this
Agreement (i) a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall be in such
form and amount as is generally customary among Persons which service a
portfolio of retail installment sales agreements having an aggregate principal
amount of $100,000,000 or more and which are generally regarded as servicers
acceptable to institutional investors.
SECTION 5.10. Repossession.
Notwithstanding the standard of care specified in Section 5.02, the
Servicer shall commence procedures for the repossession of any Product or take
such other steps that in the Servicer's reasonable judgment will maximize the
receipt of principal and interest or Net Liquidation Proceeds with respect to
the Contract secured by such Product (which may include retitling) subject to
the requirements of the applicable state and federal law, no later than five
Business Days after the time when such Contract becomes a Defaulted Contract. In
connection with such repossession or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be consistent with Section 5.02. In the event that title to any Product is
acquired in foreclosure or by deed in lieu of foreclosure, the deed or
certificate of sale shall be issued to the Indenture Trustee, as trustee, or, at
its election, to its nominee on behalf of the Indenture Trustee, as trustee.
5-5
SECTION 5.11. Commingling of Funds.
So long as the Originator is Servicer, any collections in respect of
Contracts collected by the Originator shall, prior to the deposit thereof in the
Collection Account, be held in bank accounts entitled substantially as follows:
"[name of depository], as agent for U.S. Bank Trust National Association and
other trustees and Conseco Finance Corp., as their interests may appear."
SECTION 5.12. Retitling; Security Interests.
(a) If, at any time, a Service Transfer has occurred and the Originator
is no longer the Servicer and the new Servicer is unable to foreclose upon a
Product because the title document for such Product does not show such Servicer
or the Indenture Trustee as the holder of the first priority security interest
in the Product, such Servicer shall take all necessary steps to apply for a
replacement title document showing it or the Indenture Trustee as the secured
party.
(b) In order to facilitate the Servicer's actions, as described in
subsection (a) of this section, the Originator will provide the Servicer with
any necessary power of attorney permitting it to retitle the Product. If the
Servicer is still unable to retitle the Product, the Originator will take all
actions necessary to act with the Servicer to foreclose upon the Product.
(c) If at any time during the term of this Agreement the Trust or the
Indenture Trustee receives written notice from the Originator or the Servicer
that the Originator does not have a long-term senior debt rating from Standard &
Poor's of BBB- or higher and from Fitch of BBB or higher, or if the Trust or the
Indenture Trustee otherwise becomes aware of the same, the Trust, the Indenture
Trustee and the Servicer, at the Originator's expense, shall take such action as
may, in the opinion of counsel to the Indenture Trustee, be necessary to perfect
the security interests in the Products securing the Contracts in the name of the
Indenture Trustee by amending the title documents of such Products or by such
other reasonable means as may, in the opinion of counsel to the Indenture
Trustee, be necessary or prudent. The Originator agrees to pay all expenses
related to such perfection and to take all action necessary therefor.
SECTION 5.13. Servicer Advances.
Not later than the Business Day immediately preceding each Distribution
Date, the Servicer shall advance to the Trust (each such advance, a "Servicer
Advance") all Delinquent Payments for the immediately preceding Monthly Period
by depositing the aggregate amount of such Delinquent Payments in the Collection
Account, provided, however, that the Servicer shall be obligated to advance
Delinquent Payments only to the extent that the Servicer, in its sole
discretion, expects to be able to recover such advances from subsequent
collections, including Net Liquidation Proceeds.
SECTION 5.14. Monthly Reports; Certificate of Servicing Officer.
(a) No later than 1:00 p.m. (Minnesota time) on each Determination
Date, the Servicer shall deliver to the Trust, the Indenture Trustee, the Paying
Agent, the Originator (if the
5-6
Originator is not the Servicer), Standard & Poor's and Fitch a "Monthly Report,"
substantially in the form of Exhibit C hereto.
(b) Each Monthly Report pursuant to Section 5.14(a) shall be
accompanied by a certificate of a Servicing Officer substantially in the form of
Exhibit D, certifying the accuracy of the Monthly Report and that no Event of
Termination or event that with notice or lapse of time or both would become an
Event of Termination has occurred, or if such event has occurred and is
continuing, specifying the event and its status.
(c) The Originator and (if different from the Originator) the Servicer
shall, on request of the Trust, the Indenture Trustee, Standard & Poor's, Fitch
or a Securityholder, furnish the Trust, the Indenture Trustee, Standard &
Poor's, Fitch or a Securityholder such underlying data as may be reasonably
requested.
SECTION 5.15. Annual Report of Accountants.
On or before March 31 of each year, commencing March 31, 2000, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants to
make available to the Trust, the Indenture Trustee, Standard & Poor's and Fitch
a report stating that such firm has examined selected documents and records
relating to the servicing of retail installment sales contracts, including the
contracts covered by this Agreement, in accordance with the Mortgage Bankers
Association of America's Uniform Single Attestation Program for Mortgage
Bankers, or any successor uniform program, and that, on the basis of such
examination, such servicing has been conducted in compliance with the minimum
servicing standards identified therein, except for such significant exceptions
or errors in records that, in the opinion of such firm, generally accepted
auditing standards requires it to report.
SECTION 5.16. Certain Duties of the Servicer Under the Trust
Agreement.
The Servicer shall, and hereby agrees that it will, monitor the Trust's
compliance with all applicable provisions of state and federal securities laws,
notify the Trust and the Administrator of any actions to be taken by the Trust
necessary for compliance with such laws and prepare on behalf of the Trust and
the Administrator all notices, filings or other documents or instruments
required to be filed under such laws.
SECTION 5.17. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Trust, the Indenture Trustee, and
each of Standard & Poor's and Fitch, on or before March 31 (or 90 days after the
end of the Servicer's fiscal year, if other than December 31) of each year,
beginning on March 31, 2000, an officer's certificate signed by any Responsible
Officer of the Servicer, dated as of December 31 (or other applicable date) of
the immediately preceding year, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period (or such other period as shall
have elapsed from the Closing Date to the date of the first such certificate)
and of its performance under this
5-7
Agreement has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
(b) The Originator or the Servicer shall deliver to the Trust, the
Indenture Trustee, the Servicer or the Originator (as applicable) and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than 2 Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Termination under Section 7.01.
SECTION 5.18. Maintenance of Security Interests in Products.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created by each Contract in the related
Product on behalf of the Trust, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
refiling, and re-registering of all security agreements, financing statements
and continuation statements as are necessary to maintain the security interest
granted by the Obligors under the respective Contracts. The Trust hereby
authorizes the Servicer, and the Servicer agrees, to take any and all steps
necessary to re-perfect such security interest on behalf of the Trust as
necessary because of the relocation of a Product or for any other reason. In the
event that the assignment of a Contract to the Trust is insufficient, without a
notation on the related Product's certificate of title, or without fulfilling
any additional administrative requirements under the laws of the state in which
the Product is located, to perfect a security interest in the related Product in
favor of the Trust, the Servicer hereby agrees that the Servicer's designation
as the secured party on the certificate of title is in its capacity as agent of
the Trust.
(b) Upon the occurrence of an Event of Termination, the Trust and the
Servicer shall take or cause to be taken such action as may, in the opinion of
counsel to the Trust, be necessary to perfect or re-perfect the security
interests in the Products securing the Contracts in the name of the Trust by
amending the title documents of such Products or by such other reasonable means
as may, in the opinion of counsel to the Trust, be necessary or prudent. The
Servicer hereby agrees to pay all expenses related to such perfection or
re-perfection and to take all action necessary therefor.
SECTION 5.19. Covenants, Representations, and Warranties of Servicer.
By its execution and delivery of this Agreement, the Servicer makes the
following representations, warranties and covenants on which the Trust relies in
accepting the Contracts and issuing the Notes and the Certificates and on which
the Indenture Trustee relies in authenticating the Notes and the Owner Trustee
relies in authenticating the Certificates.
(a) Organization and Good Standing. The Servicer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its assets
and to transact the business in which it is currently engaged.
5-8
The Servicer is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the character of the business
transacted by it or properties owned or leased by it requires such qualification
and in which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of the
Servicer.
(b) Authorization; Binding Obligations. The Servicer has the power and
authority to make, execute, deliver and perform this Agreement and its Related
Documents and all of the transactions contemplated under this Agreement and
thereunder and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and its Related Documents.
When executed and delivered, this Agreement and its Related Documents will
constitute the legal, valid and binding obligations of the Servicer enforceable
in accordance with their terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable remedies.
(c) No Consent Required. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement, except for such consents, licenses, approvals
and authorizations as have been obtained.
(d) No Violations. The execution, delivery and performance by the
Servicer of this Agreement and its Related Documents and the fulfillment of
their terms will not violate any provision of any existing law or regulation or
any order or decree of any court or the related Certificate of Incorporation or
Bylaws of the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or by
which the Servicer may be bound.
(e) Litigation. No litigation or administrative proceeding of or before
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement, the Related Documents, or the
Securities which, if adversely determined, would in the opinion of the Servicer
have a material adverse effect on the transactions contemplated by this
Agreement and Related Documents.
(f) Chief Executive Office. The chief executive office of the Servicer
is at 1100 Landmark Towers, ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇.
(g) No Default. The Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default would materially and
adversely affect its condition (financial or other) or operations or its
properties or the consequences of which would materially and adversely affect
its performance hereunder and under its other Related Documents. The Servicer is
not in default under any agreement involving financial obligations or on any
outstanding obligation which
5-9
would materially adversely impact its financial condition or operations or legal
documents associated with the transaction contemplated by this Agreement or the
other Related Documents.
(h) Liens in Force. The Product securing each Contract shall not be
released in whole or in part from the security interest granted by the Contract,
except upon payment in full of the Contract or as otherwise contemplated herein.
(i) No Impairment. The Servicer shall do nothing to impair the rights
of the Trust, the Indenture Trustee or the Securityholders in the Contracts, the
Insurance Policies or the other Trust Property.
(j) No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Contract, except in accordance with Section 5.06.
SECTION 5.20. Purchase of Contracts Upon Breach of Covenant.
Upon discovery by any of the Servicer, the Trust or the Indenture
Trustee of a breach of any of the covenants set forth in Section 5.06(d),
5.06(e), 5.18 or 5.19, the party discovering such breach shall give prompt
written notice to the others; provided, however, that the failure to give any
such notice shall not affect any obligation of the Servicer. Not later than the
last day of the Monthly Period that is 90 days after its discovery or receipt of
notice of any breach of any such covenant which materially and adversely affects
the interests of the Securityholders or the Trust in any Contract (including any
Liquidated Contract), the Servicer shall, unless it shall have cured such breach
in all material respects, purchase from the Trust the Contract affected by such
breach and pay the related Repurchase Price. It is understood and agreed that
the obligation of the Servicer to purchase any Contract (including any
Liquidated Contract) with respect to which such a breach has occurred and is
continuing shall, if such obligation is fulfilled, constitute the sole remedy
against the Servicer for such breach available to the Securityholders, the
Trust, or the Indenture Trustee on behalf of the Noteholders; provided, however,
that the Servicer shall indemnify the Owner Trustee, the Trust, the Indenture
Trustee, and the Securityholders against all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel, which
may be asserted against or incurred by any of them as a result of third party
claims arising out of the events or facts giving rise to such breach.
5-10
ARTICLE VI
DISTRIBUTIONS; TRUST ACCOUNTS;
STATEMENTS TO SECURITYHOLDERS
SECTION 6.01. Trust Accounts.
(a) The Servicer shall establish the Collection Account in the name of
the Indenture Trustee for the benefit of the Securityholders. The Collection
Account shall be an Eligible Account and initially shall be a segregated trust
account established with the Indenture Trustee and maintained with the Indenture
Trustee.
(b) The Servicer shall establish the Note Distribution Account in the
name of the Indenture Trustee for the benefit of the Noteholders. The Note
Distribution Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(c) The Servicer shall establish the Certificate Distribution Account
in the name of the Owner Trustee for the benefit of the Certificateholders. The
Certificate Distribution Account shall be an Eligible Account and initially
shall be a segregated trust account established with the Indenture Trustee and
maintained with the Indenture Trustee, so long as the Indenture Trustee is
acting as Paying Agent under Section 3.9 of the Trust Agreement.
(d) The Servicer shall establish the Pre-Funding Account on behalf of
the Trust, and shall deposit therein the Pre-Funded Amount pursuant to Section
2.02(j). The Pre-Funding Account shall be an Eligible Account and shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(e) The Servicer shall establish the Capitalized Interest Account on
behalf of the Trust, and shall deposit therein $-0- pursuant to Section 2.02(j).
The Capitalized Interest Account shall be an Eligible Account and shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
(f) All amounts held in the Collection Account, the Pre-Funding Account
and the Capitalized Interest Account (but not the Note Distribution Account or
the Certificate Distribution Account) shall, to the extent permitted by
applicable laws, rules and regulations, be invested, as directed by the
Servicer, in Eligible Investments that mature not later than one Business Day
prior to the Distribution Date for the Monthly Period to which such amounts
relate. Any such written direction shall certify that any such investment is
authorized by this Section 6.01(d). Such investments in Eligible Investments
shall be made in the name of the Indenture Trustee on behalf of the Trust, and
such investments shall not be sold or disposed of prior to their maturity. Any
investment of funds in the Collection Account or the Pre-Funding Account shall
be made in Eligible Investments held by a financial institution with respect to
which (a) such institution has noted the Indenture Trustee's interest therein by
book entry or otherwise and (b) a confirmation of the Indenture Trustee's
interest has been sent to the Indenture Trustee by such institution, provided
that such Eligible Investments are (i) specific certificated securities (as such
6-1
term is used in MN UCC ss. 336.8-313(1)(d)(i)), and (ii) either (A) in the
possession of such institution or (B) in the possession of a clearing
corporation (as such term is used in MN UCC ss. 336.8-313(1)(g)) in New York or
Minnesota, registered in the name of such clearing corporation, not endorsed for
collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the Indenture
Trustee's security interest therein, and held by such clearing corporation in an
account of such institution. Subject to the other provisions hereof, the
Indenture Trustee shall have sole control over each such investment and the
income thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Indenture Trustee or its
agent, together with each document of transfer, if any, necessary to transfer
title to such investment to the Indenture Trustee in a manner which complies
with this Section 6.01. All interest, dividends, gains upon sale and other
income from, or earnings on, investments of funds in the Collection Account and
the Pre-Funding Account shall be deposited in the Collection Account and
distributed on the next Distribution Date pursuant to Section 6.06. The Servicer
shall deposit in the applicable Collection Account and the Pre-Funding Account,
as applicable, an amount equal to any net loss on such investments immediately
as realized.
SECTION 6.02. Collection Account Deposits.
(a) Collections. The Servicer shall remit directly to the Collection
Account (no later than the next Business Day as specified in Section 5.05) all
payments by or on behalf of the Obligors on the Contracts and all Liquidation
Proceeds received by the Servicer.
(b) Servicer Advances. The Servicer shall deposit in the Collection
Account immediately prior to each Distribution Date all Servicer Advances
required to be made pursuant to Section 5.13.
(c) Repurchased Contracts. The Originator shall deposit in the
Collection Account the Repurchase Price for each Contract repurchased by it
under Section 3.05. The Servicer shall deposit in the Collection Account the
Repurchase Price for each Contract repurchased by it under Section 5.20.
SECTION 6.03. Permitted Withdrawals.
The Indenture Trustee may, from time to time as provided herein, make
withdrawals from the Collection Account of amounts deposited in said account
that are attributable to the Contracts only for the following purposes:
(a) to make payments in the amounts and in the manner provided
for in Section 6.06;
(b) to pay to the Originator with respect to each Contract or
property acquired in respect thereof that has been repurchased pursuant
to Section 3.05, all amounts received thereon and not required to be
distributed to Noteholders or Certificateholders as of the date on
which the related Scheduled Principal Balance or Repurchase Price is
determined;
6-2
(c) to reimburse the Servicer out of Liquidation Proceeds for
Liquidation Expenses incurred by it, to the extent such reimbursement
is permitted pursuant to Section 5.08;
(d) to withdraw any amount deposited in the Collection Account
that was not required to be deposited therein; or
(e) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d).
Since, in connection with withdrawals pursuant to clauses (a) and (b),
the Originator's or the Servicer's entitlement thereto is limited to collections
or other recoveries on the related Contract, the Servicer shall keep and
maintain a separate accounting, on a Contract by Contract basis, for the purpose
of justifying any withdrawal from the Collection Account pursuant to such
clauses.
SECTION 6.04. Distributions.
(a) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Monthly Certificate
delivered pursuant to Section 5.14) to make the following deposits and
distributions by 11:00 a.m. (Minnesota time), to the extent of the Amount
Available for such Distribution Date and in the following order of priority:
(i) Servicing Fee. If Conseco Finance Corp. or an Affiliate is
not the Servicer, then to the Servicer, the Servicing Fee for the
related Monthly Period.
(ii) Servicer Advances. After payment of the amount specified
in clause (i) above, to reimburse the Servicer for Uncollectible
Advances and for Servicer Advances made with respect to Delinquent
Payments that were recovered during the related Monthly Period.
(iii) Class A Interest. After payment of the amounts specified
in clauses (i) and (ii) above, to the Note Distribution Account, the
sum of the Class A Interest Amount and any Unpaid Class A Interest
Shortfall;
(iv) Class M Interest. After payment of the amounts specified
in clauses (i) through (iii) above, to the Note Distribution Account,
the Class M Interest Amount and any Unpaid Class M Interest Shortfall;
(v) Note Principal. After payment of the amounts specified in
clauses (i) through (iv) above, to the Note Distribution Account, the
Total Principal Distribution Amount, plus the Accelerated Principal
Distribution Amount, if applicable.
(vi) Class A LIBOR Carryforward Amount. After payment of the
amounts specified in clauses (i) through (v) above, to the Note
Distribution Account, the Class A LIBOR Carryforward Amount.
6-3
(vii) Class M LIBOR Carryforward Amount. After payment of the
amounts specified in clauses (i) through (vi) above, to the Note
Distribution Account, the Class M LIBOR Carryforward Amount.
(viii) Class B Certificate Distribution Amount. After payment
of the amounts specified in clauses (i) through (vii) above, to the
Certificate Distribution Account, the Class B Certificate Distribution
Amount.
SECTION 6.05. Statements to Securityholders.
(a) On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder, and the Owner Trustee shall include with
each distribution to each Certificateholder, a statement (which statement shall
also be provided to each Rating Agency) based on information in the Monthly
Report delivered on the related Determination Date pursuant to Section 5.14,
setting forth the following information:
(i) the amount of such distribution to Holders of each Class
of Notes and the Certificates allocable to interest, separately
identifying any Unpaid Class A Interest Shortfall and any Unpaid Class
M Interest Shortfall included in such distribution and any remaining
Unpaid Class A Interest Shortfall and Unpaid Class M Interest Shortfall
after giving effect to such distribution;
(ii) the Class A Interest Carryover Shortfall and the Class M
Interest Carryover Shortfall, if any, for such Distribution Date;
(iii) the amount of such distribution to Holders of each Class
of Notes allocable to principal, separately identifying the Formula
Principal Distribution Amount and any Formula Principal Shortfall
included therein;
(iv) the Class A Principal Balance and the Class M Principal
Balance after giving effect to the distribution of principal on such
Distribution Date;
(v) the amount of such distribution attributable to the Class
A LIBOR Carryforward Amount and the Class M LIBOR Carryforward Amount,
and any remaining unpaid Class A LIBOR Carryforward Amount and unpaid
Class M LIBOR Carryforward Amount;
(vi) the amount of the Monthly Servicing Fee paid to the
Servicer with respect to such Monthly Period;
(vii) the Pool Scheduled Principal Balance for such
Distribution Date;
(viii) the Note Pool Factor for each Class after giving effect
to the distribution of principal on such Distribution Date;
6-4
(ix) the number and aggregate principal balances of Contracts
delinquent (a) 30-59 days and (b) 60 or more days;
(x) the number and aggregate Scheduled Principal Balance of
Contracts that become Defaulted Contracts during the related Monthly
Period;
(xi) the number and aggregate Scheduled Principal Balance of
Defaulted Contracts as of the last day of the related Monthly Period;
(xii) the number and aggregate Schedule Principal Balance of
Contracts that became Liquidated Contracts during the related Monthly
Period and the related Net Liquidation Losses; and
(xiii) the aggregate amount of Servicer Advances made by the
Servicer with respect to such Distribution Date, and the aggregate
amount paid to the Servicer as reimbursement of Servicer Advances made
on prior Distribution Dates.
In the case of information furnished pursuant to clauses (i) through
(v) above, the amounts shall be expressed as a dollar amount per $1,000
denomination of Note.
(b) The Owner Trustee and the Indenture Trustee shall inform any of the
Noteholders, Certificateholders or Credit Suisse First Boston Corporation
inquiring by telephone of the information contained in the most recent Monthly
Report.
(c) Certificateholders may obtain copies of the statements delivered by
the Owner Trustee pursuant to subsection (a) above upon written request to the
Owner Trustee at the Corporate Trust Office (together with a certification that
such Person is a Certificateholder and payment of any expenses associated with
the distribution thereof). Noteholders may obtain copies of the statements
delivered by the Indenture Trustee pursuant to subsection (a) above upon written
request to the Indenture Trustee at its Corporate Trust Office (together with a
certification that such Person is a Noteholder and payment of any expenses
associated with the distribution thereof).
SECTION 6.06. Pre-Funding Account.
(a) Amounts on deposit in the Pre-Funding Account shall be withdrawn by
the Indenture Trustee on any Subsequent Transfer Date an amount equal to 100% of
the Cut-off Date Principal Balance of each Subsequent Contract transferred and
assigned to the Indenture Trustee on such Subsequent Transfer Date and pay such
amount to or upon the order of the Originator upon satisfaction of the
conditions set forth in Section 2.03(b) with respect to such transfer and
assignment. On the Post-Funding Payment date, any funds remaining in the
Pre-Funding Account (other than funds consisting of investment earnings) shall
be deposited in the Collection Account and added to the Amount Available.
(b) The Owner Trustee on behalf of the Trust shall be the legal owner
of the Pre-Funding Account. The Seller shall be the beneficial owner of the
Pre-Funding Account, subject
6-5
to the foregoing power of the Indenture Trustee to transfer amounts in the
Pre-Funding Account to the Collection Account. All amounts earned on deposits in
the Pre-Funding Account shall be taxable to the Seller. The Trustee shall
release to the Seller all investment earnings in the Pre-Funding Account on the
Post-Funding Payment Date.
SECTION 6.07. Capitalized Interest Account.
a. On the Distribution Dates occurring in January 2000 and February
2000, if the Monthly Report for such Remittance Date indicates that the Amount
Available (after payment of the amounts specified in clause (i) of Section
6.04(a)) is not sufficient to pay the Class A Interest Amount plus the Class M
Interest Amount,, the Trustee shall withdraw the amount of such deficiency, or
the amount of funds in the Capitalized Interest Account (net of any investment
earnings thereon), if less, and shall deposit such funds in the Collection
Account for distribution on such Distribution Date in order first to pay any
deficiency in the Amount Available to pay the Class A Interest Amount, and
second to pay any deficiency in the Amount Available to pay the Class M Interest
Amount.
b. Any funds remaining in the Capitalized Interest Account after the
Remittance Date in February 2000 shall be distributed to the Class B
Certificateholder. After such date no further amounts shall be deposited in or
withdrawn from the Capitalized Interest Account. Any losses on such investments
shall be deposited in the Capitalized Interest Account by the Class B
Certificateholder out of its own funds immediately as realized.
6-6
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Event of Termination.
"Event of Termination" means the occurrence of any of the following
(each a "Servicer Termination Event"):
(a) Any failure by the Servicer to make any deposit into an account
required to be made hereunder and the continuance of such failure for a period
of five Business Days after the Servicer has become aware, or should have become
aware, that such deposit was required;
(b) Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement (other than a
covenant or agreement which is elsewhere in this Section specifically dealt
with), which failure shall (i) materially and adversely affect the rights of the
Trust, the Indenture Trustee, or the Securityholders and (ii) continue
unremedied for 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Servicer by the
Indenture Trustee or to the Servicer and the Indenture Trustee by Holders of
Notes evidencing not less than 25% of the Note Principal Balance or, if the
Notes have been paid in full, by Certificateholders evidencing not less than a
Certificate Majority.
(c) Any assignment by the Servicer of its duties hereunder except as
specifically permitted hereunder, or any attempt to make such an assignment;
(d) A court or other governmental authority having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial liquidation of its
affairs, and such order remains undischarged and unstayed for at least 60 days;
(e) The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing; or
(f) The failure of the Servicer to be an Eligible Servicer.
7-1
SECTION 7.02. Transfer.
If an Event of Termination has occurred and is continuing, either the
Trust, the Indenture Trustee, a Note Majority, or, if the Notes have been paid
in full, a Certificate Majority, by notice in writing to the Servicer (and to
the Indenture Trustee and Trust if given by the Certificateholders or
Noteholders) may terminate all (but not less than all) of the Servicer's
management, administrative, servicing and collection functions (such termination
being herein called a "Service Transfer"). On receipt of such notice (or, if
later, on a date designated therein), or upon resignation of the Servicer in
accordance with Section 10.01, all authority and power of the Servicer under
this Agreement, whether with respect to the Contracts, the Contract Files or
otherwise (except with respect to the Collection Account, the transfer of which
shall be governed by Section 7.06), shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 7.02; and, without limitation, the
Indenture Trustee is authorized and empowered to execute and deliver on behalf
of the Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments (including, without limitation, documents required to make the
Indenture Trustee or a successor servicer the sole lienholder or legal title
holder of record of each Product) and to do any and all acts or things necessary
or appropriate to effect the purposes of such notice of termination. Each of the
Originator and the Servicer agrees to cooperate with the Indenture Trustee in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Indenture Trustee
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts and the execution
of any documents required to make the Indenture Trustee or a successor servicer
the sole lienholder or legal title holder of record in respect of each Product.
The Servicer shall be entitled to receive any other amounts which are payable to
the Servicer under this Agreement, at the time of the termination of its
activities as Servicer. The Servicer shall transfer to the new servicer (i) the
Servicer's records relating to the Contracts in such electronic form as the new
servicer may reasonably request and (ii) any Contracts and Contract Files in the
Servicer's possession.
SECTION 7.03. Indenture Trustee to Act; Appointment of Successor.
On and after the time the Servicer receives a notice of termination
pursuant to Section 7.02 or the resignation of the Servicer in accordance with
Section 10.01, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof and the Servicer shall be relieved of such
responsibilities, duties and liabilities arising after such Service Transfer;
provided, however, that (i) the Indenture Trustee will not assume any
obligations of the Originator pursuant to Section 3.05 and (ii) the Indenture
Trustee shall not be liable for any acts or omissions of the Servicer occurring
prior to such Service Transfer or for any breach by the Servicer of any of its
obligations contained herein or in any related document or agreement. As
compensation therefor, the Indenture Trustee shall be entitled to receive
reasonable compensation not in excess of the Monthly Servicing Fee.
Notwithstanding the above, the Indenture Trustee may, if it shall be unwilling
so to act, or shall, if it is legally unable so to act, appoint, or petition a
court of competent jurisdiction to appoint, an
7-2
Eligible Servicer as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. Pending appointment of a successor to the Servicer
hereunder, unless the Indenture Trustee is prohibited by law from so acting, the
Indenture Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Indenture Trustee may make
such arrangements for the compensation of such successor out of payments on
Contracts as it and such successor shall agree; provided, however, that no such
monthly compensation shall, without the written consent of 100% of the
Noteholders, exceed the Monthly Servicing Fee. The Indenture Trustee and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.04. Notification to Securityholders.
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Indenture Trustee, the Trust,
Standard & Poor's, and Fitch.
(b) Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Owner Trustee on
behalf of the Trust shall give written notice thereof to Standard & Poor's,
Fitch and the Certificateholders at their respective addresses appearing on the
Certificate Register and the Indenture Trustee shall give written notice thereof
to Noteholders at their respective addresses appearing in the Note Register.
(c) The Owner Trustee on behalf of the Trust shall give written notice
to Standard & Poor's and Fitch at least 30 days prior to the date upon which any
Eligible Servicer (other than the Trustee) is to assume the responsibilities of
Servicer pursuant to Section 7.03, naming such successor Servicer.
SECTION 7.05. Effect of Transfer.
(a) After the Service Transfer, the Indenture Trustee or new Servicer
may notify Obligors to make payments directly to the new Servicer that are due
under the Contracts after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Contracts and the new Servicer shall have all of such
obligations, except that the replaced Servicer will transmit or cause to be
transmitted directly to the new Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the new Servicer to collect them) received as payments upon
or otherwise in connection with the Contracts.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Originator pursuant to Article IX and Sections 3.05 and 5.19) other than
those relating to the management, administration, servicing or collection of the
Contracts.
7-3
SECTION 7.06. Transfer of Collection Account.
Notwithstanding the provisions of Section 7.02, if the Collection
Account shall be maintained with the Servicer and an Event of Termination shall
occur and be continuing, the Servicer shall, after five days' written notice
from the Indenture Trustee, or in any event within ten days after the occurrence
of the Event of Termination, establish an Eligible Account with an institution
other than the Servicer and promptly transfer all funds in the Collection
Account to such new account, which shall thereafter be deemed the Collection
Account for the purposes hereof.
SECTION 7.07. Limits on Liability.
The Servicer will be liable to the Trust, the Owner Trustee, the
Indenture Trustee and the Securityholders only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement and will have no
other obligations or liabilities hereunder. Neither the Servicer nor any of its
directors, officers, employees or agents will have any liability to the Trust,
the Owner Trustee, the Indenture Trustee or the Securityholders (except as
explicitly provided in this Agreement) for any action taken, or for refraining
from taking any action, pursuant to this Agreement, other than any liability
that would otherwise be imposed by reason of the Servicer's breach of this
Agreement or willful misfeasance, bad faith or negligence (including errors in
judgment) in the performance of its duties, or by reason of reckless disregard
of obligations and duties under this Agreement or any violation of law.
SECTION 7.08. Waiver of Past Defaults.
A Note Majority or, if the Notes have been paid in full, Certificate
Majority may, on behalf of all Holders of Notes and Certificates, waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Termination arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
7-4
ARTICLE VIII
TERMINATION
SECTION 8.01. Class B Certificateholder's Purchase Option; Auction
Sale; Accelerated Principal Distribution Amount.
(a) The Class B Certificateholder shall, subject to subsection (b)
hereof, have the option to purchase all of the Contracts and all property
acquired in respect of any Contract remaining in the Trust at a price (such
price being referred to as the "Minimum Purchase Price") equal to the greater
of:
(i) the sum of (x) 100% of the principal balance of each
Contract (other than any Contract as to which title to the underlying
property has been acquired and whose fair market value is included
pursuant to clause (y) below), together with accrued and unpaid
interest on each such Contract at a rate per annum equal to the
Weighted Average Contract Rate, plus (y) the fair market value of such
acquired property (as reasonably determined by the Servicer as of the
close of business on the third Business Day preceding the date of such
purchase), and
(ii) the aggregate Principal Balance of the Notes as of the
date of such purchase (less any amounts on deposit in the Collection
Account, the Note Distribution Account or the Certificate Distribution
Account on such purchase date and representing payments of principal in
respect of the Contracts) plus an amount necessary to pay the Class A
Formula Interest Distribution Amount and the Class M Interest Amount,
any Unpaid Class A Interest Shortfall, and any Unpaid Class M Interest
Shortfall due on the Distribution Date occurring in the calendar month
following such purchase date, plus the Class A LIBOR Carryforward
Amount and the Class M LIBOR Carryforward Amount, if any, for such
Distribution Date (less any amounts on deposit in the Collection
Account, the Note Distribution Account or the Certificate Account on
such purchase date and representing payments of interest in respect of
the Contracts, net of any amounts required to be paid therefrom to the
Servicer or any Person other than the Noteholders or
Certificateholders).
(b) The purchase by the Class B Certificateholder of all of the
Contracts pursuant to this Section 8.01 shall be conditioned upon:
(i) the Pool Scheduled Principal Balance, at the time of any
such purchase, aggregating not more than 20% of the Cut-off Date Pool
Principal Balance,
(ii) the Class B Certificateholder having provided the
Indenture Trustee, the Owner Trustee and the Depository (if any) with
at least 30 days' written notice, and
(iii) the Indenture Trustee not having accepted a qualifying
bid for the Contracts pursuant to subsection (e) below.
8-1
(c) The Class B Certificateholder may assign its rights under this
Section 8.01, separately from its other rights as Holder of the Class B
Certificate, by giving written notice of such assignment to the Trustee.
Following the Trustee's receipt of such notice of assignment, the Trustee shall
recognize only such assignee (or its assignee in turn) as the Person entitled to
exercise the purchase option set forth in Section 8.01(a).
(d) The Servicer shall notify the Indenture Trustee and the Class B
Certificateholder (whether or not the Class B Certificateholder has then
assigned its rights under this Section 8.01 pursuant to subsection (c)) no later
than two Business Days after the Determination Date relating to the first
Monthly Period which includes the date on which the Pool Scheduled Principal
Balance first becomes equal to or less than 20% of the Cut-off Date Pool
Principal Balance, to the effect that the Pool Scheduled Principal Balance is
then equal to or less than 20% of the Cutoff Date Pool Principal Balance.
(e) If the Class B Certificateholder (or its assignee) has not
delivered to the Indenture Trustee the notice of exercise of its purchase option
required by subsection (b) by the Payment Date occurring in the month following
the Determination Date specified in subsection (d), then on the following
Payment Date and each Payment Date thereafter the Notes shall be entitled to
receive the Accelerated Principal Distribution Amount to be distributed in
accordance with Section 6.04(a)(v).
SECTION 8.02. Liquidation or Sale of Trust Estate.
Upon any sale of the assets of the Trust pursuant to Sections 10.04 of
the Indenture, the Trust shall instruct the Indenture Trustee or the Owner
Trustee, as the case may be, to deposit the proceeds from such sale after all
payments and reserves therefrom have been made in the Collection Account. On the
Distribution Date on which such proceeds are deposited in the Collection Account
(or, if such proceeds are not so deposited on a Distribution Date, on the
Distribution Date immediately following such deposit), the Trust shall instruct
the Indenture Trustee to distribute such funds, together with all other amounts
available, in accordance with the terms of Section 6.04(a).
8-2
ARTICLE IX
INDEMNITIES
SECTION 9.01. Originator's Indemnities.
The Originator will defend and indemnify the Trust, the Owner Trustee,
the Indenture Trustee (including the paying agent and any other agents of the
Owner Trustee and the Indenture Trustee), and the Securityholders against any
and all costs, expenses, losses, damages, taxes, claims and liabilities,
including reasonable fees and expenses of counsel and expenses of litigation of
any third-party claims arising out of or resulting from (i) the origination of
any Contract (including but not limited to truth in lending requirements) or the
servicing of such Contract prior to its transfer to the Trust (but only to the
extent such cost, expense, loss, damage, tax, claim or liability is not provided
for by the Originator's repurchase of such Contract pursuant to Section 3.05),
(ii) the use or ownership of any Products by the Originator or the Servicer or
any Affiliate of either, or (iii) the Originator's or the Trust's violation of
federal or state securities laws in connection with the offering and sale of the
Securities. Notwithstanding any other provision of this Agreement, the
obligation of the Originator under this Section shall not terminate upon a
Service Transfer pursuant to Article VII, except that the obligation of the
Originator under this Section shall not relate to the actions of any subsequent
Servicer after a Service Transfer.
SECTION 9.02. Liabilities to Obligors.
No obligation or liability to any Obligor under any of the Contracts is
intended to be assumed by the Trust, the Owner Trustee, Indenture Trustee, or
the Securityholders under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Trust, the Owner Trustee, Indenture Trustee,
and the Securityholders expressly disclaim such assumption.
SECTION 9.03. Servicer's Indemnities.
(a) The Servicer shall indemnify, defend and hold harmless the
Trust, the Owner Trustee, the Indenture Trustee (including the Paying Agent and
any other agents of the Owner Trustee and the Indenture Trustee), their
respective officers, directors, agents and employees and the Noteholders from
and against any and all costs, expenses, losses, claims, damages and liabilities
to the extent that such cost, expense, loss, claim, damage or liability arose
out of, or was imposed upon any of them through the Servicer's breach of this
Agreement, the negligence, willful misfeasance or bad faith of the Servicer in
the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
(b) Indemnification under this Section 9.03 shall include,
without limitation, reasonable fees and expenses of counsel and expenses of
litigation. If the Servicer has made any indemnity payments pursuant to this
Section and the recipient thereafter collects any of such
9-1
amounts from others, the recipient shall promptly repay such amounts collected
to the Servicer, together with any interest earned thereon.
(c) Conseco Finance Corp., in its individual capacity, hereby
acknowledges that the indemnification provisions in the Transfer Agreement
benefitting the Trust, the Owner Trustee and the Indenture Trustee are
enforceable by each hereunder.
(d) The provisions of this Section shall survive the
termination of the Related Documents.
SECTION 9.04. Operation of Indemnities.
Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Originator or the Servicer has made any indemnity payments pursuant to this
Article and the recipient thereafter collects any of such amounts from others,
the recipient will repay such amounts collected to the Originator or the
Servicer, as the case may be, without interest.
9-2
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Servicer Not to Assign Duties or Resign; Delegation of
Servicing Duties.
The Servicer may not sell or assign its rights and duties as Servicer
hereunder, except as expressly provided for herein, provided that the Servicer
may pledge or assign the right to receive all or any portion of the Monthly
Servicing Fee or Monthly Servicing and Guaranty Fee payable to it. The Servicer
shall not resign from the obligations and duties hereby imposed on it except
upon determination that the performance of its duties hereunder is no longer
permissible under applicable law or is in material conflict by reason of
applicable law with any other activities carried on by it. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel for the Servicer to such effect addressed and delivered to
the Trust and the Indenture Trustee. No such resignation shall become effective
until the Indenture Trustee or a successor servicer shall have assumed the
responsibilities and obligations of the Servicer in accordance with Sections
7.02 and 7.03.
Notwithstanding the foregoing:
(a) Any person into which the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Servicer shall be a party, or any Person
succeeding to the business of the Servicer, shall be the successor of
the Servicer hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that the
successor or surviving Person to the Servicer shall satisfy the
criteria set forth in the definition of an Eligible Servicer. The
Servicer shall promptly notify Standard & Poor's and Fitch of any such
merger to which it is a party.
(b) The Servicer may delegate duties under this Agreement to
any of the Servicer's Affiliates. In addition, the Servicer may at any
time perform the specific duty of repossessing Products through
subcontractors who are in the business of servicing consumer
receivables, and may also perform other specific duties through
subcontractors; provided that the Servicer gives notice to the Trust
and the Indenture Trustee and each of Standard & Poor's and Fitch, and
provided further that no such delegation of duties by the Servicer
shall relieve the Servicer of its responsibility with respect thereto.
SECTION 10.02. Assignment or Delegation by Originator.
Except as specifically authorized hereunder, and except for its
obligations as Servicer which are dealt with under Article V and Article VII,
the Originator may not convey and assign or delegate any of its rights or
obligations hereunder absent the prior written consent of a Note Majority and a
Certificate Majority, and any attempt to do so without such consent shall be
void.
10-1
It is understood that the foregoing does not prohibit the pledge or assignment
by the Originator of any right to payment pursuant to Article VI.
Notwithstanding the foregoing, any person into which the Originator may
be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Originator shall be a party, or any
Person succeeding to the business of the Originator, shall be the successor of
the Originator hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Originator shall promptly notify Standard & Poor's
and Fitch of any such merger to which it is a party.
SECTION 10.03. Amendment.
(a) This Agreement may be amended from time to time by the Originator,
the Servicer, the Seller and the Trust, with the prior written consent of the
Indenture Trustee but without the consent of any of the Securityholders, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, including, without limitation, to add or amend any provision as
required by Standard & Poor's, Fitch, or any other nationally recognized
statistical rating organization in order to improve or maintain the rating of
any Class of Notes or the Certificates, provided, however, that such action
shall not, as evidenced by an Opinion of Counsel for the Originator, adversely
affect in any material respect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Originator, the Servicer, the Seller and the Trust with the prior written
consent of the Indenture Trustee and with the consent of a Certificate Majority
and a Note Majority with respect to each Class (which consent of any Holder of a
Certificate or Note given pursuant to this Section or pursuant to any other
provision of this Agreement shall be conclusive and binding on such Holder and
on all future Holders of such Certificate or Note and of any Certificate or Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon the Certificate or Note)
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates or Notes; provided, however, no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts or
distributions required to be made on any Certificate or Note or the Class A
Interest Rate or Class M Interest Rate, (b) amend any provisions of Section 6.04
in such a manner as to affect the priority of payment of interest, principal or
premium to Noteholders or Certificateholders, or (c) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of the Holders of all Securities then outstanding, and
provided further, that the Rating Agency Condition has been satisfied.
(c) Concurrently with the solicitation of any consent pursuant to this
Section 10.03, the Indenture Trustee shall furnish written notification to
Standard & Poor's and Fitch of such solicitation. Promptly after the execution
of any amendment pursuant to this Section 10.03, the
10-2
Indenture Trustee shall furnish written notification of the substance of such
amendment to Standard & Poor's, Fitch and each Securityholder.
(d) It shall not be necessary for the consent of Securityholders under
this Section 10.03 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Securityholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
(e) Each of the Owner Trustee and Indenture Trustee may, but shall not
be obligated to, enter into any such amendment which affects its own rights,
duties or immunities under this Agreement or otherwise.
(f) In connection with any amendment pursuant to this Section, the
Owner Trustee and Indenture Trustee shall be entitled to receive an unqualified
Opinion of Counsel to the Servicer to the effect that such amendment is
authorized or permitted by the Agreement.
(g) Upon the execution of any amendment or consent pursuant to this
Section 10.03, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Securityholder hereunder shall be bound thereby.
SECTION 10.04. Notices.
All communications and notices pursuant hereto to the Servicer, the
Originator, the Trust, the Owner Trustee, the Indenture Trustee, Standard &
Poor's and Fitch shall be in writing and delivered (by facsimile or other means)
or mailed to it at the appropriate following address:
If to the Originator, the Guarantor or the Servicer:
Conseco Finance Corp.
1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
10-3
If to the Trust or Owner Trustee:
Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopier Number: ▇▇▇-▇▇▇-▇▇▇▇
If to the Indenture Trustee:
U.S. Bank Trust National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration,
Structured Finance
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Standard & Poor's:
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset-Backed Surveillance
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Fitch:
Fitch IBCA, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Surveillance Group
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Securityholder
shall be in writing and delivered or mailed at the address shown in the Note
Register or the Certificate Register, as applicable.
SECTION 10.05. Merger and Integration.
Except as specifically stated otherwise herein, this Agreement sets
forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.
10-4
SECTION 10.06. Headings.
The headings herein are for purposes of reference only and shall not
otherwise affect the meaning or interpretation of any provision hereof.
SECTION 10.07. Governing Law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Minnesota.
SECTION 10.08. Limitation of Liability.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as trustee of Conseco Finance Vehicle
Trust 1999-B under the Trust Agreement, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties hereto and by any Person claiming
by, through or under the parties hereto and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or the other Related Documents.
10-5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized this 16th
day of December, 1999.
ISSUER:
CONSECO FINANCE VEHICLE TRUST 1999-B
By WILMINGTON TRUST COMPANY, not
in its individual capacity but solely
on behalf of the Issuer as Owner
Trustee under the Trust Agreement
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
SELLER:
CONSECO FINANCE SECURITIZATIONS CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
ORIGINATOR AND SERVICER:
CONSECO FINANCE CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
10-6
Acknowledged and Accepted:
U.S. BANK TRUST NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
10-7
EXHIBIT A
FORM OF ASSIGNMENT
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1999 among Conseco Finance Corp. (the "Originator"),
Conseco Finance Securitizations Corp., as Seller, (the "Seller"), and Conseco
Finance Vehicle Trust 1999-B, the Seller does hereby transfer, assign, set over
and otherwise convey to the Trust all right, title and interest of the
Originator in (i) the retail installment sales contracts and promissory notes
for the purchase of a variety of Products (collectively, the "Initial
Contracts") identified in the List of Contracts delivered pursuant to Section
2.02(a) of the Agreement, a copy of which List is attached hereto, including,
without limitation, all related Collateral Security, all security interests
created thereby and any and all rights to receive payments which are due
pursuant thereto from and after December 1, 1999, but excluding any rights to
receive payments which were due pursuant thereto prior to December 1, 1999, (ii)
the Insurance Policies on any Products securing an Initial Contract for the
benefit of the creditor of such Contract and all rights under all blanket
insurance policies to the extent they relate to the Contracts, (iii) all rights
of the Seller under the Transfer Agreement and each Subsequent Transfer
Agreement; (iv) the Errors and Omissions Protection Policy as such policy
relates to the Contracts, (v) all items contained in the Contract Files, (vi)
the Trust Accounts and all funds on deposit therein from time to time and all
investments and proceeds thereof (including all income thereon), and (vii) all
proceeds in any way derived from any of the foregoing. Capitalized terms used
herein but not defined herein have the meanings assigned to them in the
Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this 16th day of December, 1999.
CONSECO FINANCE SECURITIZATIONS CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
A-1
EXHIBIT B
FORM OF CERTIFICATE REGARDING
REPURCHASED CONTRACTS
CONSECO FINANCE CORP.
CERTIFICATE REGARDING REPURCHASED CONTRACTS
The undersigned certifies that he is a [title] of Conseco Finance
Corp., a Delaware corporation (the "Originator"); he is duly authorized to
execute and deliver this certificate on behalf of the Servicer pursuant to
Section 3.05 of the Sale and Servicing Agreement (the "Agreement"), dated as of
December 1, 1999 among the Originator, the Servicer, Conseco Finance
Securitizations Corp., as Seller, and Conseco Finance Vehicle Trust 1999-B (the
"Trust") (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement):
1. The Contracts on the attached schedule are to be
repurchased by the [Originator] [Servicer] on the date hereof pursuant
to Section [3.05] [5.20] of the Agreement.
2. Upon deposit of the Repurchase Price for such Contracts,
such Contracts may, pursuant to Section [3.05] [5.20] of the Agreement,
be assigned by the Trust to the [Originator] [Servicer].
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of ________, 19__.
CONSECO FINANCE CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
B-1
EXHIBIT C
FORM OF MONTHLY REPORT
CONSECO FINANCE VEHICLE TRUST 1999-B
Distribution Date: ________
1. Amount Available ________
(a) Collection Account balance as of last day
of related Monthly Period ________
(b) Payments on account
of principal deposited during ________
first 10 days of current month
(c) Less payments on account of principal deposited
during first 10 days of preceding month ________
(d) Repurchase Proceeds ________
(e) Servicer Advances ________
(f) Self-Insurance Payments ________
(g) Termination Payments ________
(h) Payments on Liquidation or Auction of Trust Estate ________
2. Monthly Servicing Fee (if Conseco Finance is not the Servicer) ________
3. Servicer Advances reimbursed ________
Note Interest
-------------
4. Amount actually distributed on account of Note
interest (current plus carryover) ________
5. Class A Principal Balance ________
6. Class A Interest Amount ________
7. Class M Principal Balance ________
8. Class M Interest Amount ________
9. Amount applied to Class A Interest Amount ________
10. Amount applied to Class M Interest Amount ________
C-1
11. Class A Interest Carryover Shortfall ________
12. Amount applied to Unpaid Class A Interest Shortfall ________
13. Remaining Unpaid Class A Interest Shortfall ________
14. Class M Interest Carryover Shortfall ________
15. Amount applied to Unpaid Class M Interest Shortfall ________
16. Remaining Unpaid Class M Interest Shortfall ________
Total Principal Distribution Amount
-----------------------------------
17. Formula Principal Distribution Amount: ________
(a) Scheduled principal ________
(b) Principal Prepayments ________
(c) Liquidated Contracts ________
(d) Repurchases ________
18. Aggregate of Formula Principal Shortfalls from prior
Distribution Dates ________
19. Total Principal Distribution Amount (line 17, plus line 18) ________
20. Amount actually distributed on account of principal
(lesser of line 19 or remaining Amount Available):
(a) Class A ________
(b) Class M ________
21. Formula Principal Shortfall for this Distribution Date (line
17 minus line 20, but not less than zero) ________
22. Accelerated Principal Distribution Amount (if applicable) ________
23. Class A LIBOR Carryforward Amount ________
24. Class M LIBOR Carryforward Amount ________
Portfolio Information
---------------------
25. Pool Scheduled Principal Balance ________
26. Pool Factor
(a) Class A ________
(b) Class M ________
C-2
Aggregate Scheduled Balances of delinquent Contracts
as of Determination Date
27. 30 - 59 days
(a) Number ________
(b) Aggregate Principal Amount ________
28. 60 - 89 days
(a) Number ________
(b) Aggregate Principal Amount ________
29. 90 days or more
(a) Number ________
(b) Aggregate Principal Amount ________
30. Aggregate Scheduled Balances and number of Contracts that
became Defaulted Contracts this month ________
31. Aggregate Scheduled Balances and number of all Defaulted
Contracts as of end of month ________
32. Number of Products in Repossession of as of end of month ________
33. Number of Contracts that became Liquidated Contracts ________
34. Aggregate Amount of Servicer Advances with
respect to current Distribution Date ________
35. Amount paid to Servicer as reimbursement for
prior Servicer Advances ________
The amounts of principal and interest distributions set out above are
expressed as a dollar amount per $1,000 denomination of Note.
Please contact ____________________ of U.S. Bank Trust National
Association, ____________________ with any questions regarding this Statement or
your Distribution.
C-3
EXHIBIT D
FORM OF CERTIFICATE OF SERVICING OFFICER
CONSECO FINANCE CORP.
The undersigned certifies that [s]he is a [title] of Conseco Finance
Corp., a Delaware corporation (the "Originator"), and that as such he is duly
authorized to execute and deliver this certificate on behalf of the Servicer
pursuant to Section 5.14 of the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1999 among the Servicer, Conseco Finance Securitizations
Corp., as Seller, and Conseco Finance Vehicle Trust 1999-B (all capitalized
terms used herein without definition having the respective meanings specified in
the Agreement), and further certifies that:
1. The Monthly Report for the period from ________________ to
________________ attached to this certificate is complete and accurate
in accordance with the requirements of Section 5.14 of the Agreement;
and
2. As of the date hereof, no Event of Termination or event
that with notice or lapse of time or both would become an Event of
Termination has occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ___ day
of ________________, 19___.
CONSECO FINANCE CORP.
By
------------------------------------
Name:
------------------------------
Title:
------------------------------
D-1
EXHIBIT E
FORM OF ADDITION NOTICE
-----------------------
_________________, 2000
U.S. Bank Trust National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Sale and Servicing Agreement (the "Agreement"), dated as of
December 1, 1999, among Conseco Finance Corp. (the
"Originator") , Conseco Finance Securitizations Corp. (the
"Seller") and Conseco Finance Vehicle Trust 1999-B (the "Trust")
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the
meanings given them in the Agreement. The Seller hereby notifies the Indenture
Trustee of an assignment to the Trust of Subsequent Contracts on the date and in
the amounts set forth below:
Subsequent Transfer Date:_______________________
Cut-off Date Principal Balance of Subsequent Contracts to be assigned
to Trust on Subsequent Transfer Date: $__________________
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
CONSECO FINANCE SECURITIZATIONS CORP.
By:
---------------------------------
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK TRUST NATIONAL ASSOCIATION
By:
---------------------------------
Name:
Title:
E-1
EXHIBIT F
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
--------------------------------------
In accordance with the Sale and Servicing Agreement (the "Agreement")
dated as of December 1, 1999, among the undersigned, Conseco Finance Corp. and
Conseco Finance Vehicle Trust 1999-B (the "Trust"), the undersigned does hereby
transfer, assign, set over and otherwise convey, without recourse, to the Trust
all right, title and interest of the Seller in and to (1) the retail installment
sales contracts and promissory notes identified in the List of Contracts
attached hereto (each a "Subsequent Contract"), and all moneys payable thereon
or in respect to the Subsequent Contracts, including any liquidation proceeds
therefrom but excluding payments due on the Subsequent Contracts prior to _____,
1999 (the "Subsequent Cut-off Date"), (2) all rights of the Seller under the
Subsequent Transfer Agreement with Conseco Finance Corp., (3) the Errors and
Omissions Protection Policy as such policy relates to the Subsequent Contracts,
(4) all items contained in the related Contract Files, and (5) all proceeds and
products of the foregoing.
This Subsequent Transfer Instrument is made pursuant to and upon the
representation and warranties on the part of the undersigned contained in
Section 2.03 and Article III of the Agreement and no others. All undefined
capitalized terms used in this Subsequent Transfer Instrument have the meanings
given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Subsequent Transfer
Instrument to be duly executed this _____ day of ____________, 1999.
CONSECO FINANCE SECURITIZATIONS CORP.
[Seal] By:
Name:
Title:
F-1
EXHIBIT G
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
---------------------------------------------------
The undersigned certifies that [s]he is a [title] of Conseco Finance
Securitizations Corp., a Minnesota corporation (the "Seller"), and that as such
he is duly authorized to execute and deliver this certificate on behalf of the
Seller in connection with the Sale and Servicing Agreement dated as of December
1, 1999 (the "Agreement") among the Seller, Originator, Conseco Finance Corp.
and Conseco Finance Vehicle Trust 1999-B. All capitalized terms used herein
without definition have the respective meanings specified in the Agreement. The
undersigned further certifies that:
1. This Certificate is delivered in connection with the sale to the
Trust on _______________ (the "Subsequent Transfer Date") of Contracts (the
"Subsequent Contracts") identified in the List of Contracts attached to the
Subsequent Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and
warranties in Section 3.01, 3.02, 3.03 and 3.04 of the Agreement are true and
correct; all representations and warranties in Sections 3.02 and 3.03 of the
Agreement with respect to the Subsequent Contracts are true to the best of his
knowledge; and all representations in Section 3.04 of the Agreement with respect
to the Subsequent Contracts are true and correct.
3. All conditions precedent to the sale of the Subsequent Contracts to
the Trust under Section 2.03 of the Agreement have been satisfied.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of _______________, 1999.
By:
Name:
Title:
G-1