EXHIBIT 4.1
CERTIFICATES FOR HOME EQUITY LOANS
SERIES 2002-B
POOLING AND SERVICING AGREEMENT
among
CONSECO FINANCE SECURITIZATIONS CORP.
as Seller
and
CONSECO FINANCE CORP.
as Originator and Servicer
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
as Backup Servicer
and
U.S. BANK NATIONAL ASSOCIATION
not in its individual capacity but solely as Trustee
of
CONSECO FINANCE HOME EQUITY LOAN TRUST 2002-B
Dated as of April 1, 2002
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ............................................................... 2
SECTION 1.01. General .......................................................... 2
SECTION 1.02. Specific Terms ................................................... 2
SECTION 1.03. Calculations ..................................................... 48
ARTICLE II ESTABLISHMENT OF TRUST; TRANSFER OF LOANS ................................ 48
SECTION 2.01. Closing .......................................................... 48
SECTION 2.02. Conditions to the Closing ........................................ 49
SECTION 2.03. Conveyance of the Subsequent Loans ............................... 50
SECTION 2.04. Acceptance by Trustee ............................................ 52
SECTION 2.05. REMIC Provisions ................................................. 53
SECTION 2.06. Seller Option to Substitute for Prepaid Loans .................... 60
ARTICLE III REPRESENTATIONS AND WARRANTIES .......................................... 61
SECTION 3.01. Representations and Warranties Regarding the Seller .............. 61
SECTION 3.02. Representations and Warranties Regarding Each Loan ............... 63
SECTION 3.03. Additional Representations and Warranties ........................ 66
SECTION 3.04. Representations and Warranties Regarding the Loans in the
Aggregate ........................................................ 66
SECTION 3.05. Representations and Warranties Regarding the Loan Files .......... 68
SECTION 3.06. Repurchases of Loans for Breach of Representations and
Warranties ....................................................... 69
SECTION 3.07. No Repurchase Under Certain Circumstances ........................ 71
SECTION 3.08. Certain Representations and Warranties Regarding Perfection of
the Loans ........................................................ 72
ARTICLE IV PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS .............. 73
SECTION 4.01. Transfer of Loans ................................................ 73
SECTION 4.02. Costs and Expenses ............................................... 73
ARTICLE V SERVICING OF LOANS ........................................................ 73
SECTION 5.01. Responsibility for Loan Administration ........................... 73
SECTION 5.02. Standard of Care ................................................. 74
SECTION 5.03. Records .......................................................... 74
SECTION 5.04. Inspection ....................................................... 74
SECTION 5.05. Certificate Account .............................................. 74
SECTION 5.06. Enforcement ...................................................... 78
SECTION 5.07. Trustee to Cooperate ............................................. 79
SECTION 5.08. Costs and Expenses ............................................... 80
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SECTION 5.09. Maintenance of Insurance ......................................... 80
SECTION 5.10. Merger or Consolidation of Servicer .............................. 80
SECTION 5.11. Advance Facility ................................................. 81
SECTION 5.12. Backup Servicer .................................................. 84
ARTICLE VI REPORTS AND TAX MATTERS .................................................. 87
SECTION 6.01. Monthly Reports .................................................. 87
SECTION 6.02. Officer's Certificate ............................................ 87
SECTION 6.03. Other Data ....................................................... 87
SECTION 6.04. Annual Report of Accountants ..................................... 87
SECTION 6.05. Statements to Certificateholders and the Class R
Certificateholder ................................................ 87
SECTION 6.06. Payment of Taxes ................................................. 89
ARTICLE VII SERVICE TRANSFER ........................................................ 91
SECTION 7.01. Events of Termination ............................................ 91
SECTION 7.02. Transfer ......................................................... 92
SECTION 7.03. Trustee to Act; Appointment of Successor ......................... 93
SECTION 7.04. Notification to Certificateholders and Class R
Certificateholder ................................................ 93
SECTION 7.05. Effect of Transfer ............................................... 94
SECTION 7.06. Transfer of Certificate Account .................................. 94
ARTICLE VIII PAYMENTS ............................................................... 94
SECTION 8.01. Monthly Payments ................................................. 94
SECTION 8.02. Advances ......................................................... 95
SECTION 8.03. [Reserved] ....................................................... 96
SECTION 8.04. Permitted Withdrawals from the Certificate Account;
Payments ......................................................... 96
SECTION 8.05. Reassignment of Repurchased and Replaced Loans ................... 102
SECTION 8.06. Class R Certificateholder's Purchase Option; Increase in
Class A-3 Interest Rate .......................................... 102
SECTION 8.07. Intermediate REMIC, Subsidiary REMIC and Basement
REMIC Distributions .............................................. 105
SECTION 8.08. Pre-Funding Account .............................................. 107
SECTION 8.09. Yield Maintenance Reserve Funds .................................. 108
SECTION 8.10. Basis Risk Reserve Fund .......................................... 109
SECTION 8.11. Capitalized Interest Account ..................................... 111
SECTION 8.12. Allocation of Realized Loss Amounts .............................. 111
ARTICLE IX THE CERTIFICATES AND THE CLASS R CERTIFICATE ............................. 112
SECTION 9.01. The Certificates and the Class R Certificate ..................... 112
SECTION 9.02. Registration of Transfer and Exchange of Certificates and the
Class R Certificate .............................................. 113
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SECTION 9.03. No Charge; Disposition of Void Certificates or Class R
Certificate ...................................................... 118
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or Class R
Certificate ...................................................... 118
SECTION 9.05. Persons Deemed Owners ............................................ 119
SECTION 9.06. Access to List of Certificateholders' and Class R
Certificateholder's Names and Addresses .......................... 119
SECTION 9.07. Authenticating Agents ............................................ 120
ARTICLE X INDEMNITIES ............................................................... 120
SECTION 10.01. Real Estate ..................................................... 120
SECTION 10.02. Liabilities to Obligors ......................................... 120
SECTION 10.03. Tax Indemnification ............................................. 120
SECTION 10.04. Servicer's Indemnities .......................................... 121
SECTION 10.05. Operation of Indemnities ........................................ 121
SECTION 10.06. REMIC Tax Matters ............................................... 121
SECTION 10.07. Indemnification of Backup Servicer .............................. 121
SECTION 10.08. Limitation of Liability ......................................... 122
ARTICLE XI THE TRUSTEE .............................................................. 122
SECTION 11.01. Duties of Trustee ............................................... 122
SECTION 11.02. Certain Matters Affecting the Trustee ........................... 123
SECTION 11.03. Trustee Not Liable for Certificates, Class R Certificate or
Loans ........................................................... 124
SECTION 11.04. Trustee May Own Certificates .................................... 124
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive
Events of Termination ........................................... 124
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses ................. 125
SECTION 11.07. Eligibility Requirements for Trustee ............................ 125
SECTION 11.08. Resignation or Removal of Trustee ............................... 126
SECTION 11.09. Successor Trustee ............................................... 126
SECTION 11.10. Merger or Consolidation of Trustee .............................. 127
SECTION 11.11. Tax Returns ..................................................... 127
SECTION 11.12. Obligor Claims .................................................. 127
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee ................... 128
SECTION 11.14. ▇▇▇▇▇▇▇ and U.S. Bancorp ........................................ 129
SECTION 11.15. Trustee Advances ................................................ 129
ARTICLE XII MISCELLANEOUS ........................................................... 130
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties .......... 130
SECTION 12.02. Conseco Finance Corp. and Seller Not to Engage in Certain
Transactions with Respect to the Trust .......................... 130
SECTION 12.03. Maintenance of Office or Agency ................................. 130
SECTION 12.04. Termination ..................................................... 131
SECTION 12.05. Acts of Certificateholders and Class R Certificateholder ........ 133
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SECTION 12.06. Assignment or Delegation by Company ............................. 134
SECTION 12.07. Amendment ....................................................... 134
SECTION 12.08. Notices ......................................................... 136
SECTION 12.09. Merger and Integration .......................................... 138
SECTION 12.10. Headings ........................................................ 138
SECTION 12.11. Governing Law ................................................... 138
Exhibit A -- Form of Class A-1, A-2, A-3, A-IO Certificate
Exhibit B -- Form of Class M-1, M-2 Certificate
Exhibit C -- Form of Class B-1, B-2 Certificate
Exhibit D -- Form of Assignment
Exhibit E -- Form of Certificate of Officer
Exhibit F -- Form of Opinion of Counsel for the Seller
Exhibit G -- Form of Trustee's Acknowledgment
Exhibit H -- Form of Certificate of Servicing Officer
Exhibit I -- Form of Class B-3I Certificate
Exhibit J-1 -- Form of Certificate Regarding Repurchased Loans
Exhibit J-2 -- Form of Certificate Regarding Repurchased Loans
Exhibit J-3 -- Form of Certificate Regarding Substitution for Prepaid Loans
Exhibit J-4 -- Servicer Request for Release of Loan File
Exhibit K -- Form of Representation Letter
Exhibit L -- List of Initial and Additional Loans
Exhibit M -- Form of Monthly Report
Exhibit N -- Form of Addition Notice
Exhibit O -- Form of Subsequent Transfer Instrument
Exhibit P -- Form of Officer's Certificate (Subsequent Transfer)
Exhibit Q -- Form of Class R Certificate
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AGREEMENT, dated as of April 1, 2002, among Conseco Finance
Securitizations Corp., a corporation organized and existing under the laws of
the State of Minnesota, as Seller (the "Seller"), Conseco Finance Corp., a
corporation organized and existing under the laws of the State of Delaware as
originator of the home equity loans described herein (the "Originator"), and as
Servicer (the "Servicer"), ▇▇▇▇▇ Fargo Bank Minnesota, National Association, a
national banking association organized and existing under the laws of the United
States (the "Backup Servicer") and U.S. Bank National Association (formerly
known as U.S. Bank Trust National Association), a national banking association
organized and existing under the laws of the United States, not in its
individual capacity but solely as Trustee (the "Trustee") of Conseco Finance
Home Equity Loan Trust 2002-B (the "Trust").
WHEREAS, in the regular course of its business, Conseco Finance Corp.
purchases, originates and services home equity loans, which loans provide for
installment payments by or on behalf of the borrowers and grant mortgages, deeds
of trust or security deeds on certain real estate securing such loans;
WHEREAS, the Seller, in the ordinary course of its business, acquires
pools of home equity loans and other receivables from Conseco Finance Corp. and
arranges the securitization of those receivables;
WHEREAS, the Seller intends to sell the Certificates (as defined
herein), to be issued hereunder in eleven classes (each, a "Class"), which,
together with the Class R Certificate (as defined herein), in the aggregate will
evidence the entire beneficial ownership interest in the Trust Fund (as defined
herein), consisting primarily of the Loans (as defined herein);
WHEREAS, the Seller, the Originator, the Servicer, the Backup Servicer
and the Trustee wish to set forth the terms and conditions on which the Trustee,
on behalf of the Certificateholders (as defined herein) and Class R
Certificateholder (as defined herein) will acquire the Loans and the Servicer
will service the Loans;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as provided herein:
1
ARTICLE I
DEFINITIONS
SECTION 1.01. General. For the purpose of this Agreement, except as
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otherwise expressly provided or unless the context otherwise requires, the terms
defined in this Article include the plural as well as the singular, the words
"herein," "hereof" and "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular article, section or other
subdivision, and Section references refer to Sections of this Agreement.
SECTION 1.02. Specific Terms.
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"Accrual Period" means, with respect to any Payment Date, the period
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from and including the prior Payment Date (or, with respect to the first Payment
Date, from and including the Closing Date) to but excluding such Payment Date.
"Addition Notice" means, with respect to the transfer of Subsequent
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Loans to the Trust pursuant to Section 2.03 of this Agreement, a notice,
substantially in the form of Exhibit N, which shall be given not later than five
Business Days prior to the related Subsequent Transfer Date, of the Seller's
designation of Subsequent Loans, as applicable, to be sold to the Trust and the
aggregate Cut-off Date Principal Balances of such Subsequent Loans.
"Additional Loan" means a Loan identified as such on the List of Loans
---------------
attached hereto as Exhibit L.
"Adjusted Net WAC Cap Rate" means, for any Payment Date, the Net WAC
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Cap Rate minus a fraction, expressed as a percentage, the numerator of which is
the product of (x) the Class A-IO Interest Rate for such Payment Date times (y)
(i) the sum of the Subsidiary Interest Adjusted Principal Balance of (1) for
each Payment Date through the March 2003 Payment Date, the Class S-2(1)
Interest, (2) for each Payment Date through the September 2003 Payment Date, the
Class S-2(2) Interest, (3) for each Payment Date through the March 2004 Payment
Date, the Class S-2(3) Interest, and (4) for each Payment Date through the
September 2004 Payment Date, the Class S-2(4) Interest, and (ii) 0 after the
September 2004 Payment Date, and the denominator of which is the sum of the
Subsidiary Interest Adjusted Principal Balance of the Class S-1 and Class S-2
Interests.
"Advance" means, with respect to any Payment Date, the amounts, if any,
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deposited by the Servicer or the Trustee, as applicable, in the Certificate
Account for such Payment Date pursuant to Section 8.02.
"Advance Financing Person" has the meaning assigned in Section 5.11(a).
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"Advance Payment" means any payment by an Obligor in advance of the Due
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Period in which it would be due under such Loan and which payment is not a
Principal Prepayment.
2
"Affiliate" of any specified Person means any other Person controlling
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or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Certificate Principal Balance" means the sum of the Class
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A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class B-1 and Class B-2
Principal Balances.
"Agreement" means this Pooling and Servicing Agreement, as it may be
---------
amended from time to time.
"Amount Available" means, for any Payment Date, an amount equal to:
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(a) the sum of
(i) the amount on deposit in the Certificate Account as
of the close of business on the last day of the
related Due Period (other than any amounts therein
attributable to Prepayment Charges), plus
(ii) any Advances deposited in the Certificate Account
with respect to such Payment Date, plus
(iii) any amounts transferred to the Certificate Account
for the Single Interest Excess Sub-Account pursuant
to Section 8.02(c), minus
(b) the sum of
(i) the Amount Held for Future Distribution,
(ii) amounts permitted to be withdrawn by the Trustee from
the Certificate Account pursuant to clauses (i)
through (iv) of Section 8.04(a), and
(iii) any amounts on deposit in the Certificate Account as
of the close of business on the last day of the
related Due Period representing collections in
respect of Principal Prepayments in Full (other than
any amounts referred to in Section 2.06(vii)) on
Loans for which a substitution has been made in
accordance with Section 2.06.
provided, that, solely for purposes of Section 8.07(c), this term shall
be modified such that the parenthetical of clause (a)(i) above shall
not apply and such that clause (b)(ii) above shall also include amounts
withdrawn pursuant to Section 8.04(b)(ii); provided, further, that
solely for purposes of Sections 8.07(a) and 8.07(b), this term as
defined above shall be modified to take into account, for any Payment
Date, all corresponding amounts distributed pursuant to Section 8.07(b)
or Section 8.07(c), respectively.
3
"Amount Held for Future Distribution" means, for any Payment Date, the
-----------------------------------
total of the amounts held in the Certificate Account in respect of the Loans on
the last day of the preceding Due Period on account of Advance Payments in
respect of such Due Period.
"Applicants" has the meaning assigned in Section 9.06.
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"Appointment Period" has the meaning assigned in Section 5.12(a).
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"Authenticating Agent" means any authenticating agent appointed
--------------------
pursuant to Section 9.07.
"Average Sixty-Day Delinquency Ratio Test" means, to be considered
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"satisfied" for any Payment Date, that the arithmetic average of the Sixty-Day
Delinquency Ratio for the Loans for such Payment Date and for the two
immediately preceding Payment Dates is less than or equal to 32.00% of the
Senior Enhancement Percentage for the Loans.
"Backup Servicer" means ▇▇▇▇▇ Fargo Bank Minnesota, National
---------------
Association, a national banking association organized and existing under the
laws of the United States, located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or an affiliate which primarily engages in servicing practices
on its behalf, or any successor thereto.
"Backup Servicing Fee" means for any Payment Date, with respect to the
--------------------
Loans, one-twelfth of the product of 0.03% and the Pool Scheduled Principal
Balance for the preceding Payment Date (or, in the case of the first Payment
Date, the Cut-off Date Pool Principal Balance).
"Balloon Loan" means a Loan that provides for the payment of the
------------
unamortized principal balance of such Loan in a single payment at the maturity
of such Loan that is greater than the preceding monthly payments.
"Basement Interest Adjusted Principal Balance" means as to any Payment
--------------------------------------------
Date and each Class of Uncertificated Basement Interests, the Basement Interest
Principal Balance of each Class less its allocable share of the amount, if any,
as of the preceding Payment Date, by which the aggregate Basement Interest
Principal Balance of the Class BR-1 and BR-XIO Interests exceeded the Pool
Scheduled Principal Balance plus the Pre-Funded Amount, such excess to be
allocated sequentially, in accordance with Section 8.07(c)(iii).
"Basement Interest Principal Balance" means, as to any Payment Date and
-----------------------------------
each Class of Uncertificated Basement Interests, the Original Principal Balance
of such Class less all amounts previously distributed on prior Payment Dates
under Section 8.07(c) in respect of such Class on account of principal.
"Basement REMIC" means the segregated pool of assets described as
--------------
follows, for which a separate REMIC election is to be made:
4
(a) all the rights, benefits, and obligations arising from and in
connection with each Loan, including rights to receive payments due on the Loans
after the Cut-Off Date and any liens on the related real estate,
(b) all remittances, deposits and payments made into the Certificate
Account and amounts in the Certificate Account (other than payments on the
Uncertificated Basement Interests),
(c) all proceeds in any way derived from any of the foregoing items,
and
(d) all documents contained in the Loan Files.
"Basement WAC Cap Rate" means, with respect to each Payment Date,
---------------------
(a) the Weighted Average Loan Rate; over
(b) the sum of
(i) the per annum rates at which the Trustee Fee, the
Servicing Fee and the Backup Servicing Fee are paid;
(ii) indemnification amounts payable to the Backup Servicer on
such Payment Date pursuant to Section 8.04(b)(i); and
(iii) expenses payable to the Backup Servicer on such Payment Date
pursuant to Section 8.04(b)(i).
"Basis Risk Carryover Shortfall" means the Class A-1 Basis Risk
------------------------------
Carryover Shortfall, the Class A-2 Basis Risk Carryover Shortfall, the Class A-3
Basis Risk Carryover Shortfall, the Class A-IO Basis Risk Carryover Shortfall,
the Class M-1 Basis Risk Carryover Shortfall, the Class M-2 Basis Risk Carryover
Shortfall, the Class B-1 Basis Risk Carryover Shortfall or the Class B-2 Basis
Risk Carryover Shortfall, as applicable.
"Basis Risk Reserve Fund" means a separate trust account created and
-----------------------
maintained pursuant to Section 8.10 in the name of the Trust in an Eligible
Institution.
"Book-Entry Certificate" means any Certificate registered in the name
----------------------
of the Depository or its nominee, ownership of which is reflected on the books
of the Depository or on the books of a person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
"Business Day" means any day other than
------------
(a) a Saturday or a Sunday, or
5
(b) another day on which banking institutions in the city in which
the Person taking action hereunder are authorized or obligated
by law, executive order, or governmental decree to be closed.
"Calculation Agent" means the Person who establishes LIBOR with respect
-----------------
to each Interest Reset Period. The Calculation Agent shall be the Trustee unless
the Trustee is unable or unwilling so to act, in which case the Calculation
Agent shall be a financial institution appointed by the Seller.
"Capitalized Interest Account" means a separate trust account created
----------------------------
and maintained pursuant to Section 8.11 in the name of the Trust in an Eligible
Institution.
"Certificate" means a Certificate for Home Equity Loans, Series 2002-B
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Class A-1, Class A-2, Class A-3, Class A-IO, Class M-1, Class M-2, Class B-1,
Class B-2, Class B-3I or Class P Certificate, all (except the Class P
Certificate) executed and delivered by the Trustee substantially in the form of
Exhibit A, B, C or I, as applicable, but does not include the Class R
Certificate.
"Certificate Account" means a separate trust account created and
-------------------
maintained pursuant to Section 5.05 in the name of the Trust in an Eligible
Institution.
"Certificate Owner" means the person who is the beneficial owner of a
-----------------
Book-Entry Certificate or, if Definitive Certificates have been issued,
Certificateholders.
"Certificate Register" means the register maintained pursuant to
--------------------
Section 9.02.
"Certificate Registrar" or "Registrar" means the registrar appointed
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pursuant to Section 9.02.
"Certificateholder" or "Holder" means the person in whose name a
----------------- ------
Certificate or Class R Certificate is registered on the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request or
demand pursuant to this Agreement, any Certificate or Class R Certificate
registered in the name of the Originator or the Seller or any of their
Affiliates shall be deemed not to be outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite Percentage Interest necessary to effect any such consent, request,
waiver or demand has been obtained; provided, however, that, solely for the
purpose of determining whether the Trustee is entitled to rely upon any such
consent, waiver, request or demand, only Certificates or a Class R Certificate
which the Trustee knows to be so owned shall be so disregarded.
"Class A," "Class A-IO," "Class M," "Class B," "Class B-3I," "Class P"
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or "Class R" means pertaining to Class A Certificates, Class A-IO Certificates,
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Class M Certificates, Class B Certificates, Class B-3I Certificates, the Class P
Certificate and/or the Class R Certificate, as the case may be.
6
"Class A Certificates" means the Class A-1, Class A-2 and Class A-3
--------------------
Certificates, collectively.
"Class A Current Interest Amount" means, for any Payment Date, an
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amount equal to the sum of one month's interest (or, as to the first Payment
Date, interest from and including the Closing Date to but excluding May 15,
2002) at (i) the Class A-1 Interest Rate on the Class A-1 Principal Balance,
(ii) the Class A-2 Interest Rate on the Class A-2 Principal Balance, and (iii)
the Class A-3 Interest Rate on the Class A-3 Principal Balance, in each case to
be calculated immediately prior to such Payment Date.
"Class A Formula Principal Distribution Amount" means, for any Payment
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Date, the excess of:
(a) the Class A Principal Balance immediately prior to such
Payment Date over
(b) the lesser of
(i) 53.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to unscheduled
principal collections received during the related Due
Period), less the OC Floor.
"Class A Interest Carry Forward Amount" means, with respect to any
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Payment Date, the excess, if any, of the Class A Current Interest Amount for
such Payment Date over the amount actually paid on the Class A Certificates in
respect of the Class A Current Interest Amount on such Payment Date.
"Class A Principal Balance" means, for any Payment Date, the sum of the
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Class A-1, Class A-2 and Class A-3 Principal Balances.
"Class A-1 Basis Risk Carryover Shortfall" means, for any Payment Date,
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the excess, if any, of
(a) the amount of interest that the Class A-1 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class A-1 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class A-1 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
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"Class A-1 Certificate" means any one of the Class A-1 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-1 Distribution Amount" means, for any Payment Date, the amount
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to be distributed to the Class A-1 Certificateholders pursuant to Sections 8.04,
8.10 and 8.11 on such Payment Date.
"Class A-1 Interest Rate" means a floating rate per annum equal to the
-----------------------
lesser of (a) LIBOR plus the Class A-1 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class A-1 Margin" means 0.23%.
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"Class A-1 Principal Balance" means, for any Payment Date, the Original
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Class A-1 Principal Balance less all amounts previously distributed to Holders
of Class A-1 Certificates in respect of principal.
"Class A-2 Basis Risk Carryover Shortfall" means, for any Payment Date,
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the excess, if any, of
(a) the amount of interest that the Class A-2 Certificates would
have been entitled to receive on such Payment Date had the
Class A-2 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class A-2 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class A-2 Certificate" means any one of the Class A-2 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-2 Distribution Amount" means, for any Payment Date, the amount
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to be distributed to the Class A-2 Certificateholders pursuant to Sections 8.04,
8.10 and 8.11 on such Payment Date.
"Class A-2 Interest Rate" means a rate equal to the lesser of (a) 5.31%
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per annum, and (b) the Adjusted Net WAC Cap Rate.
"Class A-2 Principal Balance" means, for any Payment Date, the Original
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Class A-2 Principal Balance less all amounts previously distributed to Holders
of Class A-2 Certificates in respect of principal.
8
"Class A-3 Basis Risk Carryover Shortfall" means, for any Payment Date,
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the excess, if any, of
(a) the amount of interest that the Class A-3 Certificates would
have been entitled to receive on such Payment Date had the
Class A-3 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class A-3 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class A-3 Certificate" means any one of the Class A-3 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit A and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class A-3 Distribution Amount" means, for any Payment Date, the amount
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to be distributed to the Class A-3 Certificateholders pursuant to Sections 8.04,
8.10 and 8.11 on such Payment Date.
"Class A-3 Interest Rate" means a rate equal to the lesser of (a) 6.87%
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(or, to the extent provided in Section 8.06(f), 7.37%) per annum, and (b) the
Adjusted Net WAC Cap Rate.
"Class A-3 Principal Balance" means, for any Payment Date, the Original
---------------------------
Class A-3 Principal Balance less all amounts previously distributed to Holders
of Class A-3 Certificates in respect of principal.
"Class A-IO Basis Risk Carryover Shortfall" means, for any Payment
-----------------------------------------
date, the excess, if any, of
(a) the amount of interest that the Class A-IO Certificates would
have been entitled to receive on such Payment Date had the
Class A-IO Interest Rate not been calculated based on the Net
WAC Cap Rate, over
(b) the amount of interest that the Class A-IO Certificates
received on such Payment Date based on the Net WAC Cap Rate.
"Class A-IO Certificates" means the Class A-IO Certificates executed
-----------------------
and delivered by the Trustee and authenticated by the Certificate Registrar
substantially in the form set forth in Exhibit A and evidencing an interest
designated as a "regular interest" in the Master REMIC for purposes of the REMIC
Provisions.
"Class A-IO Current Interest Amount" means, with respect to any Payment
----------------------------------
Date, an amount equal to interest accrued during the related Accrual Period at
the Class A-IO Interest Rate on the Class A-IO Notional Amount for the preceding
Payment Date or, in the case of the first Payment Date, the Original Class A-IO
Notional Amount.
9
"Class A-IO Distribution Amount" means, for any Payment Date, the
------------------------------
amount to be distributed to the Class A-IO Certificateholder pursuant to
Sections 8.04, 8.10 and 8.11 on such Payment Date.
"Class A-IO Interest Carry Forward Amount" means, with respect to any
----------------------------------------
Payment Date, the excess, if any, of the Class A-IO Current Interest Amount for
such Payment Date over the amount actually paid on the Class A-IO Certificates
in respect of the Class A-IO Current Interest Amount on such Payment Date.
"Class A-IO Interest Rate" means a rate per annum equal to the lesser
------------------------
of (a) 7.25% per annum and (b) the Net WAC Cap Rate.
"Class A-IO Notional Amount" means, with respect to each Payment Date,
--------------------------
the lesser of (a) from and including the Closing Date through the February 2003
Payment Date, $81,900,000, from and including the March 2003 Payment Date
through the August 2003 Payment Date, $69,600,000, from and including the
September 2003 Payment Date through the February 2004 Payment Date, $60,000,000,
from and including the March 2004 Payment Date through the August 2004 Payment
Date, $51,700,000, and for any Payment Date thereafter, $0, and (b) the Pool
Scheduled Principal Balance.
"Class B Certificates" means the Class B-1 and Class B-2 Certificates,
--------------------
collectively.
"Class B-1 Allocated Realized Loss Amount" means, for any Payment Date,
----------------------------------------
that portion, if any, of the Realized Loss Amount for such Payment Date
allocated to the Class B-1 Certificates in accordance with Section 8.12(b).
"Class B-1 Allocated Realized Loss Interest Amount" means, with respect
-------------------------------------------------
to any Payment Date, interest accrued during the related Accrual Period at the
Class B-1 Interest Rate on the Unpaid Class B-1 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(viii)(B)).
"Class B-1 Basis Risk Carryover Shortfall" means, with respect to any
----------------------------------------
Payment Date, the excess, if any of
(a) the amount of interest that the Class B-1 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class B-1 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class B-1 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class B-1 Certificate" means any one of the Class B-1 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form
10
set forth in Exhibit C and evidencing an interest designated as a "regular
interest" in the Master REMIC for purposes of the REMIC Provisions.
"Class B-1 Current Interest Amount" means, with respect to any Payment
---------------------------------
Date, an amount equal to interest accrued during the related Accrual Period at
the Class B-1 Interest Rate on the Class B-1 Principal Balance for such Payment
Date.
"Class B-1 Distribution Amount" means, for any Payment Date, the amount
-----------------------------
to be distributed to the Class B-1 Certificateholders pursuant to Sections 8.04,
8.09, 8.10 and 8.11 on such Payment Date.
"Class B-1 Formula Principal Distribution Amount" means, for any
-----------------------------------------------
Payment Date, the excess of:
(a) the sum of:
(i) the Class A Principal Balance (after giving effect to
the distributions of the Class A Formula Principal
Distribution Amount for such Payment Date);
(ii) the Class M-1 Principal Balance (after giving effect
to the distributions of the Class M-1 Formula
Principal Distribution Amount for such Payment Date);
(iii) the Class M-2 Principal Balance (after giving effect
to the distributions of the Class M-2 Formula
Principal Distribution Amount for such Payment Date);
and
(iv) the Class B-1 Principal Balance immediately prior to
such Payment Date over
(b) the lesser of
(i) 88.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to unscheduled
principal collections received during the related Due
Period), less the OC Floor.
"Class B-1 Interest Carry Forward Amount" means, with respect to any
---------------------------------------
Payment Date, the excess, if any, of the Class B-1 Current Interest Amount for
such Payment Date over the amount actually paid on the Class B-1 Certificates in
respect of the Class B-1 Current Interest on such Payment Date.
11
"Class B-1 Interest Rate" means a floating rate per annum equal to the
-----------------------
lesser of (a) LIBOR plus the Class B-1 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class B-1 Margin" means 5.25%.
----------------
"Class B-1 Principal Balance" means, as to any Payment Date, the
---------------------------
Original Class B-1 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class B-1 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class B-1 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class B-2 Allocated Realized Loss Amount" means, for any Payment Date,
----------------------------------------
that portion, if any, of the Realized Loss Amount for such Payment Date
allocated to the Class B-2 Certificates in accordance with Section 8.12(a).
"Class B-2 Allocated Realized Loss Interest Amount" means, with respect
-------------------------------------------------
to any Payment Date, interest accrued during the related Accrual Period at the
Class B-2 Interest Rate on the Unpaid Class B-2 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(x)(B)).
"Class B-2 Basis Risk Carryover Shortfall" means, with respect to any
----------------------------------------
Payment Date, the excess, if any, of
(a) the amount of interest that the Class B-2 Certificates would
have been entitled to receive on such Payment Date had the
Class B-2 Interest Rate not been calculated based on the
Adjusted Net WAC Cap Rate, over
(b) the amount of interest that the Class B-2 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate.
"Class B-2 Certificate" means any one of the Class B-2 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit C and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class B-2 Current Interest Amount" means, with respect to any Payment
---------------------------------
Date, an amount equal to interest accrued during the related Accrual Period at
the Class B-2 Interest Rate on the Class B-2 Principal Balance for such Payment
Date.
"Class B-2 Distribution Amount" means, for any Payment Date, the amount
-----------------------------
to be distributed to the Class B-2 Certificateholders pursuant to Sections 8.04,
8.10 and 8.11 on such Payment Date.
12
"Class B-2 Formula Principal Distribution Amount" means, for any
-----------------------------------------------
Payment Date, the excess of:
(a) of the sum of:
(i) the Class A Principal Balance (after giving effect to
the distributions of the Class A Formula Principal
Distribution Amount for such Payment Date);
(ii) the Class M-1 Principal Balance (after giving effect
to the distributions of the Class M-1 Formula
Principal Distribution Amount for such Payment Date);
(iii) the Class M-2 Principal Balance (after giving effect
to the distributions of the Class M-2 Formula
Principal Distribution Amount for such Payment Date);
(iv) the Class B-1 Principal Balance (after giving effect
to the distributions of the Class B-1 Formula
Principal Distribution Amount for such Payment Date);
and
(v) the Class B-2 Principal Balance immediately prior to
such Payment Date over
(b) the lesser of
(i) 94.50% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to unscheduled
principal collections received during the related Due
Period), less the OC Floor.
"Class B-2 Interest Carry Forward Amount" means, with respect to any
---------------------------------------
Payment Date, the excess, if any, of the Class B-2 Current Interest Amount for
such Payment Date over the amount actually paid on the Class B-2 Certificates in
respect of the Class B-2 Current Interest on such Payment Date.
"Class B-2 Interest Rate" means a rate equal to the lesser of (a) 9.00%
-----------------------
per annum and (b) the Adjusted Net WAC Cap Rate.
"Class B-2 Principal Balance" means, as to any Payment Date, the
---------------------------
Original Class B-2 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class B-2 Certificates
on prior Payment Dates on account of principal, plus
13
(b) all Class B-2 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class B-3I Certificate" means any one of the Class B-3I Certificates
----------------------
executed and delivered by the Trustee substantially in the form set forth in
Exhibit I hereto and evidencing an interest designated as a "regular interest"
in the Master REMIC for purposes of the REMIC Provisions.
"Class B-3I Distribution Amount" means, as to any Payment Date, an
------------------------------
amount equal to the sum of (A) the lesser of (i) the Class B-3I Formula
Distribution Amount for such Payment Date and (ii) the Excess Cashflow for such
Payment Date minus all amounts distributed on that Payment Date under Sections
8.04(e)(i)-(xiii) and (B) the amount, if any, by which the Class B-3I Formula
Distribution Amount on the preceding Payment Date exceeded the Class B-3I
Distribution Amount on such preceding Payment Date.
"Class B-3I Formula Distribution Amount" means, as to any Payment Date,
--------------------------------------
an amount equal to the product of (i) the Class B-3I Interest Rate for such
Payment Date and (ii) the Class B-3I Notional Amount.
"Class B-3I Interest Rate" means the excess of (i) the Adjusted Net WAC
------------------------
Cap Rate over (ii) the product of (A) two and (B) the weighted average
Pass-Through Rate of the Class I-Accrual Interest and the Intermediate REMIC
Accretion Directed Interests, provided that, for this purpose the Pass-Through
Rate for the Class I-Accrual Interest shall be subject to a cap of zero and the
Pass-Through Rate for each Intermediate REMIC Accretion Directed Interest shall
not exceed the Interest Rate on its Corresponding Certificate Class.
"Class B-3I Notional Amount" means $250,000,000 for the first Payment
--------------------------
Date and, for any other Payment Date, the sum of the Pool Scheduled Principal
Balance and the Pre-Funded Amount as of the immediately preceding Payment Date.
"Class BR-I Interest" means a regular interest in the Basement REMIC
-------------------
which is held as an asset of the Subsidiary REMIC, is entitled to monthly
distributions as provided in Section 8.07(c), and has the Original Principal
Balance and bears interest at the Pass-Through Rate specified in Section
2.05(d)(ii).
"Class BR-XIO Interest" means a regular interest in the Basement REMIC
---------------------
which is held as an asset of the Subsidiary REMIC, is entitled to monthly
distributions as provided in Section 8.07(c), and has the Original Principal
Balance and bears interest at the Pass-Through Rate specified in Section
2.05(d)(ii).
"Class I-AIO" means any one or more individual components of the Class
-----------
I-AIO Interest, as the case may be.
"Class I-AIO Interest" means the Class I-AIO(1), Class I-AIO(2), Class
--------------------
I-AIO(3) and Class I-AIO(4) Interests, collectively.
14
"Class I-XIO" means any one or more individual components of the Class
-----------
I-XIO Interest, as the case may be.
"Class I-XIO Interest" means the sole Class I-XIO Interest,
--------------------
collectively.
"Class M Certificates" means the Class M-1 and Class M-2 Certificates,
--------------------
collectively.
"Class M-1 Allocated Realized Loss Amount" means, with respect to any
----------------------------------------
Payment Date, that portion, if any, of the Realized Loss Amount for such Payment
Date allocated to the Class M-1 Certificates in accordance with Section 8.12(d).
"Class M-1 Allocated Realized Loss Interest Amount" means, with respect
-------------------------------------------------
to any Payment Date, interest accrued during the related Accrual Period at the
Class M-1 Interest Rate on the Unpaid Class M-1 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(iv)(B)).
"Class M-1 Basis Risk Carryover Shortfall" means, with respect to any
----------------------------------------
Payment Date, the excess, if any, of
(a) the amount of interest that the Class M-1 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class M-1 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class M-1 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class M-1 Certificate" means any one of the Class M-1 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class M-1 Current Interest Amount" means, with respect to any Payment
---------------------------------
Date, an amount equal to interest accrued during the related Accrual Period at
the Class M-1 Interest Rate on the Class M-1 Principal Balance for such Payment
Date.
"Class M-1 Distribution Amount" means, for any Payment Date, the amount
-----------------------------
to be distributed to the Class M-1 Certificateholders pursuant to Sections 8.04,
8.09, 8.10 and 8.11 on such Payment Date.
"Class M-1 Formula Principal Distribution Amount" means, for any
-----------------------------------------------
Payment Date, the excess of
(a) the sum of
15
(i) the Class A Principal Balance for such Payment Date
(after giving effect to the distribution of the Class
A Formula Principal Distribution Amount for such
Payment Date), plus
(ii) the Class M-1 Principal Balance immediately prior to
such Payment Date, over
(b) the lesser of
(i) 67.00% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to unscheduled
principal collections received during the related Due
Period), less the OC Floor.
"Class M-1 Interest Carry Forward Amount" means, with respect to any
---------------------------------------
Payment Date, the excess, if any, of the Class M-1 Current Interest Amount for
such Payment Date over the amount actually paid on the Class M-1 Certificates in
respect of the Class M-1 Current Interest Amount on such Payment Date.
"Class M-1 Interest Rate" means a floating rate per annum equal to the
-----------------------
lesser of (a) LIBOR plus the Class M-1 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class M-1 Margin" means 1.75%.
----------------
"Class M-1 Principal Balance" means, as to any Payment Date, the
---------------------------
Original Class M-1 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class M-1 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class M-1 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class M-2 Allocated Realized Loss Amount" means, with respect to any
----------------------------------------
Payment Date, that portion, if any, of the Realized Loss Amount for such Payment
Date allocated to the Class M-2 Certificates in accordance with Section 8.12(c).
"Class M-2 Allocated Realized Loss Interest Amount" means, with respect
-------------------------------------------------
to any Payment Date, interest accrued during the related Accrual Period at the
Class M-2 Interest Rate on the Unpaid Class M-2 Realized Loss Amount for the
immediately preceding Payment Date (after giving effect to any payment in
reduction thereof on such Payment Date pursuant to Section 8.04(e)(vi)(B)).
16
"Class M-2 Basis Risk Carryover Shortfall" means, with respect to any
----------------------------------------
Payment Date, the excess, if any of
(a) the amount of interest that the Class M-2 Certificates would
have been entitled to receive on such Payment Date (but not in
excess of 15.00% per annum) had the Class M-2 Interest Rate
not been calculated based on the Adjusted Net WAC Cap Rate,
over
(b) the amount of interest that the Class M-2 Certificates
received on such Payment Date based on the Adjusted Net WAC
Cap Rate (but not in excess of 15.00% per annum).
"Class M-2 Certificate" means any one of the Class M-2 Certificates
---------------------
executed and delivered by the Trustee and authenticated by the Certificate
Registrar substantially in the form set forth in Exhibit B and evidencing an
interest designated as a "regular interest" in the Master REMIC for purposes of
the REMIC Provisions.
"Class M-2 Current Interest Amount" means, with respect to any Payment
---------------------------------
Date, an amount equal to interest accrued during the related Accrual Period at
the Class M-2 Interest Rate on the Class M-2 Principal Balance.
"Class M-2 Distribution Amount" means, for any Payment Date, the amount
-----------------------------
to be distributed to the Class M-2 Certificateholders pursuant to Sections 8.04,
8.09, 8.10 and 8.11 on such Payment Date.
"Class M-2 Formula Principal Distribution Amount" means, for any
-----------------------------------------------
Payment Date, the excess of
(a) the sum of
(i) the Class A Principal Balance for such Payment Date
(after giving effect to the distribution of the Class
A Formula Principal Distribution Amount for such
Payment Date), plus
(ii) the Class M-1 Principal Balance for such Payment Date
(after giving effect to the distribution of the Class
M-1 Formula Principal Distribution Amount for such
Payment Date), plus
(iii) the Class M-2 Principal Balance immediately prior to
such Payment Date, over
(b) the lesser of
(i) 79.50% of the Pool Scheduled Principal Balance with
respect to such Payment Date (after giving effect to
unscheduled principal collections received during the
related Due Period), and
17
(ii) the Pool Scheduled Principal Balance with respect to
such Payment Date (after giving effect to unscheduled
principal collections received during the related Due
Period), less the OC Floor.
"Class M-2 Interest Carry Forward Amount" means, with respect to any
---------------------------------------
Payment Date, the excess, if any, of the Class M-2 Current Interest Amount for
such Payment Date over the amount actually paid on the Class M-2 Certificates in
respect of the Class M-2 Current Interest on such Payment Date.
"Class M-2 Interest Rate" means a floating rate per annum equal to the
-----------------------
lesser of (a) LIBOR plus the Class M-2 Margin, and (b) the Adjusted Net WAC Cap
Rate, but in no case more than 15.00% per annum.
"Class M-2 Margin" means 2.50%.
----------------
"Class M-2 Principal Balance" means, as to any Payment Date, the
---------------------------
Original Class M-2 Principal Balance minus the sum of
(a) all amounts distributed to Holders of Class M-2 Certificates
on prior Payment Dates on account of principal, plus
(b) all Class M-2 Allocated Realized Loss Amounts prior to such
Payment Date.
"Class P Certificate" means the uncertificated Class P Certificate,
-------------------
evidencing an interest designated as a "regular interest" in the Basement REMIC
for purposes of the REMIC Provisions.
"Class P Certificate Pass-Through Rate" means a fixed per annum rate of
-------------------------------------
0.00% per annum.
"Class P Certificateholder" shall mean Green Tree Finance Corp.--Two.
-------------------------
"Class P Distribution Amount" means, for any Payment Date, that portion
---------------------------
of the Excess Cashflow eligible for distribution in respect of the Class P
Certificate in accordance with the priorities set forth in Section 8.04(e)(xiv)
and all Prepayment Charges distributed pursuant to Section 8.04(f).
"Class P Principal Balance" means, for any Payment Date, the Original
-------------------------
Class P Principal Balance less all amounts previously distributed to the Class P
Certificateholder pursuant to Section 8.04(e)(xiv).
"Class Percentage Interest" means, as to any Certificate (other than
-------------------------
the Class R Certificates), the percentage interest evidenced thereby in
distributions made on the related Class, such percentage interest being equal to
the percentage (carried to eight places) obtained from dividing the denomination
of such Certificate by the aggregate denomination of all Certificates of the
related Class (which equals the Original Class A-1 Principal Balance in the
18
case of a Class A-1 Certificate, the Original Class A-2 Principal Balance in the
case of the Class A-2 Certificates, the Original Class A-3 Principal Balance in
the case of the Class A-3 Certificates, the Original Class A-IO Notional Amount
in the case of the Class A-IO Certificates, the Original Class M-1 Principal
Balance in the case of a Class M-1 Certificate, the Original Class M-2 Principal
Balance in the case of a Class M-2 Certificate, the Original Class B-1 Principal
Balance in the case of a Class B-1 Certificate, the Original Class B-2 Principal
Balance in the case of the Class B-2 Certificate, the Original Class B-3I
Notional Amount in the case of a Class B-3I Certificate, and the Original Class
P Principal Balance in the case of a Class P Certificate). The aggregate Class
Percentage Interest for each Class of Certificates shall equal 100%. The Class R
Certificate shall each be issued as a single Certificate having a Class
Percentage Interest of 100%.
"Class Principal Balance" means any of the Class A-1, Class A-2, Class
-----------------------
A-3, Class M-1, Class M-2, Class B-1, Class B-2 or Class P Principal Balances,
as appropriate.
"Class R Certificate" means a Certificate for Home Equity Loans, Series
-------------------
2002-B, bearing the designation "Class R," executed and delivered by the
Trustee, substantially in the Form of Exhibit Q, and evidencing the aggregate of
the Class R-Ib, Class R-Ia, Class R-II and Class R-III Interests designated as
"residual interests" in the Basement REMIC, Subsidiary REMIC, Intermediate REMIC
and Master REMIC, respectively, for purposes of the REMIC provisions.
"Class R Certificateholder" means the person in whose name a Class R
-------------------------
Certificate is registered on the Certificate Register.
"Class R-I Interest" means the Class R-Ia Interest, the Class R-Ib
------------------
Interest, or both, as the case may be.
"Class R-Ia Interest" means the uncertificated interest designated as
-------------------
the "residual interest" in the Subsidiary REMIC for purposes of the REMIC
provisions.
"Class R-Ib Interest" means the uncertificated interest designated as
-------------------
the "residual interest" in the Basement REMIC for purposes of the REMIC
provisions.
"Class R-II Interest" means the uncertificated interest designated as
-------------------
the "residual interest" in the Intermediate REMIC for purposes of the REMIC
Provisions.
"Class R-III Distribution Amount" means, for any Payment Date, that
-------------------------------
portion of the Amount Available eligible for distribution in respect of the
Class R-III Interest in accordance with the priorities set forth in Sections
8.04(e)(xiv) and 12.04(c)(ii).
"Class R-III Interest" means the uncertificated interest designated as
--------------------
the "residual interest" in the Master REMIC for purposes of the REMIC
Provisions.
"Class S-1 Interest," "Class S-2(1) Interest," "Class S-2(2) Interest,"
------------------ --------------------- ---------------------
"Class S-2(3) Interest," "Class S-2(4) Interest" and "Class S-XIO Interest"
--------------------- --------------------- --------------------
means, respectively, a regular interest in the Subsidiary REMIC which is held as
an asset of the Intermediate REMIC, is
19
entitled to monthly distributions as provided in Section 8.07(b), and has the
Original Principal Balance and bears interest at the Pass-Through Rate specified
in Section 2.05(d)(i).
"Class S-2 Interest" means any one of the Class S-2(1) Interest, Class
------------------
S-2(2) Interest, Class S-3(3) Interest and Class S-2(4) Interests.
"Class S-XIO" means any one or more individual components of the Class
-----------
S-XIO Interest, as the case may be.
"Class S-XIO Interest" means the sole Class S-XIO Interest, collectively.
--------------------
"Class X-IO Certificate" means the uncertificated Class X-IO Interest,
----------------------
evidencing an interest designated as a "regular interest" in the Master REMIC
for purposes of the REMIC Provisions.
"Class X-IO Certificateholder" shall initially mean Green Tree Finance
----------------------------
Corp.--Two, the original holder of the Class X-IO Certificate.
"Class X-IO Current Interest Amount" means, with respect to any Payment
----------------------------------
Date, an amount as determined pursuant to Section 2.05(b).
"Class X-IO Distribution Amount" means, for any Payment Date, the amount to
------------------------------
be distributed pursuant to Section 8.04(b)(iii) on such Payment Date.
"Class X-IO Interest" means the Class X-IO Certificate, which bears
-------------------
interest at the Class X-IO Interest Rate as applied to the Class X-IO Notional
Amount.
"Class X-IO Interest Rate" means a rate equal to 4.00% per annum.
------------------------
"Class X-IO Notional Amount" means, with respect to each Payment Date, the
--------------------------
Basement Interest Principal Balance of the Class BR-XIO Interest.
"Class X-IO Preference" means the amount payable to the Class X-IO
---------------------
Certificateholder pursuant to Section 8.04(b)(iii).
"CLEAR Advance Facility" has the meaning assigned in Section 5.11(f).
----------------------
"CLEAR Advance Facility Notice" has the meaning assigned in Section
-----------------------------
5.11(g).
"Closing Date" means April 25, 2002.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Combined LTV" means, with respect to any Loan, the percentage obtained by
------------
dividing
(a) the sum of
20
(i) the current principal balance of such Loan, plus
(ii) the outstanding principal balance, as of the date of origination
of such Loan, of any loan secured by a prior lien on the property
which secures the Loan (the "Collateral"), by
(b) the lesser of
(i) the appraised value of the Collateral based on an appraisal made
for the originator of the Loan by an independent fee appraiser
(or by an employee of the Originator who is a licensed appraiser)
at the time of origination of the Loan, and
(ii) the sales price of the Collateral at the time of origination of
the Loan; provided, that, in the case of a Loan the proceeds of
which were used to refinance an existing mortgage loan, the
amount described in clause (ii) shall be the amount to be used
for purposes of clause (ii).
"Computer Tape" means the computer tape generated by the Originator which
-------------
provides information relating to the Loans and which was used by the Originator
in selecting the Loans, and includes the master file and the history file.
"Corporate Trust Office" means the office of the Trustee at which at any
----------------------
particular time its corporate trust business shall be principally administered,
which office at the date of the execution of this Agreement is located at the
address set forth in Section 12.09.
"Corresponding Certificate Class" means, with respect to each Class of
-------------------------------
Uncertificated Intermediate Interests, as follows:
Uncertificated Intermediate Interest Corresponding Certificate Class
------------------------------------ -------------------------------
Class I-A1 Class A-1
Class I-A2 Class A-2
Class I-A3 Class A-3
Class I-M1 Class M-1
Class I-M2 Class M-2
Class I-B1 Class B-1
Class I-B2 Class B-2
"Counsel for the Originator" means ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, or other legal
--------------------------
counsel for the Originator.
21
"Counsel for the Seller" means ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, or other legal counsel
----------------------
for the Seller.
"Cumulative Realized Loss Ratio" means, for any Payment Date, a fraction,
------------------------------
expressed as a percentage, the numerator of which is the Cumulative Realized
Losses for the Loans for that Payment Date and the denominator of which is the
sum of the Cut-off Date Pool Scheduled Principal Balance plus the amount on
deposit in the Pre-Funding Account immediately prior to the Post-Funding Payment
Date.
"Cumulative Realized Losses" means, for any Payment Date, the sum of the
--------------------------
Realized Losses for the Loans for that Payment Date and each preceding Payment
Date since the Cut-off Date.
"Cumulative Realized Losses Test" means, to be considered "satisfied" for
-------------------------------
any Payment Date, that the Cumulative Realized Loss Ratio for the Loans for such
Payment Date is less than or equal to the percentage set forth below for the
specified period:
Month Percentage
----- ----------
37-48 4.25%
49-60 5.75%
61-72 6.50%
73 and thereafter 6.75%
"Custodian" means at any time an Eligible Institution, or a financial
---------
institution organized under the laws of the United States or any State, which is
not an Affiliate of the Originator, which is subject to supervision and
examination by Federal or State authorities and whose commercial paper or
unsecured long-term debt (or, in the case of a member of a bank holding company
system, the commercial paper or unsecured long-term debt of such bank holding
company) has been rated, if rated by such rating company, A-1+ by S&P, F-1+ by
Fitch or P-1 by ▇▇▇▇▇'▇ in the case of commercial paper, or, if rated by such
rating company, BBB+ or higher by each of S&P and Fitch and Baa2 or higher by
and ▇▇▇▇▇'▇ in the case of unsecured long-term debt, as is acting at such time
as Custodian of the Loan Files pursuant to Section 4.01.
"Cut-off Date" means, with respect to each Initial Loan, March 31, 2002,
------------
with respect to each Additional Loan, March 31, 2002 (or the date of
origination, if later); and with respect to each Subsequent Loan, the applicable
Subsequent Cut-off Date.
"Cut-off Date Pool Principal Balance" means the aggregate of the Cut-off
-----------------------------------
Date Principal Balances of all Loans.
"Cut-off Date Principal Balance" means,
------------------------------
(a) as to any Initial or Additional Loan, the Scheduled Principal Balance
thereof with respect to the Cut-off Date, and
22
(b) as to any Subsequent Loan, the Scheduled Principal Balance thereof
with respect to the related Subsequent Cut-off Date.
"Data" has the meaning assigned in Section 5.12(d).
----
"Defaulted Loan" means a Loan with respect to which the Servicer commenced
--------------
foreclosure proceedings, made a sale of such Loan to a third party for
foreclosure or enforcement, or as to which there was a Delinquent Payment 180 or
more days past due.
"Definitive Certificates" has the meaning assigned in Section 9.02(e).
-----------------------
"Delinquent Payment" means, as to any Loan, with respect to any Due Period,
------------------
any payment or portion of a payment of principal or interest that was scheduled
to be made during such Due Period under such Loan (after giving effect to any
reduction in the principal amount deemed owed on such Loan by the Obligor) and
was not received or applied during such Due Period; provided, however, that with
respect to any Liquidated Loan, the payment scheduled to be made in the Due
Period in which such Loan became a Liquidated Loan shall not be deemed a
Delinquent Payment.
"Depository" means the initial Depository, The Depository Trust Company,
----------
the nominee of which is Cede & Co., as the registered Holder of
(a) one Class A-1 Certificate evidencing $95,000,000 in Original Class A-1
Principal Balance,
(b) one Class A-2 Certificate evidencing $71,000,000 in Original Class A-2
Principal Balance,
(c) one Class A-3 Certificate evidencing $32,125,000 in Original Class A-3
Principal Balance,
(d) one Class A-IO Certificate evidencing $81,900,000 in Original Class
A-IO Notional Amount,
(e) one Class M-1 Certificate evidencing $17,500,000 in Original Class M-1
Principal Balance,
(f) one Class M-2 Certificate evidencing $15,625,000 in Original Class M-2
Principal Balance,
(g) one Class B-1 Certificate evidencing $10,625,000 in Original Class B-1
Principal Balance, and
(h) one Class B-2 Certificate evidencing an aggregate of $8,125,000 in
Original Class B-2 Principal Balance,
23
and any permitted successor depository. The Depository shall at all times be a
"clearing corporation" as defined in Section 8-102(5) of the Uniform Commercial
Code of the State of New York.
"Depository Participant" means a broker, dealer, bank or other financial
----------------------
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date" means the second Business Day preceding each Payment
------------------
Date during the term of this Agreement.
"Disqualified Organization" has the meaning assigned in Section 9.02(b)(3).
-------------------------
"Due Period" means, for any Payment Date, a calendar month during the term
----------
of this Agreement.
"Early Termination Fee" means an amount equal to the excess of $722,490
---------------------
over the sum of amounts distributed pursuant to Section 8.04(b)(iii) on all
Payment Dates preceding the purchase date specified in the notice given under
Section 8.06(b).
"Electronic Ledger" means the electronic master record of promissory notes
-----------------
of the Originator.
"Eligible Account" means, at any time, an account which is any of the
----------------
following:
(a) an account maintained with an Eligible Institution;
(b) an account or accounts the deposits in which are fully insured by
either the Bank Insurance Fund or the Savings Association Insurance
Fund of the Federal Deposit Insurance Corporation;
(c) a trust account (which shall be a "segregated trust account")
maintained with the corporate trust department of a federal or state
chartered depository institution or trust company with trust powers
and acting in its fiduciary capacity for the benefit of the Trustee
hereunder, which depository institution or trust company shall have
capital and surplus of not less than $50,000,000; or
(d) an account that will not cause any of the Rating Agencies to downgrade
or withdraw its then-current rating assigned to the Certificates, as
evidenced in writing by each of the Rating Agencies.
"Eligible Institution" means any depository institution (which may be the
--------------------
Trustee or an Affiliate of the Trustee) organized under the laws of the United
States or any State, the deposits of which are insured to the full extent
permitted by law by the Federal Deposit Insurance Corporation, which is subject
to supervision and examination by Federal or State authorities and whose
short-term deposits have been rated, if rated by such rating company, A-1+ by
S&P, F-1+
24
by Fitch and P-1 by ▇▇▇▇▇'▇ or whose unsecured long-term debt has been rated in
one of the two highest rating categories by S&P, Fitch and ▇▇▇▇▇'▇.
"Eligible Investments" has the meaning assigned in Section 5.05(b).
--------------------
"Eligible Servicer" means the Originator or any Person
-----------------
(a) which is qualified to act as Servicer of the Loans under applicable
federal and state laws and regulations, and
(b) which services not less than an aggregate of $100,000,000 in
outstanding principal amount of home equity loans, manufactured
housing conditional sales contracts and installment loan agreements.
"Eligible Substitute Loan" means, as to
------------------------
(a) any Replaced Loan for which an Eligible Substitute Loan is being
substituted pursuant to Section 3.06(b), and
(b) any Prepaid Loan for which an Eligible Substitute Loan is being
substituted pursuant to Section 2.06, a Loan that
(i) as of the date of its substitution, satisfies all of the
representations and warranties (which, except when expressly
stated to be as of origination, shall be deemed to be made as of
the date of its substitution rather than as of the applicable
Cut-off Date or the Closing Date) in Sections 3.02 and 3.03 and
does not cause any of the representations and warranties in
Sections 3.03, 3.04 and 3.05, after giving effect to such
substitution, to be incorrect,
(ii) after giving effect to the scheduled payment due in the month of
such substitution, has a Scheduled Principal Balance that is not
greater than the Scheduled Principal Balance of such Replaced
Loan or, but for such Principal Prepayment in Full, the
Scheduled Principal Balance of such Prepaid Loan, as the case
may be,
(iii) has a Loan Interest Rate that is at least equal to the Loan
Interest Rate of such Replaced Loan or Prepaid Loan, as the case
may be,
(iv) has a remaining term to scheduled maturity that is not greater
than the remaining term to scheduled maturity of the Replaced
Loan or Prepaid Loan, as the case may be,
(v) as of the date of its origination, was identified by the
Originator under its standard underwriting criteria as the same
credit grade as the Replaced Loan or Prepaid Loan, as the case
may be,
25
(vi) the mortgage securing such Loan is in a lien position that
is the same or better than the mortgage securing the
Replaced Loan or Prepaid Loan, as the case may be, and
(vii) the Combined LTV of such Loan is not more than 100 basis
points higher than the Combined LTV of the Replaced Loan or
Prepaid Loan, as the case may be.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Errors and Omissions Protection Policy" means the employee errors and
--------------------------------------
omissions policy maintained by the Servicer or any similar replacement policy
covering errors and omissions by the Servicer's employees, and meeting the
requirements of Section 5.09, all as such policy relates to Loans comprising a
portion of the corpus of the Trust.
"Event of Termination" has the meaning assigned in Section 7.01.
--------------------
"Excess Cashflow" means, for any Payment Date, the sum of the amounts,
---------------
if any, distributable pursuant to Sections 8.04(b)(ix) and either Section
8.04(c)(vi) or Section 8.04(d)(vi), whichever is applicable, which amounts shall
be distributed pursuant to Section 8.04(e).
"Exemption" means an individual administration exemption granted by the
---------
U.S. Department of Labor to:
(a) ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated (Prohibited
Transaction Exemption 90-29; Exemption Application No. D-8012, 55
Fed. Reg. 21459 (1990)),
(b) Deutsche Bank A.G., New York Branch (Final Authorization Number
97-03E, granted pursuant to the expedited processing provided
under Prohibited Transaction Exemption 96-62; 61 Fed. Reg. 39988
(1996)), or
(c) ▇▇▇▇▇▇ Brothers Inc. (Prohibited Transaction Exemption 91-14;
Exemption Application No. D-7958, 56 Fed. Reg. 7413 (1991)),
from certain of the prohibited transaction rules of ERISA and the Internal
Revenue Code.
"Expense Reimbursement Amounts" has the meaning assigned in Section
-----------------------------
5.11(f).
"Federal Bankruptcy Code" means 11 U.S.C. Section 101 et seq.
-----------------------
"FHA-Insured Loan" means a home equity loan that has been or is being
----------------
reported to the Federal Housing Administration, or any successor thereto
("FHA"), as eligible for credit insurance provided by FHA pursuant to Title I of
the National Housing Act.
26
"FICO Score" means a credit score derived on the basis of a methodology
----------
developed by Fair ▇▇▇▇▇ and Company.
"Fidelity Bond" means the fidelity bond maintained by the Servicer or
-------------
any similar replacement bond, meeting the requirements of Section 5.09, as such
bond relates to Loans comprising a portion of the corpus of the Trust.
"FIFO" has the meaning assigned in Section 5.11(e).
----
"Final Payment Date" means the Payment Date on which the final
------------------
distribution in respect of the Certificates will be made pursuant to Section
12.04.
"Fitch" means Fitch, Inc., or any successor thereto; provided, that, if
-----
Fitch no longer has a rating outstanding on any Class of the Certificates, then
references herein to "Fitch" shall be deemed to refer to the NRSRO then rating
any Class of the Certificates (or, if more than one such NRSRO is then rating
any Class of the Certificates, to such NRSRO as may be designated by the
Servicer), and references herein to ratings by or requirements of Fitch shall be
deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Formula Principal Distribution Amount" means, for any Payment Date,
-------------------------------------
the sum of:
(a) all scheduled payments of principal due on each outstanding
Loan during the prior Due Period as specified in the
amortization schedule at the time applicable thereto (after
adjustments for previous Partial Principal Prepayments and
after any adjustment to such amortization schedule by reason
of any bankruptcy of an Obligor or similar proceeding or any
moratorium or similar waiver or grace period); plus
(b) all Partial Principal Prepayments applied and all Principal
Prepayments in Full received during the prior Due Period with
respect to the Loans; plus
(c) the aggregate Scheduled Principal Balance of all Loans that
became Liquidated Loans during the prior Due Period plus the
amount of any reduction in principal balance of any Loan
during the prior Due Period pursuant to bankruptcy proceedings
involving the related Obligor; plus
(d) the aggregate Scheduled Principal Balance of all Loans
repurchased, and all amounts deposited in lieu of the
repurchase of any Loan, during the prior Due Period pursuant
to Section 3.06(a) or, in the event of a substitution of a
Loan in accordance with Section 3.06(b), any amount required
to be deposited by the Servicer in the Certificate Account
during the prior Due Period pursuant to Section 3.06(b)(vi);
plus
(e) any amount described in clauses (a) through (d) above that was
not previously distributed because of an insufficient amount
of funds available in the Certificate Account; plus
27
(f) on the Post-Funding Payment Date, any amount withdrawn from
the Pre-Funding Account and deposited in the Certificate
Account.
"GNMA" means the Government National Mortgage Association, or any
----
successor thereto.
"Initial Loan" means a Loan identified as such on the List of Loans
------------
attached hereto, the aggregate Cut-off Date Principal Balance of which Loans is
$180,557,947.46.
"Intermediate Interest Principal Balance" means, with respect to each
---------------------------------------
Class of Intermediate REMIC Accretion Directed Interests, one-half the Principal
Balance of the Corresponding Certificate Class and with respect to the Class
I-Accrual Interest, one-half the sum of the Pool Scheduled Principal Balance,
the Pre-Funded Amount and the Overcollateralization Amount.
"Intermediate REMIC" means the segregated pool of assets consisting of
------------------
the Uncertificated Subsidiary Interests, as to which assets a separate REMIC
election is to be made.
"Intermediate REMIC Accretion Directed Interests" means the
-----------------------------------------------
Uncertificated Intermediate Interests, other than the Class I-Accrual Interest
and the Class I-AIO Interest and the Class I-XIO Interest. In all cases, the
principal balance of each Intermediate REMIC Accretion Directed Interest shall
maintain, including after giving effect to any allocation of principal or loss,
a direct and unvarying proportionality to the principal balance of its
Corresponding Certificate Class.
"LIBOR" means, with respect to any Accrual Period, the offered rate, as
-----
established by the Trustee, for United States dollar deposits for one month that
appears on Telerate Page 3750 as of 11:00 A.M., London time, on the LIBOR Rate
Adjustment Date for such Accrual Period. If on any LIBOR Rate Adjustment Date
the offered rate does not appear on Telerate Page 3750, the Calculation Agent
will request each of the reference banks (which shall be major banks that are
engaged in transactions in the London interbank market selected by the
Calculation Agent) to provide the Trustee with its offered quotation for United
States dollar deposits for one month to prime banks in the London interbank
market as of 11:00 A.M., London time, on such date. If at least two reference
banks provide the Calculation Agent with such offered quotations, LIBOR on such
date will be the arithmetic mean, rounded upwards, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, of all such quotations. If on such date fewer than two of the
reference banks provide the Calculation Agent with such offered quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a
percentage point rounded upward, of the offered per annum rates that one or more
leading banks in the City of Minneapolis selected by the Calculation Agent are
quoting as of 11:00 A.M., Minnesota time, on such date to leading European banks
for United States dollar deposits for one month; provided, however, that if such
banks are not quoting as described above, LIBOR for such date will be LIBOR
applicable to the Accrual Period immediately preceding such Accrual Period; and
provided, further, that if the result of the foregoing would be for three
consecutive Payment Dates to base LIBOR on the rate applicable in the
immediately preceding Accrual
28
Period, for such third consecutive Payment Date the Calculation Agent shall
instead select an alternative comparable index (over which the Calculation Agent
has no control) used for determining one-month Eurodollar lending rates that is
calculated and published (or otherwise made available) by an independent third
party.
"LIBOR Business Day" as used herein means a day that is both a Business
------------------
Day and a day on which banking institutions in the City of London, England are
not required or authorized by law to be closed.
"LIBOR Cap Counterparty" means Bear ▇▇▇▇▇▇▇ Financial Products, Inc.,
----------------------
"LIBOR Rate Adjustment Date" means the second LIBOR Business Day prior
--------------------------
to the first day of the related Accrual Period.
"Liquidated Loan" means, with respect to any Due Period, either
---------------
(a) a Defaulted Loan as to which the Servicer has received from
the Obligor, or a third-party purchaser of the Loan, all
amounts which the Servicer reasonably and in good faith
expects to recover from or on account of such Loan, or
(b) a Loan
(i) upon which all or a portion of the first payment of
interest due by the Obligor was added to principal,
and
(ii) on which the Obligor failed to pay the full amount of
principal due on the Loan, as computed by the
Servicer;
provided, however, that any Loan which the Originator is obligated to repurchase
pursuant to Section 3.06, and did so repurchase or substitute therefor an
Eligible Substitute Loan in accordance with Section 3.06, shall be deemed not to
be a Liquidated Loan; and provided, further, that with respect to Due Periods
beginning on or after April 15, 2033, a Liquidated Loan also means any Loan as
to which the Servicer has commenced foreclosure proceedings, or made a sale of
the Loan to a third party for foreclosure or enforcement.
"Liquidation Expense" means any out-of-pocket expense (exclusive of any
-------------------
overhead expense) which is incurred by the Servicer in connection with the
liquidation of any Defaulted Loan, including, without limitation, legal fees and
expenses, and any related and unreimbursed expenditures for pursuing claims in
bankruptcy proceedings of the related Obligor, property taxes, property
preservation or restoration of the property to marketable condition.
"Liquidation Proceeds" means cash (including insurance proceeds)
--------------------
received in connection with the liquidation of Defaulted Loans, whether through
repossession, foreclosure sale or otherwise.
29
"List of Loans" means the lists identifying each Loan constituting part
-------------
of the Trust Fund and attached either to this Agreement as Exhibit L or to a
Subsequent Transfer Instrument, as such lists may be amended from time to time
pursuant to Section 2.06 or Section 3.06(b) to add Eligible Substitute Loans and
delete Replaced Loans or Prepaid Loans, as the case may be. Each List of Loans
shall set forth as to each Loan identified on it
(a) the Cut-off Date Principal Balance,
(b) the amount of monthly payments due from the Obligor,
(c) the Loan Interest Rate, and
(d) the maturity date.
"Loan" means each closed-end home equity loan identified as such in the
----
List of Loans, which Loan is to be assigned and conveyed by the Seller to the
Trust, and includes, without limitation, all related mortgages, deeds of trust
and security deeds and any and all rights to receive payments due pursuant
thereto after the applicable Cut-off Date.
"Loan File" means, as to each Loan,
---------
(a) the original promissory note (or executed lost note affidavit,
together with a copy of the note) duly endorsed in blank or in
the name of the Trustee for the benefit of the
Certificateholders,
(b) the original or a copy of the mortgage, deed of trust or
security deed or similar evidence of a lien on the related
improved property and evidence of due recording of such
mortgage, deed of trust or security deed, if available,
(c) if such Loan was originated by a lender other than the
Originator, the original or a copy of an assignment of the
mortgage, deed of trust or security deed by such lender to the
Originator,
(d) an assignment of the mortgage, deed of trust or security deed
in recordable form to the Trustee or in blank, and
(e) any extension, modification or waiver agreements.
"Loan Interest Rate" means, as to any Loan, the annual rate of interest
------------------
specified in the Loan.
"Master REMIC" means the segregated pool of assets consisting of the
------------
Uncertificated Intermediate Interests, as to which a separate REMIC election is
to be made.
"Monthly Report" has the meaning assigned in Section 6.01.
--------------
30
"Monthly Servicing Fee" means, for any Payment Date, with respect to
---------------------
the Loans, one-twelfth of the product of 0.50% and the Pool Scheduled Principal
Balance for the preceding Payment Date (or, in the case of the first Payment
Date, the Cut-off Date Pool Principal Balance).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
-------
thereto; provided, that, if Moody's no longer has a rating outstanding on any
Class of Certificates, then references herein to "▇▇▇▇▇'▇" shall be deemed to
refer to the NRSRO then rating any Class of the Certificates (or, if more than
one such NRSRO is then rating any Class of the Certificates, to such NRSRO as
may be designated by the Originator or the Trustee), and references herein to
ratings by or requirements of ▇▇▇▇▇'▇ shall be deemed to have the equivalent
meanings with respect to ratings by or requirements of such NRSRO.
"Net Liquidation Loss" means, as to a Liquidated Loan, the difference
--------------------
between
(a) the Repurchase Price of such Loan, and
(b) the Net Liquidation Proceeds with respect to such Liquidated
Loan, where such difference is a positive number.
"Net Liquidation Proceeds" means, as to a Liquidated Loan, the proceeds
------------------------
received, or, for Loans which become Liquidated Loans pursuant to the last
proviso in the definition of "Liquidated Loan," the estimated proceeds to be
received, as of the last day of the Due Period in which such Loan became a
Liquidated Loan, from the Obligor, from a third-party purchaser of the Loan,
under insurance, or otherwise, net of Liquidation Expenses.
"Net Simple Interest Excess" means, for the Simple Interest Qualifying
--------------------------
Loans and any Due Period, the excess, if any, of the aggregate amount of Simple
Interest Excess (net of reimbursement to the Servicer for simple interest
advances on previous Payments Dates pursuant to Section 8.02(c) over the amount
of Simple Interest Shortfall.
"Net Simple Interest Shortfall" means, for the Simple Interest
-----------------------------
Qualifying Loans and any Due Period, the excess, if any, of the aggregate Simple
Interest Shortfalls over the aggregate Simple Interest Excess (net of
reimbursement to the Servicer for simple interest advances on previous Payment
Dates pursuant to Section 8.02) for the related Due Period.
"Net WAC Cap Rate" means, for any Payment Date, the Basement WAC Cap
----------------
Rate minus a fraction, expressed as a percentage, the numerator of which is the
product of (x) the Class X-IO Interest Rate for such Payment Date times (y) (i)
for each Payment Date through the October 2004 Payment Date, the Basement
Interest Adjusted Principal Balance of the Class BR-XIO Interest, and (ii) for
each Payment Date thereafter, -0-, and the denominator of which is the sum of
the Basement Interest Adjusted Principal Balances of the Class BR-1 and Class
BR-XIO Interests.
"Non-Recoverable Liquidation Expense" means, as to any Liquidation
-----------------------------------
Expense that has not yet been incurred by the Servicer, any portion of the
amount of such prospective Liquidation
31
Expense which the Servicer reasonably determines would, when combined with all
Liquidation Expenses previously incurred with respect to that Loan, exceed the
Related Proceeds, and as to any Liquidation Expense that has been incurred by
the Server, any portion of the amount of such Liquidation Expense that has
subsequently been determined by the Servicer to exceed the Related Proceeds,
when combined with all Liquidation Expenses previously incurred with respect to
that Loan. In determining whether a Liquidation Expense would be or has become a
Non-Recoverable Liquidation Expense, the Servicer may not take into account the
possibility that it might recover any amounts as the result of a deficiency
judgment against the related Obligor.
"NRSRO" means any nationally recognized statistical rating
-----
organization.
"Obligor" means the person who owes payments under a Loan.
-------
"OC Floor" means 0.50% of the sum of
--------
(i) the Cut-off Date Pool Principal Balance plus
(ii) amounts deposited in the Pre-Funding Account, if any.
"Officer's Certificate" means a certificate signed by the Chairman of
---------------------
the Board, President or any Vice President of the Originator or of the Seller
and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may,
------------------
except as expressly provided herein, be salaried counsel for the Originator, the
Seller or the Servicer, as applicable, acceptable to the Trustee, the Originator
and the Seller.
"Original Aggregate Certificate Principal Balance" means $250,000,000.
------------------------------------------------
"Original Class Notional Amount" means as to each of the Uncertificated
------------------------------
Master Interest, the Class A-IO and Class B-3I Certificates, the amount set
forth with respect to such Class in Section 2.05(b).
"Original Class Principal Balance" means as to each Class of
--------------------------------
Certificates (other than the Class A-IO, the Class X-IO and Class B-3I
Certificates), the amount set forth with respect to such Class in Section
2.05(b).
"Original Pre-Funded Amount" means the amount deposited in the
--------------------------
Pre-Funding Account pursuant to Section 2.02(l).
"Original Principal Balance" means as to each Class of Uncertificated
--------------------------
Intermediate Interests (other than the Class I-XIO Interest and the Class I-AIO
Interest), Uncertificated Subsidiary Interests (other than the Class S-XIO
Interest) and Uncertificated Basement Interests, the respective amount set forth
with respect to such Class in Sections 2.05(c) and 2.05(d).
32
"Overcollateralization Amount" means, for any Payment Date, the amount,
----------------------------
if any, by which the Pool Scheduled Principal Balance with respect to such
Payment Date exceeds the Aggregate Certificate Principal Balance as of such
Payment Date (after giving effect to distributions in respect of principal on
the Certificates on such Payment Date).
"Overcollateralization Increase Amount" means, with respect to each
-------------------------------------
Payment Date, an amount equal to the lesser of:
(a) the excess, if any, of (x) the Required
Overcollateralization Amount for such Payment Date
over (y) the Overcollateralization Amount for such
Payment Date, and
(b) the Excess Cashflow for such Payment Date.
"P&I Advance Facility" has the meaning assigned in Section 5.11(a).
--------------------
"P&I Advance Facility Notice" has the meaning assigned in Section
---------------------------
5.11(b).
"P&I Reimbursement Amounts" has the meaning assigned in Section
-------------------------
5.11(a).
"Partial Principal Prepayment" means
----------------------------
(a) any Principal Prepayment other than a Principal Prepayment in
Full, and
(b) any cash amount deposited in the Certificate Account pursuant
to the proviso in Section 3.06(a) or pursuant to Section
3.06(b).
"Pass-Through Rate" means, with respect to each Class of Certificates,
-----------------
the rate set forth for such Class in Section 2.05(b), with respect to each Class
of Uncertificated Intermediate Interests, the rate set forth in Section 2.05(c),
with respect to each Class of Uncertificated Subsidiary Interests, the rate set
forth in Section 2.05(d)(i), and with respect to each Class of Uncertificated
Basement Interests, the rate set forth in Section 2.05(d)(ii).
"Paying Agent" has the meaning assigned in Section 8.01(c).
------------
"Payment Date" means the fifteenth day of each calendar month during
------------
the term of this Agreement, or if such day is not a Business Day, the next
succeeding Business Day, commencing in May 2002.
"Percentage Interest" means, as to any Certificate or the Class R
-------------------
Certificate, the percentage interest evidenced thereby in distributions made on
the related Class, such percentage interest being equal to:
(a) as to any Certificate other than the Class B-3I and Class P
Certificates, the percentage (carried to eight places)
obtained from dividing the denomination of such Certificate by
the Original Class Principal Balance of the related Class, and
33
(b) as to the Class B-3I, Class P and Class R Certificates, the
percentage specified on the face of such Certificate. The
aggregate Percentage Interests for each Class of Certificates
and the Class R Certificate shall equal 100%, respectively.
"Permitted Transferee" means, in the case of a transfer of the Class R
--------------------
Certificate, a Person that is not a Plan or a Disqualified Organization, except
as permitted by Sections 9.02(b)(2) and (3), respectively.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"Plan" has the meaning assigned in Section 9.02(b)(2).
----
"Pool Factor" means, at any time, the percentage derived from a
-----------
fraction, the numerator of which is the Aggregate Certificate Principal Balance
at such time and the denominator of which is the Original Aggregate Certificate
Principal Balance.
"Pool Scheduled Principal Balance" means, for any Payment Date, the
--------------------------------
aggregate Scheduled Principal Balance for such Payment Date of all Loans that
were outstanding during the immediately preceding Due Period.
"Post-Funding Payment Date" means the Payment Date on, or the first
-------------------------
Payment Date after, the last day of the Pre-Funding Period.
"Pre-Funded Amount" means, with respect to any date of determination,
-----------------
the amount then on deposit in the Pre-Funding Account, after giving effect to
any sale of Subsequent Loans to the Trust on such date.
"Pre-Funding Account" means the account so designated, established and
-------------------
maintained pursuant to Section 8.08.
"Pre-Funding Period" means the period beginning on the Closing Date and
------------------
ending on the earliest of
(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 July 14, 2002, or
(c) the date on which an Event of Termination occurs.
"Prepaid Loan" has the meaning assigned in Section 2.06.
------------
"Prepayment Charges" means all prepayment premiums, penalties and
------------------
similar charges paid by any Obligor in connection with, and as a condition to,
prepayment in part or in full of a Loan.
34
"Principal Prepayment" means a payment or other recovery of principal
--------------------
on a Loan (exclusive of Liquidation Proceeds) which is received in advance of
its scheduled due date and applied upon receipt (or, in the case of a partial
prepayment, upon the next scheduled payment date on such Loan) to reduce the
outstanding principal amount due on such Loan prior to the date or dates on
which such principal amount is due.
"Principal Prepayment in Full" means any Principal Prepayment of the
----------------------------
entire principal balance of a Loan.
"Qualified Plan Investor" shall mean a plan investor or group of plan
-----------------------
investors on whose behalf the decision to purchase the Certificates, as the case
may be, is made by an independent fiduciary that is
(a) qualified to analyze and understand the terms and conditions
of the Yield Maintenance Agreements and the effect of the
Yield Maintenance Agreements on the credit ratings of the
Certificates, and
(b) a "qualified professional asset manager," as defined in Part
V(a) of PTE 84-14, an "in-house asset manager" as defined in
Part IV(a) of PTE 96-23, or a plan fiduciary with a total plan
and non-plan assets under management of at least $100,000,000
at the time of the acquisition of the Certificates.
"Rating Agencies" means S&P, Fitch and Moody's.
---------------
"Realized Loss Amount" means, as to any Payment Date, the excess, if
--------------------
any, of the Aggregate Certificate Principal Balance, after giving effect to
distributions in respect of principal on the Certificates on such Payment Date,
but prior to any reduction in Class Principal Balances as a result of any
Realized Loss Amount for such Payment Date, over the Pool Scheduled Principal
Balance with respect to such Payment Date.
"Realized Losses" means, for any Payment Date, the aggregate Net
---------------
Liquidation Losses for all Loans that became Liquidated Loans during the related
Due Period.
"Record Date" means, with respect to any Payment Date, the Business Day
-----------
immediately preceding such Payment Date.
"Regular Certificates" means a Class A-1, Class A-2, Class A-3, Class
--------------------
A-IO, Class M-1, Class M-2, Class B-1, Class B-2 or Class B-3I Certificate.
"Related Proceeds" means, with respect to any Liquidation Expense paid
----------------
by the Servicer in connection with the servicing of a Loan, collections from the
related Obligor or in respect of Liquidation Proceeds or a Repurchase Price
recovered by the Servicer in respect of such Loan or any real estate securing
such Loan.
"REMIC" means a "real estate mortgage investment conduit" as defined in
-----
Section 860D of the Code.
35
"REMIC Provisions" means the provisions of the federal income tax law
----------------
relating to REMICs, which appear at Sections 860A through 860G of the Code, and
related provisions and any temporary, proposed or final regulations promulgated
thereunder, as the foregoing may be in effect from time to time.
"REO" means Loans as to which the real estate collateral has been
---
foreclosed upon and is owned by the Trust.
"Replaced Loan" has the meaning assigned in Section 3.06(b).
-------------
"Repurchase Price" means, with respect to a Loan to be repurchased
----------------
pursuant to Section 3.06 or which becomes a Liquidated Loan, an amount equal to
(a) the remaining principal amount outstanding on such Loan
(without giving effect to any Advances paid by the Servicer or
the Trustee, as applicable, with respect to such Loan pursuant
to Section 8.02), plus
(b) interest at the weighted average pass-through rate on such
Loan from the end of the Due Period with respect to which the
Obligor last made a scheduled payment (without giving effect
to any Advances paid by the Servicer or the Trustee, as
applicable, with respect to such Loan pursuant to Section
8.02) through the date of such repurchase or liquidation, plus
(c) without duplication, the amount necessary to reimburse all
Advances in respect of such Loan on the date of repurchase.
"Required Overcollateralization Amount" means, for any Payment Date
-------------------------------------
(a) prior to the Stepdown Date, an amount equal to 2.75% of the
Cut-off Date Principal Balance plus amount deposited in the
Pre-Funding Account, if any, on the Closing Date; or
(b) on or after the Stepdown Date, an amount equal to 5.50% of the
Pool Scheduled Principal Balance with respect to such Payment
Date, but in no event (x) less than the OC Floor in each case,
or (y) greater than the Pool Scheduled-Principal Balance with
respect to such Payment Date.
"Reserve Fund Addition" means the amount, if any, received from the
---------------------
LIBOR Cap Counterparty pursuant to the applicable Yield Maintenance Agreement.
"Residual Interests" means the Class R-Ib, Class R-Ia, Class R-II and
------------------
Class R-III Interests, each one evidencing the sole class of "residual
interests" in the Basement REMIC, Subsidiary REMIC, Intermediate REMIC and
Master REMIC, respectively, and represented in the aggregate by the Class R
Certificate.
36
"Responsible Officer" means, with respect to the Trustee, the chairman
-------------------
and any vice chairman of the board of directors, the president, the chairman and
vice chairman of any executive committee of the board of directors, every vice
president, assistant vice president, the secretary, every assistant secretary,
cashier or any assistant cashier, controller or assistant controller, the
treasurer, every assistant treasurer, every trust officer, assistant trust
officer and every other officer or assistant officer of the Trustee customarily
performing functions similar to those performed by persons who at the time shall
be such officers, respectively, or to whom a corporate trust matter is referred
because of knowledge of, familiarity with, and authority to act with respect to
a particular matter.
"S&P" means Standard & Poor's Ratings Services, a division of The
---
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto; provided, that, if S&P no
longer has a rating outstanding on any Class of the Certificates, then
references herein to "S&P" shall be deemed to refer to the NRSRO then rating any
Class of the Certificates (or, if more than one such NRSRO is then rating any
Class of the Certificates, to such NRSRO as may be designated by the Originator
or the Trustee), and references herein to ratings by or requirements of S&P
shall be deemed to have the equivalent meanings with respect to ratings by or
requirements of such NRSRO.
"Scheduled Principal Balance" means, with respect to any Loan and any
---------------------------
Payment Date, the Cut-off Date or any Subsequent Cut-off Date, the principal
balance of such Loan as of the due date in the Due Period immediately preceding
such Payment Date, Cut-off Date or Subsequent Cut-off Date, as the case may be,
as specified in the amortization schedule at the time relating thereto (before
any adjustment to such amortization schedule by reason of any bankruptcy of an
Obligor or similar proceeding or any moratorium or similar waiver or grace
period) after giving effect to any previous Partial Principal Prepayments
received during such Due Period and all prior Due Periods and to the payment of
principal due on such due date and irrespective of any delinquency in payment
by, or extension granted to, the related Obligor. If for any Loan the Cut-off
Date is the date of origination of the Loan, its Scheduled Principal Balance as
of the Cut-off Date is the principal balance of the Loan on its date of
origination. If for any Initial or Additional Loan the Cut-off Date is March 31,
2002, its Scheduled Principal Balance is the principal balance of the Loan
determined in accordance with the first sentence of this definition as of the
due date in the Due Period ending on the Cut-off Date.
"Senior Enhancement Percentage" means, for any Payment Date, a
-----------------------------
fraction, expressed as a percentage, obtained by dividing:
(a) the excess of
(i) the Pool Scheduled Principal Balance with respect to
the prior Payment Date over
(ii) the Principal Balance of the most senior Class of
Certificates outstanding immediately following the
prior Payment Date, by
(b) the Pool Scheduled Principal Balance with respect to the prior
Payment Date.
37
"Service Transfer" has the meaning assigned in Section 7.02.
----------------
"Service Transfer Date" has the meaning assigned in Section 7.02.
---------------------
"Service Transfer Notice" has the meaning assigned in Section 7.02.
-----------------------
"Service Transfer Notice Date" has the meaning assigned in Section
----------------------------
7.02.
"Servicer" means the Originator until any Service Transfer hereunder
--------
and thereafter means the new servicer appointed pursuant to Article VII.
"Servicer Expense Advance" has the meaning assigned in Section 5.11(f).
------------------------
"Servicer Termination Cumulative Loss Test" means, to be considered
-----------------------------------------
"satisfied" for any Payment Date, that the Cumulative Realized Loss Ratio for
the Loans for such Payment Date is less than or equal to the percentage set
forth below for the specified period:
Month Percentage
----- ----------
37-48 7.25%
49-60 8.25%
61-72 8.75%
73 and thereafter 9.00%
"Servicer Termination Delinquency Test" means, to be considered
-------------------------------------
"satisfied" for any Payment Date, that the three month rolling average of the
Loans that are 60 days or more delinquent as of such Payment Date (including
REO) does not exceed 42.25% of the Senior Enhancement Percentage.
"Servicer's Assignee" has the meaning assigned in Section 5.11(a) and
-------------------
Section 5.11(f), as applicable.
"Servicing Officer" means any officer of the Servicer involved in, or
-----------------
responsible for, the administration and servicing of Loans whose name appears on
a list of servicing officers appearing in an Officer's Certificate furnished to
the Trustee by the Servicer, as the same may be amended from time to time.
"Simple Interest Excess" means, as of any Determination Date for each
----------------------
Simple Interest Qualifying Loan, the excess, if any, of (i) the portion of the
scheduled payment received from the Obligor for such Loan allocable to interest
with respect to the related Due Period, over (ii) 30 days' interest on the
principal balance of such Loan at the Loan Interest Rate.
"Simple Interest Excess Sub-Account" means a sub-account of the
----------------------------------
collection account established and maintained by the Servicer.
38
"Simple Interest Qualifying Loan" means, as of any Determination Date,
-------------------------------
any simple interest mortgage loan that was neither prepaid in full during the
related Due Period, nor delinquent with respect to a payment that became due
during the related Due Period as of the close of business on the Determination
Date following such Due Period.
"Simple Interest Shortfall" means as of any Determination Date for each
-------------------------
Simple Interest Qualifying Loan, the excess, if any, of (i) 30 days' interest on
the principal balance of such Loan at the Loan rate, over (ii) the portion of
the scheduled payment received from the Obligor for such Loan Interest allocable
to interest with respect to the related Due Period.
"Sixty-Day Delinquency Ratio" means, for any Payment Date, a fraction,
---------------------------
expressed as a percentage, the numerator of which is the aggregate of the
outstanding balances of all Loans that were delinquent 60 days or more as of the
end of the prior Due Period (including such Loans in respect of which the
related real estate has been foreclosed upon but is still in inventory), and the
denominator of which is the Pool Scheduled Principal Balance of the Loans for
such Payment Date.
"SPV" has the meaning assigned in Section 5.11(a).
---
"Stepdown Date" means the earlier of (a) the later of (i) the Payment
-------------
Date in May 2005 and (ii) the first Payment Date on which the Class A Principal
Balance (after taking into account distribution of the Formula Principal
Distribution Amount for that Payment Date) is less than or equal to 53.00% of
the Pool Scheduled Principal Balance with respect to such Payment Date and (b)
the Payment Date on which the Class A Principal Balance has been reduced to
zero.
"Subsequent Cut-off Date" means, with respect to a Subsequent Loan, the
-----------------------
last day of the month in which the Subsequent Transfer Date occurs or the last
day of the preceding month, as specified by the Seller in the related loan
schedule.
"Subsequent Loan" means a Loan sold by the Seller to the Trust pursuant
---------------
to Section 2.03, such Loan being identified as such in the Subsequent Transfer
Instrument.
"Subsequent Transfer Date" means, with respect to each Subsequent
------------------------
Transfer Instrument, the date on which the related Subsequent Loans are sold to
the Trust.
"Subsequent Transfer Instrument" means each Subsequent Transfer
------------------------------
Instrument dated as of a Subsequent Transfer Date executed by the Seller
substantially in the form of Exhibit O, by which the Seller sells Subsequent
Loans to the Trust.
"Subsidiary Interest Adjusted Principal Balance" means, as to any
----------------------------------------------
Payment Date and each Class of Uncertificated Subsidiary Interests, the
Subsidiary Interest Principal Balance of such Class less its allocable share of
the amount, if any, as of the preceding Payment Date, by which the aggregate
Subsidiary Interest Principal Balance of the Class S-1 and Class S-2 Interests
exceeded the Pool Scheduled Principal Balance plus the Pre-Funded Amount, such
excess to be allocated sequentially, in accordance with Section 8.07(b)(iii).
39
"Subsidiary Interest Principal Balance" means, as to any Payment Date
-------------------------------------
and each Class of Uncertificated Subsidiary Interests, the Original Principal
Balance of such Class less all amounts distributed on prior Payment Dates under
Section 8.07(b) in respect of such Class on account of principal.
"Subsidiary REMIC" means the segregated pool of assets consisting of
----------------
the Uncertificated Basement Interests, as to which a separate REMIC election is
to be made.
"Transfer Agreement" means that Transfer Agreement between Conseco
------------------
Finance Securitizations Corp., as purchaser, and Conseco Finance Corp., as
seller, dated as of April 1, 2002.
"Trigger Event" exists for any Payment Date if
-------------
(a) Average Sixty-Day Delinquency Ratio Test for the Loans is not
satisfied or
(b) the Cumulative Realized Losses Test for the Loans is not
satisfied.
"Trust" means Conseco Finance Home Equity Loan Trust 2002-B.
-----
"Trust Fund" means the corpus of the Trust created by this Agreement
----------
which consists of
(a) all the rights, benefits and obligations arising from and in
connection with the Loans, including without limitation all
related mortgages, deeds of trust and security deeds and any
and all rights to receive payments on or with respect to the
Loans due after the applicable Cut-off Date,
(b) all rights under any hazard, flood or other individual
insurance policy on the real estate securing a Loan for the
benefit of the creditor of such Loan,
(c) all rights of the Seller under the Transfer Agreement and any
Subsequent Transfer Agreement (as defined in the Transfer
Agreement),
(d) all rights the Originator may have against the originating
lender with respect to Loans originated by a lender other than
the Originator,
(e) all rights under the Errors and Omissions Protection Policy
and the Fidelity Bond as such policy and bond relate to the
Loans,
(f) all rights under any title insurance policies, if applicable,
on any of the properties securing Loans,
(g) all documents contained in the Loan Files,
(h) all rights under the Yield Maintenance Agreements,
40
(i) amounts in the Certificate Account, the Capitalized Interest
Account, the Pre-Funding Account, the Basis Risk Reserve Fund,
and the Yield Maintenance Reserve Funds (including all
proceeds of investments of funds in the Certificate Account),
and
(j) all proceeds and products of the foregoing.
"Trustee Advance" has the meaning assigned in Section 11.15.
---------------
"Trustee Fee" means the fees payable to the Trustee under its agreement
-----------
with Conseco Finance Corp. dated November 8, 1995, including its reasonable and
customary fees as custodian, and the reasonable and customary fees of any
Custodian appointed by the Trustee, including those payable under the contract
dated August 15, 1997 between Conseco Finance Corp. and ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, but in all cases only if and to the extent such
fees are not paid by Conseco Finance Corp. as and when due under such
agreements, which nonpayment continues for 30 days; and the reasonable and
customary fees of any successor Trustee.
"Uncertificated Basement Interests" means the Class BR-1 and Class
---------------------------------
BR-XIO Interests and Class P Certificate, collectively.
"Uncertificated Intermediate Interests" means the Class I-A1, Class
-------------------------------------
I-A2, Class I-A3, Class I-AIO(1), Class I-AIO(2), Class I-AIO(3), Class
I-AIO(4), Class I-XIO, Class I-M1, Class I-M2, Class I-B1, Class I-B2 and Class
I Accrual Interests, collectively.
"Uncertificated Master Interest" means the sole Class X-IO Interest,
------------------------------
held by the Class X-IO Certificateholder.
"Uncertificated Subsidiary Interests" means the Class S-1, Class S-2
-----------------------------------
and Class S-XIO Interests, collectively.
"Underwriters" means ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
------------
Incorporated, Deutsche Bank Securities Inc. and ▇▇▇▇▇▇ Brothers Inc.
"Underwriting Agreement" means the Underwriting Agreement and related
----------------------
Terms Agreement, each dated April 17, 2002, among the Originator, the Seller and
the Underwriters.
"Unpaid Class A Basis Risk Carryover Shortfall" means, as to any
---------------------------------------------
Payment Date, the sum of the Unpaid Class A-1, Class A-2 and Class A-3 Basis
Risk Carryover Shortfalls.
"Unpaid Class A Interest Carry Forward Amount" means, as to any Payment
--------------------------------------------
Date, the excess of
(a) the aggregate amount of all Class A Interest Carry Forward
Amounts, over
41
(b) the sum of all payments in reduction of the Unpaid Class A
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(ii),
plus interest (to the extent payment thereof is legally permissible) at the
Class A Interest Rate for such Payment Date on the Unpaid Class A Interest Carry
Forward Amount for the immediately preceding Payment Date (after giving effect
to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(ii)), accrued during the related Accrual Period.
"Unpaid Class A-1 Basis Risk Carryover Shortfall" means, as to any
-----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class A-1 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-1 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-1 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-1 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-2 Basis Risk Carryover Shortfall" means, as to any
-----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class A-2 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-2 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-2 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-2 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-3 Basis Risk Carryover Shortfall" means, as to any
-----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class A-3 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-3 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-3 Interest Rate for such Payment Date (calculated without giving effect
to the Net WAC Cap Rate) on the
42
Unpaid Class A-3 Basis Risk Carryover Shortfall for the immediately preceding
Payment Date (after giving effect to any payment made in reduction thereof on
such Payment Date pursuant to Section 8.10), accrued during the related Accrual
Period.
"Unpaid Class A-IO Basis Risk Carryover Shortfall" means, as to any
------------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class A-IO Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class A-IO
Basis Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10;
plus interest (to the extent payment thereof is legally permissible) at the
Class A-IO Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class A-IO Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class A-IO Interest Carry Forward Amount" means, as to any
-----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class A-IO Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class A-IO
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(ii),
plus interest (to the extent payment thereof is legally permissible) at the
Class A-IO Interest Rate for such Payment Date on the Unpaid Class A-IO Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(ii)), accrued during the related Accrual Period.
"Unpaid Class B-1 Basis Risk Carryover Shortfall" means, as to any
-----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class B-1 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class B-1 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class B-1 Interest Rate for such Payment Date (calculated without giving effect
to the Net WAC Cap Rate) on the Unpaid Class B-1 Basis Risk Carryover Shortfall
for the immediately preceding Payment Date (after giving effect to any payment
made in reduction thereof on such Payment Date pursuant to Sections 8.09 and
8.10), accrued during the related Accrual Period.
43
"Unpaid Class B-1 Interest Carry Forward Amount" means, as to any
----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class B-1 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class B-1
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(vii),
plus interest (to the extent payment thereof is legally permissible) at the
Class B-1 Interest Rate for such Payment Date on the Unpaid Class B-1 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(vii)), accrued during the related Accrual Period.
"Unpaid Class B-1 Realized Loss Amount" means, with respect to any
-------------------------------------
Payment Date,
(a) the sum of all Class B-1 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-1 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(viii)(B).
"Unpaid Class B-1 Realized Loss Interest Amount" means, with respect to
----------------------------------------------
any Payment Date,
(a) the sum of all Class B-1 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-1 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(viii)(A).
"Unpaid Class B-2 Basis Risk Carryover Shortfall" means, as to any
-----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class B-2 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Unpaid Class B-2 Basis
Risk Carryover Shortfalls on all previous Payment Dates
pursuant to Section 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class B-2 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class B-2 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Section
8.10), accrued during the related Accrual Period.
"Unpaid Class B-2 Interest Carry Forward Amount" means, as to any
----------------------------------------------
Payment Date, the excess of
44
(a) the aggregate amount of all Class B-2 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class B-2
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(ix),
plus interest (to the extent payment thereof is legally permissible) at the
Class B-2 Interest Rate for such Payment Date on the Unpaid Class B-2 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(ix)), accrued during the related Accrual Period.
"Unpaid Class B-2 Realized Loss Amount" means, with respect to any
-------------------------------------
Payment Date,
(a) the sum of all Class B-2 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-2 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(x)(B).
"Unpaid Class B-2 Realized Loss Interest Amount" means, with respect to
----------------------------------------------
any Payment Date,
(a) the sum of all Class B-2 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class B-2 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(x)(A).
"Unpaid Class M-1 Basis Risk Carryover Shortfall" means, with respect
-----------------------------------------------
to the Class M-1 Certificates and as to any Payment Date, the excess of
(a) the aggregate amount of all Class M-1 Basis Risk Carryover
Shortfalls over
(b) the sum of all payments in reduction of Class M-1 Basis Risk
Carryover Shortfalls on all previous Payment Dates pursuant to
Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class M-1 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class M-1 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment made in reduction thereof on such Payment Date pursuant to Sections 8.09
and 8.10), accrued during the related Accrual Period.
"Unpaid Class M-1 Interest Carry Forward Amount" means, as to any
----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class M-1 Interest Carry Forward
Amounts, over
45
(b) the sum of all payments in reduction of Unpaid Class M-1
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(iii),
plus interest (to the extent payment thereof is legally permissible) at the
Class M-1 Interest Rate for such Payment Date on the Unpaid Class M-1 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment made in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(iii)), accrued during the related Accrual Period.
"Unpaid Class M-1 Realized Loss Amount" means, with respect to any
-------------------------------------
Payment Date,
(a) the sum of all Class M-1 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-1 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(iv)(B).
"Unpaid Class M-1 Realized Loss Interest Amount" means, with respect to
----------------------------------------------
any Payment Date,
(a) the sum of all Class M-1 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-1 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(iv)(A).
"Unpaid Class M-2 Basis Risk Carryover Shortfall" means, with respect
-----------------------------------------------
to the Class M-2 Certificates and as to any Payment Date, the excess of
(a) the aggregate amount of all Class M-2 Basis Risk Carryover
Shortfalls, over
(b) the sum of all payments in reduction of Class M-2 Basis Risk
Carryover Shortfalls on all previous Payment Dates pursuant to
Sections 8.09 and 8.10,
plus interest (to the extent payment thereof is legally permissible) at the
Class M-2 Interest Rate for such Payment Date (calculated without giving effect
to the Adjusted Net WAC Cap Rate) on the Unpaid Class M-2 Basis Risk Carryover
Shortfall for the immediately preceding Payment Date (after giving effect to any
payment in reduction thereof on such Payment Date pursuant to Sections 8.09 and
8.10), accrued during the related Accrual Period.
"Unpaid Class M-2 Interest Carry Forward Amount" means, as to any
----------------------------------------------
Payment Date, the excess of
(a) the aggregate amount of all Class M-2 Interest Carry Forward
Amounts, over
(b) the sum of all payments in reduction of Unpaid Class M-2
Interest Carry Forward Amount on all previous Payment Dates
pursuant to Section 8.04(e)(v),
46
plus interest (to the extent payment thereof is legally permissible) at the
Class M-2 Interest Rate for such Payment Date on the Unpaid Class M-2 Interest
Carry Forward Amount for the immediately preceding Payment Date (after giving
effect to any payment in reduction thereof on such Payment Date pursuant to
Section 8.04(e)(v)), accrued during the related Accrual Period.
"Unpaid Class M-2 Realized Loss Amount" means, with respect to any
-------------------------------------
Payment Date,
(a) the sum of all Class M-2 Allocated Realized Loss Amounts,
minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-2 Realized Loss Amount on all previous Payment Dates
pursuant to Section 8.04(e)(vi)(B).
"Unpaid Class M-2 Realized Loss Interest Amount" means, with respect to
----------------------------------------------
any Payment Date,
(a) the sum of all Class M-2 Allocated Realized Loss Interest
Amounts, minus
(b) the sum of all amounts distributed in respect of the Unpaid
Class M-2 Realized Loss Interest Amount on all previous
Payment Dates pursuant to Section 8.04(e)(vi)(A).
"Unpaid Basement Interest Shortfall" means, with respect to each Class
----------------------------------
of Uncertificated Basement Interests and any Payment Date, the amount, if any,
by which the amount distributed on such Class on such Payment Date pursuant to
Section 8.07(c)(ii) is less than the amount specified in Section 8.07(c)(ii).
"Unpaid Intermediate Interest Shortfall" means, with respect to each
--------------------------------------
Class of Uncertificated Intermediate Interests and any Payment Date, the amount,
if any, by which the amount distributed on such Class on such Payment Date
pursuant to Section 8.07(a)(i) is less than the amount specified in Section
8.07(a)(i).
"Unpaid Subsidiary Interest Shortfall" means, with respect to each
------------------------------------
Class of Uncertificated Subsidiary Interests and any Payment Date, the amount,
if any, by which the amount distributed on such Class on such Payment Date
pursuant to Section 8.07(b)(ii) is less than the amount specified in Section
8.07(b)(ii).
"Weighted Average Debt Consolidation Percentage" means the weighted
----------------------------------------------
average, by Scheduled Principal Balance, of Loans the proceeds of which were
used by the related Obligors for the purpose of debt consolidation.
"Weighted Average Loan Rate" means, for any Payment Date, the weighted
--------------------------
average (determined by Scheduled Principal Balance as of the preceding Payment
Date) of the Loan Interest Rates for all Loans that were outstanding during the
immediately preceding month.
"Weighted Average Pass-Through Rate" means, for any Payment Date, with
----------------------------------
respect to any Payment Date, the sum of (i) the weighted average (expressed as a
percentage and rounded
47
to four decimal places) of the Class A-1, Class A-2, Class A-3, Class A-IO,
Class X-IO, Class M-1, Class M-2, Class B-1 and Class B-2 Pass-Through Rates,
weighted on the basis of the respective Class A-1, Class A-2, Class A-3, Class
A-IO, Class X-IO, Class M-1, Class M-2, Class B-1 and Class B-2 Principal
Balances or Notional Amount, as applicable, for such Payment Date.
"Yield Maintenance Agreements" means the three Yield Maintenance
----------------------------
Agreements, each effective as of April 25, 2002, between the Trust (on behalf of
the Class X-IO Certificateholder) and the LIBOR Cap Counterparty, relating to
the Class M-1, Class M-2 and Class B-1 Certificates, respectively.
"Yield Maintenance Reserve Funds" means the three separate trust
-------------------------------
accounts created and maintained pursuant to Section 8.09 in the name of the
Trust in an Eligible Institution.
SECTION 1.03. Calculations. Except as otherwise provided in this
------------
Agreement,
(a) interest payable on the Class A-1, Class M and Class B-1
Certificates for each Accrual Period shall be calculated on
the basis of actual days in a 360-day year, and
(b) interest payable on the Class A-2, Class A-3, Class A-IO, and
Class B-2 Certificates for each Accrual Period shall be
calculated on the basis of a 360-day year comprised of twelve
30-day months.
ARTICLE II
ESTABLISHMENT OF TRUST; TRANSFER OF LOANS
SECTION 2.01. Closing.
-------
(a) There is hereby created, by the Seller as settlor, a separate trust
which shall be known as Conseco Finance Home Equity Loan Trust 2002-B. The Trust
shall be administered pursuant to the provisions of this Agreement for the
benefit of the Certificateholders and the Class R Certificateholder.
(b) The Seller hereby transfers, assigns, sets over and otherwise
conveys to the Trustee on behalf of the Trust, by execution and delivery of an
assignment substantially in the form of Exhibit D hereto, all the right, title
and interest of the Seller in and to the Initial Loans and Additional Loans,
including all rights to receive payments on or with respect to the Initial Loans
and Additional Loans due after the applicable Cut-off Date, all rights of the
Seller under the Transfer Agreement and all other assets now or hereafter
included in the Trust Fund. Each such transfer and assignment is intended by the
Seller to be a sale of such assets for all purposes, including, without
limitation, the Federal Bankruptcy Code, to the end that all such assets will
hereafter cease to be the property of the Seller and would not be includable in
the estate of the Seller or the Originator for purposes of Section 541 of the
Federal Bankruptcy Code.
48
(c) Although the parties intend that each conveyance pursuant to this
Agreement of the Seller's right, title and interest in and to the Loans
(including the Subsequent Loans) shall constitute a purchase and sale and not a
loan, if such conveyances are deemed to be loans, the parties intend that the
rights and obligations of the parties to such loans shall be established
pursuant to the terms of this Agreement. If the conveyances are deemed to be
loans, the parties further intend and agree that the Originator and the Seller
shall be deemed to have granted to the Trustee and the Originator and the Seller
do hereby grant to the Trustee, a perfected first-priority security interest in
the Trust Fund and that this Agreement shall constitute a security agreement
under applicable law. If the trust created by this Agreement terminates prior to
the satisfaction of the claims of any Person under any Certificate or Class R
Certificate, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for the
benefit of such Person.
SECTION 2.02. Conditions to the Closing. On or before the Closing Date,
-------------------------
the Seller shall deliver or cause to be delivered the following documents to the
Trustee:
(a) The List of Loans attached to this Agreement as Exhibit L,
certified by the Chairman of the Board, President or any Vice President of the
Seller.
(b) A certificate of an officer of the Originator substantially in the
form of Exhibit E hereto on behalf of the Seller and the Originator.
(c) An Opinion of Counsel for the Seller substantially in the form of
Exhibit F hereto.
(d) A letter, acceptable to the Underwriters, from
PricewaterhouseCoopers LLP or another nationally recognized accounting firm,
stating that such firm has reviewed the Initial Loans on a statistical sampling
basis and setting forth the results of such review.
(e) Copies of resolutions of the board of directors of the Seller or of
the executive committee of the board of directors of the Seller approving the
execution, delivery and performance of this Agreement and the transactions
contemplated hereunder, certified in each case by the secretary or an assistant
secretary of the Seller.
(f) Officially certified recent evidence of due incorporation and good
standing of the Seller under the laws of the State of Minnesota and of the
Originator under the laws of the State of Delaware.
(g) An Officer's Certificate listing the Servicer's Servicing Officers.
(h) Officer's Certificate relating to coverage of the Servicer under
the Errors and Omissions Protection Policy.
(i) Evidence of deposit in the Certificate Account of all funds
received with respect to the Loans from the Cut-off Date to the Closing Date,
other than principal due on or before the Cut-off Date, together with an
Officer's Certificate to the effect that such amount is correct.
49
(j) The Loan Files for the Initial Loans and Additional Loans and an
Officer's Certificate confirming that the Originator has reviewed the original
or a copy of each related promissory note and each related Loan File, that each
such Loan and Loan File conforms in all material respects with the List of Loans
and that each such Loan File is complete in accordance with the definition
thereof and has been delivered to the Trustee (or its custodian).
(k) An executed copy of the Transfer Agreement.
(l) Evidence of the deposit of $ -0- in the Pre-Funding Account.
(m) Evidence of deposit of $ -0- in the Capitalized Interest Account.
(n) Letters from each of the Rating Agencies evidencing the following
ratings for the Certificates:
Class S&P Rating Fitch Rating ▇▇▇▇▇'▇ Rating
-------------------- ----------------- --------------------- ----------------
A-1 AAA AAA Aaa
A-2 AAA AAA Aaa
A-3 AAA AAA Aaa
A-IO AAA AAA Aaa
M-1 AA AA Aa2
M-2 A A A2
B-1 BBB BBB Baa2
B-2 BB BB Ba2
(o) Evidence of the deposit of $5,000 in the Basis Risk Reserve Fund.
SECTION 2.03. Conveyance of the Subsequent Loans.
----------------------------------
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Seller of all or a portion of the balance of funds
in the Pre-Funding Account, the Seller shall on any Subsequent Transfer Date
sell, transfer, assign, set over and convey to the Trust by execution and
delivery of a Subsequent Transfer Instrument, all the right, title and interest
of the Seller in and to the Subsequent Loans identified on the List of Loans
attached to the Subsequent Transfer Instrument, including all rights to receive
payments on or with respect to the Subsequent Loans due after the related
Subsequent Cut-off Date, and all items with respect to such Subsequent Loans in
the related Loan Files. The transfer to the Trustee by the Seller of the
Subsequent Loans shall be absolute and is intended by the Seller, the Trustee,
the Certificateholders and the
50
Class R Certificateholder to constitute and to be treated as a sale of the
Subsequent Loans by the Seller or the Originator to the Trust. Such transfer and
assignment is intended by the Seller to be a sale of such assets for all
purposes, including, without limitation, the Federal Bankruptcy Code, to the end
that all such assets will hereafter cease to be the property of the Seller and
would not be includable in the estate of the Seller for purposes of Section 541
of the Federal Bankruptcy Code.
The purchase price paid by the Trustee shall be one hundred percent
(100%) of the aggregate Cut-off Date Principal Balances of such Subsequent
Loans. The purchase price of Subsequent Loans shall be paid solely with amounts
in the Pre-Funding Account. This Agreement shall constitute a fixed price
contract in accordance with Section 860G(a)(3)(A)(ii) of the Code.
(b) The Seller shall transfer to the Trustee the Subsequent Loans,
and the Trustee shall release funds from the Pre-Funding Account only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee with an
Addition Notice at least five Business Days prior to
the Subsequent Transfer Date and shall have provided
any information reasonably requested by the Trustee
with respect to the Subsequent Loans;
(ii) the Seller shall have delivered the related Loan File
for each Subsequent Loan to the Trustee at least two
Business Days prior to the Subsequent Transfer Date;
(iii) the Seller shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument substantially
in the form of Exhibit O, which shall include a List
of Loans identifying the related Subsequent Loans;
(iv) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, the
Seller shall not be insolvent nor shall it have been
made insolvent by such transfer nor shall it be aware
of any pending insolvency;
(v) such sale and transfer shall not result in a material
adverse tax consequence to the Trust (including the
Master REMIC, Intermediate REMIC, Subsidiary REMIC or
Basement REMIC) or the Certificateholders or Class R
Certificateholder;
(vi) the Pre-Funding Period shall not have ended;
(vii) the Seller shall have delivered to the Trustee an
Officer's Certificate, substantially in the form
attached hereto as Exhibit P, confirming the
satisfaction of each condition precedent and the
representations specified in this Section 2.03 and in
Sections 3.01, 3.02, 3.03, 3.04 and 3.05;
51
(viii) the Seller and the Originator shall have delivered to
the Trustee Opinions of Counsel addressed to S&P,
Fitch, ▇▇▇▇▇'▇ and the Trustee with respect to the
transfer of the Subsequent Loans substantially in the
form of the Opinions of Counsel delivered to the
Trustee on the Closing Date regarding certain
bankruptcy, corporate and tax matters;
(ix) no Subsequent Loan will have a Combined LTV greater
than 100%; and
(x) the Seller shall have delivered assignments in
recordable form to the Trustee of the mortgages,
deeds of trust and security deeds relating to the
Subsequent Loans.
(c) On or before the last day of the Pre-Funding Period, the
Seller shall deliver to the Trustee:
(i) A letter from PricewaterhouseCoopers LLC or another
nationally recognized accounting firm retained by the
Seller (with copies provided to S&P, Fitch, Moody's,
the Underwriters and the Trustee) that is in form,
substance and methodology the same as that dated
April 25, 2002 and delivered under Section 2.02(d) of
this Agreement, except that it shall address the
Subsequent Loans and their conformity in all material
respects to the characteristics described in Sections
2.03(b)(ix) and 3.04(b) of this Agreement.
(ii) Evidence that, as a result of the purchase by the
Trust of the Subsequent Loans, none of the ratings
assigned to the Certificates as of the Closing Date
by S&P, Fitch or ▇▇▇▇▇'▇ will be reduced, withdrawn
or qualified.
(iii) Evidence that the aggregate Cut-off Date Principal
Balances of the Subsequent Loans, not specifically
identified as Subsequent Loans as of the Closing
Date, do not exceed 25% of the Original Aggregate
Certificate Principal Balance.
SECTION 2.04. Acceptance by Trustee.
---------------------
(a) On the Closing Date and each Subsequent Transfer Date, if the
conditions set forth in Section 2.02 and 2.03, respectively, have been
satisfied, the Trustee shall deliver a certificate to the Seller substantially
in the form of Exhibit G hereto (an "Acknowledgment") acknowledging conveyance
of the Loans identified on the applicable List of Loans and the related Loan
Files to the Trustee and declaring that the Trustee, directly or through a
Custodian, will hold all Loans that have been delivered in trust, upon the
trusts herein set forth, for the use and benefit of all Certificateholders and
the Class R Certificateholder.
(b) The Trustee or a Custodian shall review each Loan File, as
described in Exhibit G, within 60 days of the Closing Date or later receipt by
it of the Loan File. If, in its review of the Loan Files, as described in
Exhibit G, the Trustee or a Custodian discovers a
52
breach of the representations or warranties set forth in Sections 2.03, 3.02,
3.03, 3.04 or 3.05 of this Agreement, or in the Officer's Certificates delivered
pursuant to Section 2.02(j) or 2.03(b)(vii) of this Agreement, the Trustee or
Custodian, as the case may be, shall notify the Seller and the Originator shall
cure such breach or repurchase or replace such Loan pursuant to Section 3.06.
SECTION 2.05. REMIC Provisions.
----------------
(a) The Originator, as Servicer, and each holder of the Class R-I
Interest, the Class R-II Interest and the Class R-III Interest, by acceptance
thereof, each agree that, in accordance with the requirements of Section
860D(b)(1) of the Code, the federal tax return of each of the Basement REMIC,
Subsidiary REMIC, Intermediate REMIC and Master REMIC for its first taxable year
shall provide an election for the Basement REMIC, Subsidiary REMIC, Intermediate
REMIC or Master REMIC, as the case may be (excluding the Pre-Funding Account,
the Basis Risk Reserve Fund and the Yield Maintenance Reserve Funds), to be
treated as a REMIC under the Code for such taxable year and all subsequent
taxable years, and the Trustee shall sign such return. In furtherance of the
foregoing, the Trustee (at the direction of the Originator, the Seller or the
Servicer), the Originator, the Seller and the Servicer shall take, or refrain
from taking, all such action as is necessary to maintain the status of each of
the Basement REMIC, Subsidiary REMIC, Intermediate REMIC or Master REMIC as a
REMIC under the REMIC Provisions of the Code, including, but not limited to, the
taking of such action as is necessary to cure any inadvertent termination of
REMIC status.
(b) The Regular Certificates and the Uncertificated Master Interest are
being issued in 11 classes and are hereby designated by the Seller as the
"regular interests" in the Master REMIC for the purposes of Section 860G(a)(1)
of the Code. The following terms of the Regular Certificates and Uncertificated
Master Interest are irrevocably established as of the Closing Date:
53
Original Class
Principal Balance
Interest Rate ▇▇▇ ▇▇▇▇▇ (or Notional Assumed Final
Class (Pass-Through Rate) Amount) Maturity Date(1)
------------------ ------------------------------------------ ----------------------- --------------------
Class A-1 a floating rate equal to the lesser of
one month LIBOR plus 0.23% per year or
the Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% per year $ 95,000,000 April 15, 2034
Class A-2 the lesser of 5.31% per year or the
Adjusted Net WAC Cap Rate $ 71,000,000 April 15, 2034
Class A-3 the lesser of 6.87% per year or the
Adjusted Net WAC Cap Rate $ 32,125,000 April 15, 2034
Class A-IO the lesser of 7.25% per year or the Net
WAC Cap Rate (2) (2) April 15, 2034
Class X-IO
(3) (3) April 15, 2034
Class M-1 a floating rate equal to lesser of
one month LIBOR plus 1.75% per year or
the Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% $ 17,500,000 April 15, 2034
Class M-2 a floating rate equal to lesser of
one month LIBOR plus 2.50% per year or
the Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% $ 15,625,000 April 15, 2034
Class B-1 a floating rate equal to lesser of
one month LIBOR plus 5.25% per year or
the Adjusted Net WAC Cap Rate, but in no
event greater than 15.00% $ 10,625,000 April 15, 2034
Class B-2 the lesser of 9.00% per year or the
Adjusted Net WAC Cap Rate $ 8,125,000 April 15, 2034
Class B-3I (4) (4) April 15, 2034
_________________
(1) Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month approximately 24 months following the month of
the maturity date for the Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each class of
Certificates that represents one or more of the "regular interests" in the
Master REMIC.
54
(2) Collectively, the Class A-IO Certificates will be entitled to receive on
each Payment Date the distribution on such Payment Date to the Class I-AIO
Interest under Section 8.07(a)(i)(C), which is equivalent to interest
accrued at the Class A-IO Pass-Through Rate on the Class A-IO Notional
Amount. Thus, the Class A-IO Certificates shall effectively accrue interest
on an initial notional amount and at a rate as described in the Prospectus
Supplement. For federal tax purposes and pursuant to Treas. Reg.
1.860G-1(a)(2)(v), the Class A-IO Certificates, collectively, will be
entitled to 100% of the interest payable on the Class I-AIO Interest.
(3) The Class X-IO Interest will be entitled to receive on each Payment Date
the distribution on such Payment Date to the Class I-XIO Interest under
Section 8.07(a)(i)(B), which is equivalent to the interest accrued at the
Class X-IO Interest Rate on the Class X-IO Notional Amount. For federal tax
purposes and pursuant to Treas. Reg. 1.860G-1(a)(2)(v), the Class X-IO
Interest will be entitled to 100% of the interest payable on the Class
I-XIO Interest.
(4) Solely for federal income tax purposes, the Class B-3I Certificate will be
comprised of two components, each of which is hereby designated a REMIC
regular interest for federal income tax purpose: component one will be an
interest-only regular interest component entitled to the payment of the
Class B-3I Formula Distribution Amount (bearing interest at a rate and upon
an amount as set forth by the defined terms contained in such definition);
component two will have a principal balance equal to the Overcollateralized
Amount on the Closing Date and will not bear interest.
The Seller does not represent that any regular interest in the Master
REMIC will, in fact, mature on any given date, except that each regular interest
of the Master REMIC will absolutely mature by the Assumed Final Maturity Date as
indicated above. Solely for federal income tax purposes, the Master REMIC will
issue a Class R-III Interest, which is hereby designated by the Seller as
constituting the sole class of "residual interests" in the Master REMIC for
purposes of Section 860G(a)(2) of the Code. For purposes of certification, a
Class R Certificate will represent the Class R-III Interest, as well as the
Class R-Ia, Class R-Ib and Class R-II Interests described in Section 2.05(c) and
Section 2.05(d).
(c) The Uncertificated Intermediate Interests are being issued in
thirteen classes and are hereby designated by the Seller as constituting the
"regular interests" in the Intermediate REMIC for the purposes of Section
860G(a)(1) of the Code. The following terms of the Uncertificated Intermediate
Interests are irrevocably established as of the Closing Date:
Assumed
Original Class Principal Final
Interest Rate Per Annum Balance (or Notional Maturity Date
Class (Pass-Through Rate) Amount) (1)
------------------- --------------------------------- -------------------------- --------------------
Class I-A1 Adjusted Net WAC Cap Rate $ 47,500,000 April 15, 2034
Class I-A2 Adjusted Net WAC Cap Rate $ 35,500,000 April 15, 2034
Class I-A3 Adjusted Net WAC Cap Rate $ 16,062,500 April 15, 2034
Class I-AIO(1) (2) (2) April 15, 2034
Class I-AIO(2) (2) (2) April 15, 2034
55
Class I-AIO(3) (2) (2) April 15, 2034
Class I-AIO(4) (2) (2) April 15, 2034
Class I-XIO (3) (3) April 15, 2034
Class I-M1 Adjusted Net WAC Cap Rate $ 8,750,000 April 15, 2034
Class I-M2 Adjusted Net WAC Cap Rate $ 7,812,500 April 15, 2034
Class I-B1 Adjusted Net WAC Cap Rate $ 5,312,500 April 15, 2034
Class I-B2 Adjusted Net WAC Cap Rate $ 4,062,500 April 15, 2034
Class I-Accrual Adjusted Net WAC Cap Rate $ 125,000,000 April 15, 2034
___________________
(1) Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month approximately 24 months following the month of
the maturity date for the Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each class of
interests that represents one or more of the "regular interests" in the
Intermediate REMIC.
(2) Each Class I-AIO Interest comprising the Class I-AIO Interest is entitled
to that specified portion of the interest paid on a Class S-2 Interest as
designated in Section 8.07(a)(i)(C). Therefore, solely for federal income
tax purposes, the corresponding Pass-Through Rate and Notional Amount of
each Class I-AIO Interest as of the Closing Date is that designated in
Section 8.07(a)(i)(C) and applicable at such time.
(3) The Class I-XIO Interest will be entitled to receive on each Payment Date
the distribution on such Payment Date to the Class S-XIO Interest under
Section 8.07(b)(ii)(B), which is equivalent to the interest accrued at the
Class X-IO Interest Rate on the Class X-IO Notional Amount. For federal tax
purposes and pursuant to Treas. Reg. 1.860G-1(a)(2)(v), the Class I-XIO
Interest will be entitled to 100% of the interest payable on the Class
S-XIO Interest.
The Seller does not represent that any Class of Uncertificated
Intermediate Interests will, in fact, mature on any given date, except that each
regular interest of the Intermediate REMIC will absolutely mature by the Assumed
Final Maturity Date as indicated above. Solely for federal income tax purposes,
the Intermediate REMIC will issue a Class R-II Interest, which is hereby
designated by the Seller as constituting the sole class of "residual interests"
in the Intermediate REMIC for purposes of Section 860G(a)(2) of the Code.
(d) The Uncertificated Subsidiary Interests and Uncertificated
Basement Interests are being issued as described in this Section 2.05(d):
(i) The Uncertificated Subsidiary Interests are being
issued in six classes and are hereby designated by
the Seller as constituting the "regular interests" in
the Subsidiary REMIC for the purposes of Section
860G(a)(1) of the Code. The following terms of the
Uncertificated Subsidiary Interests are irrevocably
established as of the Closing Date:
56
Interest Original Assumed Final
Rate ▇▇▇ ▇▇▇▇▇ Principal Balance Maturity Date
Class (Pass-Through Rate) or Notional Amount (1)
---------------- ----------------------------- ------------------------ -------------------
Class S-1 Net WAC Cap Rate $ 168,100,000 April 15, 2034
Class S-2(1) Net WAC Cap Rate $ 12,300,000 April 15, 2034
Class S-2(2) Net WAC Cap Rate $ 9,600,000 April 15, 2034
Class S-2(3) Net WAC Cap Rate $ 8,300,000 April 15, 2034
Class S-2(4) Net WAC Cap Rate $ 51,700,000 April 15, 2034
Class S-XIO (2) (2) April 15, 2034
_____________________
(1) Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month approximately 24 months following the month of
the maturity date for the Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each class of
interests that represents one or more of the "regular interests" in the
Subsidiary REMIC.
(2) The Class S-XIO Interest is entitled to that specified portion of the
interest paid on a Class BR-XIO Interest as designated in Section
8.07(b)(ii)(B). Therefore, solely for federal income tax purposes, the
corresponding Pass-Through Rate and notional amount of each Class S-XIO
Interest as of the Closing Date is that designated in Section
8.07(b)(ii)(B) and applicable at such time.
The Seller does not represent that any Class of Uncertificated
Subsidiary Interests will, in fact, mature on any given date, except that each
regular interest of the Subsidiary REMIC will absolutely mature by the Assumed
Final Maturity Date as indicated above. Solely for federal income tax purposes,
the Subsidiary REMIC will issue a Class R-Ia Interest, which is hereby
designated by the Seller as the sole class of "residual interests" in the
Subsidiary REMIC for purposes of Section 860G(a)(2) of the Code.
(ii) The Uncertificated Basement Interests are being
issued in three classes and are hereby designated by
the Seller as constituting the "regular interests" in
the Basement REMIC for the purposes of Section
860G(a)(1) of the Code. The following terms of the
Uncertificated Basement Interests are irrevocably
established as of the Closing Date:
57
Interest Assumed Final
Rate Per Annum Original Maturity Date
Class (Pass-Through Rate) Principal Balance (1)
---------------- ------------------------------ ------------------------ -------------------
Class BR-1 Basement WAC Cap Rate $ 242,775,100 April 15, 2034
Class BR-XIO Basement WAC Cap Rate $ 7,224,900 April 15, 2034
Class P (2) $ 100 April 15, 2034
(1) Solely for purposes of Treas. Reg. 1.860G-1(a)(4)(iii), a hypothetical
Payment Date in the month approximately 24 months following the month of
the maturity date for the Loan with the latest maturity date has been
designated as the "latest possible maturity date" for each class of
Certificates that represents one or more of the "regular interests" in the
Basement REMIC.
(2) The Class P Certificate is entitled to all Prepayment Charges and bears
interest at the Class P Certificate Pass-Through Rate. The Class P
Certificate shall not be entitled to receive any distribution of principal
until a Payment Date subsequent to the month in which Prepayment Charges
are no longer collectible on any Loan.
The Seller does not represent that any Class of Uncertificated Basement
Interests will, in fact, mature on any given date, except that each regular
interest of the Basement REMIC will absolutely mature by the Assumed Final
Maturity Date as indicated above. Solely for federal income tax purposes, the
Basement REMIC will issue a Class R-Ib Interest, which is hereby designated by
the Seller as the sole class of "residual interests" in the Basement REMIC for
purposes of Section 860G(a)(2) of the Code.
(e) For any purpose for which the Basement Net WAC Cap Rate, Net WAC
Cap Rate and the Adjusted Net WAC Cap Rate are calculated, the interest rate on
the Loans shall be appropriately adjusted to account for the difference between
the monthly day count convention of the Loans (simple interest which is the same
as an actual/actual convention) and the month day count convention of the
regular interest issued by each REMIC created hereunder. For purposes of
calculating the Basement Net WAC Cap Rate, Net WAC Cap Rate and Adjusted Net WAC
Cap Rate, for each of the interests issued by the Basement REMIC, the Subsidiary
REMIC, the Intermediate REMIC and the Master REMIC, such rates shall be adjusted
to equal a month day count convention based on the actual number of days in the
preceding Due Period and a 360 day year so that the Loans and all regular
interests created hereunder will be using the same monthly day count convention.
(f) The Closing Date, which is the day on which each of the Basement
REMIC, the Subsidiary REMIC, the Intermediate REMIC and the Master REMIC will
issue all of its regular and residual interests, is hereby designated as the
"startup day" of each of the Basement REMIC, the Subsidiary REMIC, the
Intermediate REMIC and the Master REMIC within the meaning of Section 860G(a)(9)
of the Code.
(g) After the Closing Date, neither the Trustee, the Originator, the
Seller nor any Servicer shall:
58
(i) accept any contribution of assets to the Basement
REMIC, the Subsidiary REMIC, the Intermediate REMIC
or the Master REMIC,
(ii) dispose of any portion of the Basement REMIC, the
Subsidiary REMIC, the Intermediate REMIC or the
Master REMIC, other than as provided in Sections
3.06, 3.08 and 8.06,
(iii) engage in any "prohibited transaction," as defined in
Sections 860F(a)(2) and (5) of the Code, except as
may be contemplated by Section 3.07,
(iv) accept any contribution after the Closing Date that
is subject to the tax imposed by Section 860G(d) of
the Code or
(v) engage in any activity or enter into any agreement
that would result in the receipt by the Basement
REMIC, the Subsidiary REMIC, the Intermediate REMIC
or the Master REMIC of any "net income from
foreclosure property" as defined in Section
860G(c)(2) of the Code, unless, prior to any such
action set forth in clauses (i), (ii), (iii), (iv) or
(v) the Trustee shall have received an unqualified
Opinion of Counsel, which opinion shall not be an
expense of the Trust, stating that such action will
not, directly or indirectly,
(A) adversely affect the status of the Basement
REMIC, the Subsidiary REMIC, the Intermediate
REMIC or the Master REMIC as a REMIC or the
status of the Uncertificated Basement
Interests as "regular interests" in the
Basement REMIC, the status of the Class R-Ib
Interest as of the sole class of "residual
interests" in the Basement REMIC, the status
of the Uncertificated Subsidiary Interests as
"regular interests" in the Subsidiary REMIC,
the status of the Class R-Ia Interest as the
sole class of "residual interests" in the
Subsidiary REMIC, the status of the
Uncertificated Intermediate Interests as
"regular interests" in the Intermediate REMIC,
the status of the Class R-II Interest as the
sole class of "residual interests" in the
Intermediate REMIC, the status of the Regular
Certificates and the Uncertificated Master
Interest as "regular interests" in the Master
REMIC, or the status of the Class R-III
Interest as the sole class of "residual
interests" in the Master REMIC,
(B) affect the distributions payable hereunder to
the Certificateholders, or
(C) result in the imposition of any lien, charge
or encumbrance upon the Basement REMIC, the
Subsidiary REMIC, the Intermediate REMIC or
the Master REMIC.
59
(h) Upon the acquisition of any real property (including interests in
real property), or any personal property incident thereto, in connection with
the default of a Loan, the Servicer and the Trustee (at the direction of the
Servicer) shall take, or cause to be taken, such action as is necessary to sell
or otherwise dispose of such property within such period as is then required by
the Code in order for such property to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, unless the Servicer and the
Trustee receive an Opinion of Counsel to the effect that the holding by the
Basement REMIC, the Subsidiary REMIC, the Intermediate REMIC or the Master REMIC
of such property subsequent to the period then permitted by the Code will not
result in the imposition of any taxes on "prohibited transactions" of the
Basement REMIC, the Subsidiary REMIC, the Intermediate REMIC or the Master
REMIC, as defined in Section 860F of the Code, or cause the Basement REMIC, the
Subsidiary REMIC, the Intermediate REMIC or the Master REMIC to fail to qualify
as a REMIC at any time that the Uncertificated Basement Interests,
Uncertificated Subsidiary Interests, Class R Certificate, Uncertificated
Intermediate Interests, Regular Certificates or Uncertificated Master Interest
are outstanding. The Servicer shall manage, conserve, protect and operate such
real property, or any personal property incident thereto, so that such property
will not fail to qualify as "foreclosure property," as defined in Section
860G(a)(8) of the Code, and that the management, conservation, protection and
operation of such property will not result in the receipt by the Basement REMIC,
the Subsidiary REMIC, the Intermediate REMIC or the Master REMIC of any "income
from nonpermitted assets," within the meaning of Section 860F(a)(2)(B) of the
Code.
SECTION 2.06. Seller Option to Substitute for Prepaid Loans. The Seller
---------------------------------------------
may, at its option, substitute new loans for Loans as to which a Principal
Prepayment in Full has been received by the Servicer prior to July 1, 2002
("Prepaid Loans"), up to a maximum of 5% of the Cut-Off Date Pool Principal
Balance, upon satisfaction of the following conditions:
(i) the Seller shall have conveyed to the Trustee the
Loan to be substituted for the Prepaid Loan and the
Loan File related to such Loan and the Seller shall
have marked the Electronic Ledger indicating that
such Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute
Loan and the Seller delivers an Officers'
Certificate, substantially in the form of Exhibit J-3
hereto, to the Trustee certifying that such Loan is
an Eligible Substitute Loan;
(iii) the Seller shall have delivered to the Trustee
evidence of filing of a UCC-1 financing statement
executed by the Seller as debtor, naming the Trustee
as secured party and filed in Minnesota, listing such
Loan to be substituted as collateral;
(iv) the Seller shall have delivered to the Trustee an
executed assignment to the Trustee on behalf of the
Trust in recordable form for the mortgage securing
such Loan to be substituted;
60
(v) such substitution shall be accomplished prior to the
Determination Date immediately following the calendar
month in which the Principal Prepayment in Full was
received by the Servicer, and no such substitution
shall take place after July 1, 2002.
(vi) the Seller shall have delivered to the Trustee an
Opinion of Counsel
(A) to the effect that the substitution of such
Loan for such Prepaid Loan will not cause the
Master, Intermediate, Subsidiary or Basement
REMIC to fail to qualify as a REMIC at any
time under then applicable REMIC Provisions or
cause any "prohibited transaction" that will
result in the imposition of a tax under such
REMIC Provisions, and
(B) to the effect of paragraph 9 of Exhibit F
hereto; and
(vii) if the Principal Prepayment received in respect of
such Prepaid Loan is greater than the Scheduled
Principal Balance of the Loan to be substituted, such
excess shall be distributed to Certificateholders on
the related Payment Date as a prepayment of
principal.
Upon satisfaction of such conditions, the Trustee shall add such Loan
to be substituted to the List of Loans.
Any substitutions pursuant to this Section 2.06 may be accomplished on
a loan-by-loan basis or on an aggregate basis as to all Prepaid Loans with
respect to a given calendar month.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Seller and the Originator make the following representations and
warranties. The Trustee will rely on the representations and warranties in
accepting the Loans in trust and issuing the Certificates and the Class R
Certificate on behalf of the Trust. The repurchase or substitution and
indemnification obligations of the Originator set forth in Section 3.06
constitute the sole remedies available to the Trust, the Certificateholders or
the Class R Certificateholder for a breach of a representation or warranty of
the Originator set forth in Sections 2.03, 3.02, 3.03, 3.04 or 3.05 of this
Agreement, or in the Officer's Certificates delivered pursuant to Sections
2.02(j) or 2.03(b)(vii) of this Agreement.
SECTION 3.01. Representations and Warranties Regarding the Seller. The
---------------------------------------------------
Seller represents and warrants to the Certificateholders and the Class R
Certificateholder, effective on the Closing Date and each Subsequent Transfer
Date, that:
(a) Organization and Good Standing. The Seller is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and
61
has the corporate power to own its assets and to transact the business in which
it is currently engaged. The Seller is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the business transacted by it or properties owned or leased by it
requires such qualification and in which the failure so to qualify would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Seller.
(b) Authorization; Binding Obligations. The Seller has the power and
----------------------------------
authority to make, execute, deliver and perform this Agreement and all of the
transactions contemplated under this Agreement, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and to cause the Trust to
be created. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Seller enforceable in accordance with
its terms, except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and by the availability of equitable remedies.
(c) No Consent Required. The Seller is not required to obtain the
-------------------
consent of any other party or any consent, license, approval or authorization
from, or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement by the Seller will not violate any provision of any existing law or
regulation or any order or decree of any court or the Certificate of
Incorporation or Bylaws of the Seller, or constitute a material breach of any
mortgage, indenture, contract or other agreement to which the Seller is a party
or by which the Seller may be bound.
(e) Litigation. No litigation or administrative proceeding of or before
----------
any court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of its properties
or with respect to this Agreement, the Certificates or the Class R Certificate
which, if adversely determined, would in the opinion of the Seller have a
material adverse effect on the transactions contemplated by this Agreement.
(f) Licensing. The Seller is duly licensed in each state in which Loans
---------
were originated to the extent the Seller is required to be licensed by
applicable law in connection with the origination and servicing of the Loans.
(g) Chief Executive Office. The chief executive office of the Seller
----------------------
is at 300 Landmark Towers, ▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
The Seller is a corporation organized and existing under the laws of the State
of Minnesota.
(h) No Default. The Seller is not in default with respect to any order
----------
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would materially and adversely
affect is condition (financial or other) or operations or its properties or the
consequences of which would materially and adversely affect
62
its performance hereunder. The Seller is not in default under any agreement
involving financial obligations or on any outstanding obligation which would
materially adversely impact its financial condition or operations or legal
documents associated with the transaction contemplated by this Agreement.
(i) Lawful Assignment. The Seller has duly executed a valid blanket
-----------------
assignment of the Loans transferred to the Trust, and has transferred all its
right, title and interest in such Loans. The Assignment, any and all documents
executed and delivered by the Seller pursuant to Section 2.01(a), and this
Agreement each constitutes the legal, valid and binding obligation of the Seller
enforceable in accordance with its respective terms.
(j) Good Title. The Seller is the sole owner of the Loans and has the
----------
authority to sell, transfer and assign such Loans to the Trust under the terms
of this Agreement. There has been no assignment, sale or hypothecation of the
Loans by the Seller, other than a hypothecation which terminates upon sale of
the Loans to the Trust. The Seller has good and marketable title to the Loans,
free and clear of any encumbrance, equity, loan, pledge, charge, claim or
security interest of any type and has full right to transfer the Loans to the
Trust.
SECTION 3.02. Representations and Warranties Regarding Each Loan. The
--------------------------------------------------
Originator has made the following representations and warranties to the Seller
in the Transfer Agreement, which representations and warranties the Seller has
assigned to the Trustee for the benefit of the Certificateholders and the Class
R Certificateholder, as of the Closing Date with respect to each Loan identified
on the List of Loans attached to this Agreement as Exhibit L and as of each
Subsequent Transfer Date with respect to each Subsequent Loan identified on the
List of Loans attached to the related Subsequent Transfer Instrument:
(a) List of Loans. The information set forth in the List of Loans is
-------------
true and correct as of its date.
(b) Payments. No scheduled payment due under the Loan was delinquent
--------
over 30 days as of the Cut-off Date if an Initial Loan (except for 0.54% of the
Initial Loans by principal balance), or 29 days as of the related Cut-off Date
or Subsequent Cut-off Date, if a Subsequent Loan.
(c) Costs Paid and No Waivers. The terms of the Loan have not been
-------------------------
waived, altered or modified in any respect, except by instruments or documents
identified in the Loan File. All costs, fees and expenses incurred in making,
closing and perfecting the lien of the Loan have been paid. The subject real
property has not been released from the lien of such Loan.
(d) Binding Obligation. The Loan is the legal, valid and binding
------------------
obligation of the Obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights generally.
(e) No Defenses. The Loan is not subject to any right of rescission,
-----------
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of the Loan or the exercise of any right
thereunder will not render the Loan unenforceable in whole
63
or in part or subject to any right of rescission, setoff, counterclaim or
defense, including the defense of usury, and no such right of rescission,
setoff, counterclaim or defense has been asserted with respect thereto.
(f) Insurance Coverage. The Originator has been named as an additional
------------------
insured party under any hazard insurance on the property described in the Loan,
to the extent required by the Originator's underwriting guidelines. If upon
origination of the Loan, the property securing the Loan was in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards (and if flood insurance was required by federal
regulation and such flood insurance has been made available in the locale where
the property is located), the property is covered by a flood insurance policy of
the nature and in an amount which is consistent with the servicing standard set
forth in Section 5.02.
(g) Combined LTV. As of the Cut-Off Date and as of the date that each
------------
Loan is transferred to the Trust, the Combined LTV for each Loan is not greater
than 100%.
(h) Lawful Assignment. The Loan was not originated in and is not
-----------------
subject to the laws of any jurisdiction whose laws would make the transfer of
the Loan under this Agreement or pursuant to transfers of the Certificates or
Class R Certificate unlawful or render the Loan unenforceable. The Originator
has duly executed a valid blanket assignment of the Loans transferred to the
Seller, and has transferred all its right, title and interest in such Loans,
including all rights the Originator may have against the originating lender with
respect to Loans originated by a lender other than the Originator, to the
Seller. The blanket assignment, any and all documents executed and delivered by
the Originator pursuant to Sections 2.01(b) and 2.03(b), and this Agreement each
constitutes the legal, valid and binding obligation of the Originator
enforceable in accordance with its respective terms.
(i) Compliance with Law. At the date of origination of the Loan, all
-------------------
requirements of any federal and state laws, rules and regulations applicable to
the Loan, including, without limitation, usury and truth in lending laws, have
been complied with and the Originator shall for at least the period of this
Agreement, maintain in its possession, available for the Trustee's inspection,
and shall deliver to the Trustee upon demand, evidence of compliance with all
such requirements.
(j) Loan in Force. The Loan has not been satisfied or subordinated in
-------------
whole or in part or rescinded, and the real estate securing such Loan has not
been released from the lien of such Loan in whole or in part.
(k) Valid Lien. The contract and/or promissory note, and the mortgage,
----------
deed of trust, security deed or other evidence of a lien on the related real
property, which evidence the Loan has been duly executed and delivered by the
Obligor, and the lien created thereby has been duly recorded, or has been
delivered to the appropriate governmental authority for recording and will be
duly recorded within 180 days, and constitutes a valid and perfected first,
second or third priority lien, as the case may be, on the real estate described
in such Loan.
64
(l) Capacity of Parties. The signature(s) of the Obligor(s) on the
-------------------
contract and/or promissory note, and the mortgage, deed of trust, security deed
or other evidence of a lien on the related real property, which evidence the
Loan are genuine and all parties to the Loan had full legal capacity to execute
such documents.
(m) Good Title. The Originator is the sole owner of the Loan and has
----------
the authority to sell, transfer and assign such Loan to the Seller under the
terms of the Transfer Agreement. There has been no assignment, sale or
hypothecation of the Loan by the Originator except the usual past hypothecation
of the Loan in connection with the Originator's normal banking transactions in
the conduct of its business, which hypothecation terminates upon sale of the
Loan to the Seller. The Originator has good and marketable title to the Loan,
free and clear of any encumbrance, equity, loan, pledge, charge, claim, lien or
encumbrance of any type and has full right to transfer the Loan to the Seller.
(n) No Defaults. As of the applicable Cut-off Date, there was no
-----------
default, breach, violation or event permitting acceleration existing under the
Loan and no event which, with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event permitting
acceleration under such Loan (except payment delinquencies permitted by clause
(b) or (c) above). The Originator has not waived any such default, breach,
violation or event permitting acceleration except payment delinquencies
permitted by clause (b) above.
(o) Equal Installments. The Loan provides for monthly payments (except,
------------------
in the case of a Balloon Loan, for the final monthly payment of such Loan) which
fully amortize the Loan over its term.
(p) Enforceability. Each Loan contains customary and enforceable
--------------
provisions so as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the lien
provided thereby.
(q) One Original. There is only one original executed promissory note,
------------
which promissory note has been delivered to the Trustee or its Custodian on or
before the Closing Date or Subsequent Transfer Date, if a Subsequent Loan.
(r) Genuine Documents. All documents submitted are genuine, and all
-----------------
other representations as to each Loan, including the List of Loans, are true and
correct. Any copies of documents provided by the Originator are accurate and
complete (except that, with respect to each Loan that was originated by a lender
other than the Originator, the Originator makes such representation and warranty
only to the best of the Originator's knowledge).
(s) Origination. Each Loan was originated by a home equity lender in
-----------
the ordinary course of such lender's business or was originated by the
Originator directly.
(t) Underwriting Guidelines. The Loan was originated or purchased in
-----------------------
accordance with the Originator's then-current underwriting guidelines, and such
underwriting guidelines required an appraisal acceptable to ▇▇▇▇▇▇ ▇▇▇ or
Freddie Mac.
65
(u) Good Repair. The property described in the Loan is, to the best of
-----------
the Originator's knowledge, free of damage and in good repair.
(v) Qualified Mortgage. The Loan is a "qualified mortgage" within the
meaning of the REMIC Provisions. The Originator represents and warrants that,
either as of (i) the date of origination (within the meaning of the REMIC
Provisions) or (ii) the Closing Date or, if a Subsequent Loan, the Subsequent
Transfer Date, the fair market value of the interest in real property securing
each Loan was not less than 80% of the "adjusted issue price" (in each case
within the meaning of the REMIC Provisions) of such Loan.
(w) Prepayment Term. No Prepayment Charges are payable under the Loan
---------------
after the 60th month following the origination date of the Loan.
(x) Certain Disclosure Statements. The Obligor has executed a statement
-----------------------------
to the effect that it has received all disclosure materials required by
applicable law with respect to the making of fixed-rate mortgage loans, and such
statement will be retained in the Loan File.
Section 3.03. Additional Representations and Warranties. The Seller
-----------------------------------------
hereby represents and warrants to the Trustee for the benefit of the
Certificateholders and the Class R Certificateholder, as of the Closing Date
with respect to each Loan identified on the List of Loans attached to this
Agreement as Exhibit L and as of each Subsequent Transfer Date with respect to
each Subsequent Loan identified on the List of Loans attached to the related
Subsequent Transfer Instrument:
(a) Lawful Assignment. The Loan was not originated in and is not
-----------------
subject to the laws of any jurisdiction whose laws would make the transfer of
the Loan under this Agreement or pursuant to transfers of the Certificates or
Class R Certificate unlawful or render the Loan unenforceable. The Seller has
duly executed a valid blanket assignment of the Loans transferred to the Trust,
and has transferred all its right, title and interest in such Loans. The blanket
assignment, any and all documents executed and delivered by the Seller pursuant
to Sections 2.01(b) and 2.03(b), and this Agreement each constitutes the legal,
valid and binding obligation of the Seller enforceable in accordance with its
respective terms.
(b) Good Title. The Seller is the sole owner of the Loan and has the
----------
authority to sell, transfer and assign such Loan to the Trust under the terms of
this Agreement. There has been no assignment, sale or hypothecation of the Loan
by the Seller. The Seller has good and marketable title to the Loan, free and
clear of any encumbrance, equity, loan, pledge, charge, claim, lien or
encumbrance of any type and has full right to transfer the Loan to the Trust.
SECTION 3.04. Representations and Warranties Regarding the Loans in the
---------------------------------------------------------
Aggregate. The Originator has represented and warranted to the Seller in the
---------
Transfer Agreement, which representations and warranties the Seller has assigned
to the Trustee for the benefit of the Certificateholders and the Class R
Certificateholder, as of the Closing Date with respect to the Initial Loans and
Additional Loans, and as of each Subsequent Transfer Date with respect to the
related Subsequent Loans, that:
66
(a) Amounts. As of the Closing Date, the sum of the Cut-off Date Pool
-------
Principal Balance, plus the Original Pre-Funded Amount, equals at least the
Original Aggregate Certificate Principal Balance. By Cut-off Date Principal
Balance, the Initial Loans and Additional Loans plus the Subsequent Loans
specifically identified as of the Closing Date represent at least 75% of the
Original Aggregate Certificate Principal Balance.
(b) Characteristics. The Loans have the following characteristics:
---------------
(i) 100% are secured by a mortgage, deed of trust or security
deed creating a first, second or third lien on the related
real estate;
(ii) none has a remaining or original maturity of more than 360
months;
(iii) no Initial Loan has a final scheduled payment date later
than April 5, 2032, no Additional Loan has a final
scheduled payment date later than April 24, 2032 and no
such Subsequent Loan has a final scheduled payment date
later than May 31, 2032;
(iv) none had a principal balance at origination of more than
$718,100;
(v) none has a Loan Interest Rate less than 3.00%; and
(vi) no Subsequent Loan is an FHA-Insured Loan.
The weighted average (by Scheduled Principal Balance) loan to value
ratio of the Loans as of the Post-Funding Payment Date will not be more
than 100 basis points more than such ratio with respect to the Initial
Loans.
The weighted average (by Scheduled Principal Balance) of the Loan
Interest Rates of the Loans as of the Cut-off Date will be greater than
12.03% and as of the Post-Funding Payment Date, will not be more than
25 basis points less than the weighted average of the Loan Interest
Rates of the Initial Loans.
The percentage (by Scheduled Principal Balance) of the Loans as of
the Post-Funding Payment Date which are identified by the Originator
under its standard underwriting criteria as "B," "C," and "D" credits
will not be more than 300 basis points, 200 basis points, and 100 basis
points, respectively, more than the percentage of Initial Loans
identified as "B," "C," and "D" credits.
(c) All Loans. As of the Cut-Off Date, 77.20% (by Scheduled Principal
---------
Balance) of the Initial Loans are secured by a first-priority lien, 22.44% by a
second-priority lien and 0.36% by a third-priority lien. As of the Post-Funding
Payment Date, the percentage of the Loans secured by a second-priority lien is
not more than 23.00% and not more than 0.36% are secured by a third-priority
lien.
67
The percentage (by Scheduled Principal Balance) of the Loans as of
the Closing Date which are identified by the Originator as debt
consolidation loans will be no more than 12.23%. As of any Subsequent
Transfer Date, such percentage of debt consolidation loans will not be
greater than 12.50%.
As a result of the purchase of the Additional Loans and the
Subsequent Loans, the percentage of the Loans, by Aggregate Principal
Balance, with a FICO score of less than 620 will not increase by more
than 2%.
(d) Geographic Concentrations. By Cut-off Date Principal Balance,
-------------------------
approximately 12.07% of the Initial and Additional Loans are secured by property
located in California, approximately 8.84% in Texas, approximately 7.97% in
Florida, and approximately 5.29% in New York. No other state represents more
than 5.00% of the aggregate Cut-off Date Principal Balances of the Initial and
Additional Loans.
The percentage (by Scheduled Principal Balance) of the Loans as of
the Post-Funding Payment Date which are owner-occupied will be at least
97%.
The percentage (by Scheduled Principal Balance) of the Loans as of
the Post-Funding Payment Date which are single family will be at least
92%.
No more than 1.00% of the Loans by Cut-off Date Principal Balance
are secured by property located in an area with the same five-digit zip
code.
(e) Marking Records. The Originator has caused the portions of the
---------------
Electronic Ledger relating to the Loans to be clearly and unambiguously marked
to indicate that such Loans constitute part of the Trust and are owned by the
Trust in accordance with the terms of the Trust created hereunder.
(f) No Adverse Selection. No adverse selection procedures have been
--------------------
employed in selecting the Loans.
(g) Lender Concentration. No more than 5.00% of the Loans, by Cut-off
--------------------
Date Principal Balance, were originated by any one lender (other than the
Originator).
(h) Home Ownership and Equity Protection Act. With respect to any Loan
----------------------------------------
subject to the Home Ownership and Equity Protection Act of 1994, each such Loan
has been originated and serviced in compliance with the provisions thereof.
(i) 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
Loans that are described in the List of Loans.
SECTION 3.05. Representations and Warranties Regarding the Loan Files.
-------------------------------------------------------
The Originator has represented and warranted to the Seller in the Transfer
Agreement, which
68
representations and warranties the Seller has assigned to the Trustee for the
benefit of the Certificateholders and the Class R Certificateholder that:
(a) Possession. On the Closing Date, the Trustee or a Custodian
----------
will have possession of each original Initial Loan and Additional Loan and the
related Loan File, except for each of the missing notes described in Section
3.02(q), as to which the Originator has delivered to the Trustee or its
Custodian a copy of the note and a lost note affidavit. On each Subsequent
Transfer Date, the Originator will have possession of each original Subsequent
Loan being transferred to the Trust on that Subsequent Transfer Date and the
related Loan File. There are and there will be no custodial agreements or
servicing contracts in effect materially and adversely affecting the rights of
the Originator to make, or cause to be made, any delivery required hereunder or
under the Transfer Agreement.
(b) Bulk Transfer Laws. The transfer, assignment and conveyance of
------------------
the Loans and the Loan Files by the Originator pursuant to the Transfer
Agreement is not subject to the bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction.
SECTION 3.06. Repurchases of Loans for Breach of Representations and
------------------------------------------------------
Warranties.
----------
(a) Subject to Section 3.07, the Originator shall repurchase a
Loan, at its Repurchase Price, not later than 90 days after the day on which the
Originator, the Servicer, the Seller or the Trustee first discovers or should
have discovered a breach of a representation or warranty set forth in Sections
2.03, 3.02, 3.03, 3.04 or 3.05, or in the Officer's Certificates delivered
pursuant to Sections 2.02(j) or 2.03(b)(vii), that materially and adversely
affects the Trust's, the Certificateholders' or the Class R Certificateholder's
interest in such Loan and which breach has not been cured within such time;
provided, however, that
(i) in the event that a party other than the Originator
first becomes aware of such breach, such discovering
party shall notify the Originator in writing within
five Business Days of the date of such discovery and
(ii) with respect to any Loan incorrectly described on the
List of Loans with respect to Cut-off Date Principal
Balance, which the Originator would otherwise be
required to repurchase pursuant to this Section, the
Originator may, in lieu of repurchasing such Loan,
deliver to the Seller for deposit in the Certificate
Account within 90 days from the date of such
discovery cash in an amount sufficient to cure such
deficiency or discrepancy. Any such cash so deposited
shall be distributed to Certificateholders and the
Class R Certificateholder on the immediately
following Payment Date as a collection of principal
or interest on such Loan, according to the nature of
the deficiency or discrepancy. Notwithstanding any
other provision of this Agreement, the obligation of
the Originator under this Section shall not terminate
upon a Service Transfer pursuant to Article VII.
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(b) On or prior to the date that is the second anniversary of the
Closing Date, the Originator may, at its election, substitute an Eligible
Substitute Loan for a Loan that it is obligated to repurchase pursuant to
Section 3.06(a) (such Loan being referred to as the "Replaced Loan") upon
satisfaction of the following conditions:
(i) the Originator shall have conveyed to the Seller the
Loan to be substituted for the Replaced Loan and the
Loan File related to such Loan and the Originator
shall have marked the Electronic Ledger indicating
that such Loan constitutes part of the Trust;
(ii) the Loan to be substituted is an Eligible Substitute
Loan and the Originator delivers an Officers'
Certificate, substantially in the form of Exhibit J-2
hereto, to the Trustee certifying that such Loan is
an Eligible Substitute Loan;
(iii) the Originator shall have delivered to the Trustee
evidence of filing of a UCC-1 financing statement
identifying the Originator as debtor, naming the
Seller as secured party and filed in Delaware,
listing such Loan to be substituted as collateral;
(iv) the Originator shall have delivered to the Trustee an
executed assignment to the Seller and to the Trustee
on behalf of the Trust in recordable form for the
mortgage securing such Loan to be substituted;
(v) the Originator shall have delivered to the Trustee an
Opinion of Counsel
(A) to the effect that the substitution of such
Loan for such Replaced Loan will not cause
any applicable portion of the Trust to fail
to qualify as a REMIC at any time under then
applicable REMIC Provisions or cause any
"prohibited transaction" that will result in
the imposition of a tax under such REMIC
Provisions and
(B) to the effect of paragraph 9 of Exhibit F
hereto; and
(vi) if the Scheduled Principal Balance of such Replaced
Loan is greater than the Scheduled Principal Balance
of the Loan to be substituted, the Originator shall
have delivered to the Seller for deposit in the
Certificate Account the amount of such excess and
shall have included in the Officers' Certificate
required by clause (ii) above a certification that
such deposit has been made.
Upon satisfaction of such conditions, the Trustee shall add such Loan to be
substituted to, and delete such Replaced Loan from, the List of Loans. Such
substitution shall be effected prior to the first Determination Date that occurs
more than 90 days after the Originator becomes aware, or should have become
aware, or receives written notice from the Trustee, of the breach referred
70
to in Section 3.06(a). Promptly after any such substitution of a Loan, the
Originator shall give written notice of such substitution to S&P, Fitch and
▇▇▇▇▇'▇.
(c) If the Originator is required to repurchase a Loan under
Section 3.06(a) or has elected to substitute an Eligible Substitute Loan for a
Loan under Section 3.06(b), and if the reason for such repurchase or
substitution is that the Originator has failed to deliver to the Trustee the
Loan File for the Loan to be repurchased or substituted for (except in the case
of a failure to deliver evidence of the lien on the related improved property
and evidence of due recording of such mortgage, deed of trust or security deed,
if available), then, notwithstanding the time periods set out in Sections
3.06(a) and 3.06(b), the Originator shall either
(i) repurchase such Loan, at its respective Repurchase
Price, within 30 days of the Closing Date, or
(ii) substitute an Eligible Substitute Loan for the Loan
within 90 days of the Closing Date.
(d) The Originator shall defend and indemnify the Seller, the
Trustee, the Certificateholders, and the Class R Certificateholder against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of any third-party action arising out of any breach of any
such representation and warranty.
SECTION 3.07. No Repurchase Under Certain Circumstances.
-----------------------------------------
Notwithstanding any provision of this Agreement to the contrary, no repurchase
or substitution pursuant to Section 3.06 shall be made unless the Originator (at
its own expense) obtains for the Trustee an Opinion of Counsel addressed to the
Trustee that any such repurchase or substitution would not, under the REMIC
Provisions,
(i) cause the Master REMIC, Intermediate REMIC,
Subsidiary REMIC or Basement REMIC to fail to qualify
as a REMIC while any regular interest in such REMIC
is outstanding,
(ii) result in a tax on prohibited transactions within the
meaning of Section 860F(a)(2) of the Code, or
(iii) constitute a contribution after the startup day
subject to tax under Section 860G(d) of the Code.
The Originator shall diligently attempt to obtain such Opinion of Counsel. In
the case of a repurchase or deposit pursuant to Section 3.06(a) or (b), the
Originator shall, notwithstanding the absence of such opinion as to the
imposition of any tax as the result of such purchase or deposit, repurchase such
Loan or make such deposit and shall guarantee the payment of such tax by paying
to the Trustee the amount of such tax not later than five Business Days before
such tax shall be due and payable to the extent that amounts previously paid
over to and then held by the Trustee pursuant to Section 6.06 are insufficient
to pay such tax and all other taxes chargeable
71
under Section 6.06. Pursuant to Section 6.06, the Servicer is hereby directed to
withhold, and shall withhold and pay over to the Trustee, an amount sufficient
to pay such tax and any other taxes imposed on "prohibited transactions" under
Section 860F(a)(i) of the Code or imposed on "contributions after startup date"
under Section 860G(d) of the Code from amounts otherwise distributable to the
Class R Certificateholder. The Servicer shall give notice to the Trustee at the
time of such repurchase of the amounts due from the Originator pursuant to the
guarantee of the Originator described above and give notice as to who should
receive such payment.
The Trustee shall have no obligation to pay any such amounts pursuant
to this Section other than from moneys provided to it by the Originator or from
moneys held in the funds and accounts created under this Agreement. The Trustee
shall be deemed conclusively to have complied with this Section if it follows
the directions of the Originator.
In the event any tax that is guaranteed by the Originator pursuant to
this Section 3.07 is refunded to the Trust or otherwise is determined not to be
payable, the Originator shall be repaid the amount of such refund or that
portion of any guarantee payment made by the Originator that is not applied to
the payment of such tax.
SECTION 3.08. Certain Representations and Warranties Regarding
------------------------------------------------
Perfection of the Loans. The Seller represents that:
-----------------------
(a) This Agreement creates a valid and continuing security interest (as
defined in the UCC) in the Loans in favor of the Trustee, which security
interest is prior to all other Liens, and is enforceable as such as against
creditors of and purchasers from the Seller.
(b) The Loans constitute "instruments," "tangible chattel paper,"
"promissory notes," "payment intangibles" or "accounts" within the meaning of
the applicable UCC.
(c) Seller owns and has good and marketable title to the Loans free and
clear of any Lien, claim or encumbrance of any Person.
(d) The Seller has received all consents and approvals required by the
terms of the Loans to the sale of the Loans hereunder to the Trust.
(e) The Seller has caused or will have caused, within ten days, the
filing of all appropriate financing statements in the proper filing office in
the appropriate jurisdictions under applicable law in order to perfect the
security interest in the Loans granted to the Trust hereunder.
(f) Other than the security interest granted to the Trust pursuant to
this Agreement, the Seller has not pledged, assigned, sold, granted a security
interest in, or otherwise conveyed any of the Loans. The Seller has not
authorized the filing of and is not aware of any financing statements against
the Seller that include a description of collateral covering the Loans other
than any financing statement relating to the security interest granted to the
Trust hereunder or that has been terminated. The Seller is not aware of any
judgment or tax lien filings against the Seller.
72
(g) The Seller has in its possession all original copies of the
mortgage notes and promissory notes that constitute or evidence the Loans. With
respect to any Loan bearing a stamp indicating that such Loan has been sold to
another party, such other party's interest in such Loan has been released. All
financing statements filed or to be filed against the Seller in favor of the
Trust in connection herewith describing the Loans contain a statement to the
following effect: "A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the Secured
Party."
ARTICLE IV
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. Transfer of Loans.
-----------------
(a) On or prior to the Closing Date or the related Subsequent Transfer
Date in the case of Subsequent Loans, the Originator shall deliver the Loan
Files to the Trustee. The Trustee shall maintain the Loan Files at its office or
with a duly appointed ▇▇▇▇▇▇▇▇▇, who shall act as the agent of the Trustee on
behalf of the Certificateholders. The Trustee may release a Loan File to the
Servicer pursuant to Section 5.07. The Originator has filed a form UCC-1
financing statement regarding the sale of the Loans to the Seller, and shall
file continuation statements in respect of such UCC-1 financing statement as if
such financing statement were necessary to perfect the security interest granted
pursuant to Section 2.01(c). The Originator shall take any other actions
necessary to maintain the perfection of such security interest.
(b) The Originator shall file promptly in the appropriate recording
offices the assignments to the Trustee on behalf of the Trust of the mortgage,
deed of trust or security deed securing each Loan relating to real estate
located in Maryland, and shall deliver to the Trustee an Opinion of Counsel to
the effect that the recordation of assignments of the mortgages, deeds of trust
and security deeds, securing Loans relating to real estate located in any State
other than Maryland, is not necessary to effect the assignment to the Trustee of
the Originator's lien on the real property securing such Loans.
SECTION 4.02. Costs and Expenses. The Originator agrees to pay all
------------------
reasonable costs and disbursements in connection with the vesting (including the
perfection and the maintenance of perfection, as against all third parties) in
the Trust of all right, title and interest in and to the Loans (including,
without limitation, the mortgage or deed of trust on the related real estate
granted thereby).
ARTICLE V
SERVICING OF LOANS
SECTION 5.01. Responsibility for Loan Administration. The Servicer will
--------------------------------------
have the sole obligation to manage, administer, service and make collections on
the Loans and perform or cause to be performed all contractual and customary
undertakings of the holder of the Loans to the Obligor. Conseco Finance Corp. if
it is the Servicer, may delegate some or all of its
73
servicing duties to a wholly owned subsidiary of Conseco Finance Corp., for so
long as such subsidiary remains, directly or indirectly, a wholly owned
subsidiary of Conseco Finance Corp. Notwithstanding any such delegation Conseco
Finance Corp. shall retain all of the rights and obligations of the Servicer
hereunder. The Trustee, at the request of a Servicing Officer, shall furnish the
Servicer with any powers of attorney or other documents necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
hereunder. Conseco Finance Corp. is hereby appointed the Servicer until such
time as any Service Transfer shall be effected under Article VII.
SECTION 5.02. Standard of Care. In managing, administering, servicing
----------------
and making collections on the Loans pursuant to this Agreement, the Servicer
will exercise that degree of skill and care consistent with the highest degree
of skill and care that the Servicer exercises with respect to similar loans
(including manufactured housing contracts) serviced by the Servicer; provided,
however, that such degree of skill and care shall be at least as favorable as
the degree of skill and care generally applied by prudent servicers of home
equity loans for prudent institutional investors.
SECTION 5.03. Records. The Servicer shall, during the period it is
-------
servicer hereunder, maintain such books of account and other records as will
enable the Trustee to determine the status of each Loan.
SECTION 5.04. Inspection.
----------
(a) At all times during the term hereof, the Servicer shall afford the
Trustee and its authorized agents reasonable access during normal business hours
to the Servicer's records relating to the Loans, which have not previously been
provided to the Trust, and will cause its personnel to assist in any examination
of such records by the Trustee. The examination referred to in this Section will
be conducted in a manner which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Trustee may make, the
Trustee may, using generally accepted audit procedures, verify the status of
each Loan and review the Electronic Ledger and records relating thereto for
conformity to Monthly Reports prepared pursuant to Article VI and compliance
with the standards represented to exist as to each Loan in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Loans at its principal executive office for
inspection by Certificateholders.
(c) A Certificateholder holding Certificates representing in the
aggregate at least 5% of the Aggregate Certificate Principal Balance shall have
the rights of inspection afforded to the Trustee pursuant to this Section 5.04.
SECTION 5.05. Certificate Account.
-------------------
(a) On or before the Closing Date, the Servicer shall establish the
Certificate Account on behalf of the Trust, which shall be an Eligible Account.
The Servicer shall pay into the Certificate Account as promptly as practicable
(but not later than the next Business Day)
74
following receipt thereof, all amounts received with respect to the Loans,
including Prepayment Charges and all Liquidation Proceeds, other than extension
fees and assumption fees, which fees shall be retained by the Servicer as
compensation for servicing the Loans. The Trustee shall hold all amounts paid
into the Certificate Account under this Agreement in trust for the Trustee, the
Certificateholders and the Class R Certificateholder until payment of any such
amounts is authorized under this Agreement. Only the Trustee may withdraw funds
from the Certificate Account.
(b) If the Servicer so directs, the institution maintaining the
Certificate Account shall, in the name of the Trustee in its capacity as such,
invest the amounts in the Certificate Account in Eligible Investments that
mature not later than one Business Day prior to the next succeeding Payment
Date. Any investment of funds in the Certificate Account shall be made in
Eligible Investments held by a financial institution in accordance with the
following requirements:
(i) all Eligible Investments shall be held in an account with
such financial institution in the name of the Trustee, and
the agreement governing such account shall be governed by
the laws of the State of Minnesota,
(ii) with respect to securities held in such account, such
securities shall be
(A) certificated securities (as such term is used in N.Y.
U.C.C. (S) 8-102(4)(i)), securities deemed to be
certificated securities under applicable regulations
of the United States government, or uncertificated
securities issued by an issuer organized under the
laws of the State of New York or the State of
Delaware,
(B) either
(1) in the possession of such institution,
(2) in the possession of a clearing corporation
(as such term is used in Minn. Stat. (S)
8-102(5)) in the State of New York,
registered in the name of such clearing
corporation or its nominee, not endorsed for
collection or surrender or any other purpose
not involving transfer, not containing any
evidence of a right or interest inconsistent
with the Trustee's security interest therein,
and held by such clearing corporation in an
account of such institution,
(3) held in an account of such institution with
the Federal Reserve Bank of New York or the
Federal Reserve Bank of Minneapolis, or
(4) in the case of uncertificated securities,
issued in the name of such institution, and
75
(C) identified, by book entry or otherwise, as held for
the account of, or pledged to, the Trustee on the
records of such institution, and such institution
shall have sent the Trustee a confirmation thereof,
and
(iii) with respect to repurchase obligations held in such account,
such repurchase obligations shall be identified by such
institution, by book entry or otherwise, as held for the
account of, or pledged to, the Trustee on the records of
such institution, and the related securities shall be held
in accordance with the requirements of clause (ii) above.
Once such funds are invested, such institution shall not change the investment
of such funds. All income and gain from such investments shall be added to the
Certificate Account and distributed on such Payment Date pursuant to Section
8.04. Any losses from such investments will be deducted from other investment
earnings or from other funds in the Certificate Account. An amount equal to any
net loss on such investments shall be deposited in the Certificate Account by
the Seller out of its own funds immediately as realized. The Servicer and the
Trustee shall in no way be liable for losses on amounts invested in accordance
with the provisions hereof. Funds in the Certificate Account not so invested
must be insured to the extent permitted by law by the Federal Deposit Insurance
Corporation. "Eligible Investments" are any of the following:
(i) direct obligations of, and obligations fully guaranteed by,
the United States of America, or any agency or
instrumentality of the United States of America the
obligations of which are backed by the full faith and credit
of the United States of America;
(ii)
(A) demand and time deposits in, certificates of deposit
of, bankers' acceptances issued by, or federal funds
sold by any depository institution or trust company
(including the Trustee or any Affiliate of the
Trustee, acting in its commercial capacity)
incorporated under the laws of the United States of
America or any state thereof and subject to
supervision and examination by federal and/or state
authorities, so long as, at the time of such
investment or contractual commitment providing for
such investment, the commercial paper or other
short-term debt obligations of such depository
institution or trust company are rated, if rated by
such rating company, at least A-1+ by S&P, F-1+ by
Fitch and P-1 by ▇▇▇▇▇'▇, and
(B) any other demand or time deposit or certificate of
deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) shares of an investment company registered under the
Investment Company Act of 1940, whose shares are registered
under the Securities
76
Act of 1933 and have a rating of AAA by each of S&P and
Fitch and Aaa by ▇▇▇▇▇'▇, and whose only investments are in
securities described in clauses (i) and (ii) above;
(iv) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security
issued or guaranteed by an agency or instrumentality of the
United States of America, in either case entered into with a
depository institution or trust company (acting as
principal) described in clause (ii)(A) above;
(v) securities that have been rated, if rated by such rating
company, at least A-1+ by S&P, F-1+ by Fitch and P-1 from
▇▇▇▇▇'▇, and bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United
States of America or any State thereof which have a credit
rating, if rated by such rating company, of at least AA from
S&P, in one of the two highest rating categories from Fitch
and Aa2 from ▇▇▇▇▇'▇; provided, however, that securities
issued by any particular corporation will not be Eligible
Investments to the extent that investment therein will cause
the then outstanding principal amount of securities issued
by such corporation and held as part of the corpus of the
Trust to exceed 10% of amounts held in the Certificate
Account;
(vi) commercial paper having a rating, if rated by such rating
company, of at least A-1+ from S&P, F-1 from Fitch and P-1
from ▇▇▇▇▇'▇ at the time of such investment;
(vii) money market funds rated at least AAAm or AAAm-G by S&P; and
(viii) other obligations or securities that are acceptable to each
of the Rating Agencies as an Eligible Investment hereunder
and will not reduce the rating assigned to any Class of
Certificates by each of the Rating Agencies below the lower
of the then-current rating or the rating assigned to such
Certificates as of the Closing Date by each of the Rating
Agencies, as evidenced in writing;
provided, that, any such investment must constitute a "cash flow investment"
within the meaning of the REMIC Provisions.
The Trustee may trade with itself or an Affiliate in the purchase or
sale of such Eligible Investments. The Servicer acknowledges that to the extent
that regulations of the Comptroller of the Currency or other applicable
regulatory agency grant the Servicer the right to receive brokerage
confirmations of security transactions as they occur, the Servicer specifically
waives receipt of such confirmations; provided, that, such confirmations shall
begin to be provided to the Backup Servicer upon its replacement of the
Servicer.
77
(c) If at any time the Trustee receives notice (from any of the Rating
Agencies, the Servicer or otherwise) that the Certificate Account has ceased to
be an Eligible Account, the Trustee shall, as soon as practicable but in no
event later than five Business Days of the Trustee's receipt of such notice,
transfer the Certificate Account and all funds and Eligible Investments therein
to an Eligible Account. Following any such transfer, the Trustee shall notify
each of the Rating Agencies, the Backup Servicer and the Servicer of the
location of the Certificate Account.
SECTION 5.06. Enforcement.
-----------
(a) The Servicer shall, consistent with customary servicing procedures,
act with respect to the Loans in such manner as will in the Servicer's
reasonable judgment maximize the receipt of principal and interest on such Loans
and Liquidation Proceeds with respect to Liquidated Loans. The Servicer shall
exercise its discretion, consistent with customary servicing procedures and the
terms of this Agreement, with respect to the enforcement of defaulted Loans in
such manner as will maximize the receipt of principal and interest with respect
thereto, including but not limited to the sale of such Loan to a third party,
the modification of such Loan, or foreclosure upon the related real property and
disposition thereof.
(b) In accordance with the standard of care specified in Section 5.02,
the Servicer may, in its own name, if possible, or as agent for the Trust,
commence proceedings for the foreclosure of any subject real estate, or may take
such other steps that in the Servicer's reasonable judgment will maximize
Liquidation Proceeds with respect to the Loan, including, for example, the sale
of the Loan to a third party for foreclosure or enforcement and, in the case of
any default on a related prior mortgage loan, the advancing of funds to correct
such default and the advancing of funds to pay off a related prior mortgage
loan, which advances are Liquidation Expenses that will be reimbursed to the
Servicer out of related Liquidation Proceeds before the related Net Liquidation
Proceeds are paid to Certificateholders and the Class R Certificateholder. The
Servicer shall also deposit in the Certificate Account any Net Liquidation
Proceeds received in connection with any Loan which became a Liquidated Loan in
a prior Due Period.
(c) The Servicer may sue to enforce or collect upon Loans, in its own
name, if possible, or as agent for the Trust. If the Servicer elects to commence
a legal proceeding to enforce a Loan, the act of commencement shall be deemed to
be an automatic assignment of the Loan to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce a Loan on the ground that it is not a
real party in interest or a holder entitled to enforce the Loan, the Trustee on
behalf of the Trust shall, at the Servicer's expense for which it will be
reimbursed by the Trust, take such steps as the Servicer deems necessary to
enforce the Loan, including bringing suit in its name or the names of the
Certificateholders and the Class R Certificateholder.
(d) The Servicer may grant to the Obligor on any Loan any rebate,
refund or adjustment out of the Certificate Account that the Servicer in good
faith believes is required because of the Principal Prepayment in Full of the
Loan. The Servicer will not permit any rescission or cancellation of any Loan.
78
(e) The Servicer shall enforce any due-on-sale clause in a Loan if such
enforcement is called for under its then current servicing policies for
obligations similar to the Loans, provided, that, such enforcement is permitted
by applicable law and will not adversely affect any applicable insurance policy.
If an assumption of a Loan is permitted by the Servicer, upon conveyance of the
related property the Servicer shall use its best efforts to obtain an assumption
agreement in connection therewith.
(f) Any provision of this Agreement to the contrary notwithstanding,
the Servicer shall not agree to the modification or waiver of any provision of a
Loan at a time when such Loan is not in default or such default is not
reasonably foreseeable, if such modification or waiver would both (i) be treated
as a taxable exchange under Section 1001 of the Code or any proposed, temporary
or final Treasury Regulations promulgated thereunder and (ii) cause the Master
REMIC, Intermediate REMIC, Subsidiary REMIC or Basement REMIC to fail to qualify
as a REMIC or cause the imposition of any tax on "prohibited transactions" or
"contributions after the startup date" under the REMIC Provisions.
SECTION 5.07. Trustee to Cooperate.
--------------------
(a) Upon payment in full on any Loan, the Servicer will notify the
Trustee and Conseco Finance Corp. (if Conseco Finance Corp. is not the Servicer)
on the next succeeding Payment Date by certification of a Servicing Officer
(which certification shall include a statement to the effect that all amounts
received in connection with such payments which are required to be deposited in
the Certificate Account pursuant to Section 5.05 have been so deposited and may
be in substantially the form of Exhibit J-4 hereto) and shall request delivery
of the Loan and Loan File to the Servicer. Upon receipt of such delivery and
request, the Trustee shall promptly release or cause to be released such Loan
and Loan File to the Servicer. Upon receipt of such Loan and Loan File, each of
Conseco Finance Corp. (if different from the Servicer) and the Servicer is
authorized to execute an instrument in satisfaction of such Loan and to do such
other acts and execute such other documents as the Servicer deems necessary to
discharge the Obligor thereunder and eliminate any lien on the related real
estate. The Servicer shall determine when a Loan has been paid in full;
provided, that, to the extent that insufficient payments are received on a Loan
credited by the Servicer as prepaid or paid in full and satisfied, the shortfall
shall be paid by the Servicer out of its own funds, without any right of
reimbursement therefor (except from additional amounts recovered from the
related Obligor or otherwise in respect of such Loan), and deposited in the
Certificate Account.
(b) From time to time as appropriate for servicing and foreclosing in
connection with a Loan, the Trustee shall, upon written request of a Servicing
Officer (which may be substantially in the form of Exhibit J-4 hereto) and
delivery to the Trustee of a receipt signed by such Servicing Officer, cause the
original Loan and the related Loan File to be released to the Servicer and shall
execute such documents as the Servicer shall deem necessary to the prosecution
of any such proceedings. The Trustee shall stamp the face of each such Loan to
be released to the Servicer with a notation that the Loan has been assigned to
the Trustee. Upon request of a Servicing Officer, the Trustee shall perform such
other acts as reasonably requested
79
by the Servicer and otherwise cooperate with the Servicer in enforcement of the
Certificateholders' and Class R Certificateholder's rights and remedies with
respect to Loans.
(c) The Servicer's receipt of a Loan and/or Loan File shall obligate
the Servicer to return the original Loan and the related Loan File to the
Trustee when its need by the Servicer has ceased unless the Loan shall be
liquidated or repurchased or replaced as described in Section 3.06 or Section
8.06.
SECTION 5.08. Costs and Expenses. All costs and expenses incurred by
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the Servicer in carrying out its duties hereunder, including payment of all fees
and expenses incurred in connection with the enforcement of Loans, foreclosure
upon real estate securing any such Loans and all other fees and expenses not
expressly stated hereunder to be for the account of the Trust or the Originator,
and, while the Originator or a subsidiary or affiliate of the Originator is the
Servicer, payment of the Trustee's fees pursuant to Section 8.06 and fees and
expenses of accountants, shall be paid by the Servicer and the Servicer shall
not be entitled to reimbursement hereunder, except as provided in this Section
and except that the Servicer shall be reimbursed for any Liquidation Expense not
in excess of the Related Proceeds pursuant to Section 8.04(a)(ii). The Servicer
shall not incur any Liquidation Expense unless it determines in its good faith
business judgment that (i) incurring such expense will increase the Net
Liquidation Proceeds on the related Loan, and (ii) that the Liquidation Expense,
if incurred, would not constitute a Non-Recoverable Liquidation Expense. Any
Liquidation Expense previously incurred by the Servicer that is determined by
the Servicer to have become a Non-Recoverable Liquidation Expense shall be
reported on the related Monthly Report. The Trustee shall not be responsible for
determining whether any such determination was reasonable. In the case of
Conseco Finance, but not the Backup Servicer or any successor Servicer,
reimbursement for Liquidation Expenses incurred in connection with filing claims
in bankruptcy proceedings for those Loans for which no Liquidation Proceeds are
ultimately received shall not exceed $500 per loan or $50,000 in the aggregate.
So long as the Servicer is not the Originator or a subsidiary or Affiliate of
the Originator, the Servicer shall be reimbursed from the Trust for any
third-party costs incurred by it pursuant to Sections 5.12, 6.06, 7.02 or 11.06.
The Backup Servicer shall also be reimbursed from the Trust for all
extraordinary costs and expenses and all reimbursed costs and expenses shall be
paid to the Backup Servicer under Section 8.04(b)(i).
SECTION 5.09. Maintenance of Insurance. The Servicer shall at all times
------------------------
keep in force a policy or policies of insurance covering errors and omissions
for failure to maintain insurance as required by this Agreement, and a fidelity
bond. Such policy or policies and such fidelity bond shall be in such form and
amount as is generally customary among persons who service a portfolio of home
equity loans having an aggregate principal amount of $10,000,000 or more, and
which are generally regarded as servicers acceptable to institutional investors.
The Servicer shall cause to be maintained with respect to the real property
securing a Loan hazard insurance (excluding flood insurance coverage) if such
Loan is secured by a first priority mortgage, deed of trust or security deed or
the initial principal balance of such Loan exceeds $20,000.
SECTION 5.10. Merger or Consolidation of Servicer. Any Person into
-----------------------------------
which the Servicer may be merged or converted or with which it may be
consolidated, or any Person
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resulting from any merger, conversion or consolidation to which the Servicer
shall be a party shall be the successor of the Servicer hereunder, provided,
however, that such Person shall be an Eligible Servicer, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding. The Servicer shall
promptly notify each of the Rating Agencies and the Backup Servicer in the event
it is a party to any merger, conversion or consolidation.
SECTION 5.11. Advance Facility.
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(a) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, a "P&I Advance Facility"), the
documentation for which complies with Section 5.11(e) below, under which (1) the
Servicer assigns or pledges its rights under this Agreement to be reimbursed for
any or all Advances to a special-purpose bankruptcy-remote entity (an "SPV"),
which in turn, directly or through other assignees and/or pledges, assigns or
pledges such rights to a Person, which may include a trustee acting on behalf of
holders of debt instruments (any such Person, an "Advance Financing Person"),
and/or (2) an Advance Financing Person agrees to fund some or all Advances
required to be made by the Servicer pursuant to this Agreement. No consent of
the Trustee, Certificateholders or any other party is required before the
Servicer may enter into a P&I Advance Facility. Notwithstanding the existence of
any P&I Advance Facility under which an Advance Financing Person agrees to fund
Advances on the Servicer's behalf, the Servicer shall remain obligated pursuant
to this Agreement to make Advances pursuant to and as required by this
Agreement, and shall not be relieved of such obligations by virtue of such P&I
Advance Facility. If the Servicer enters into a P&I Advance Facility, and for so
long as an Advance Financing Person remains entitled to receive reimbursement
for any Advances outstanding and previously unreimbursed pursuant to this
Agreement, then the Servicer shall not be permitted to reimburse itself for
Advances, pursuant to Section 8.04(b)(ii) of this Agreement, but instead the
Servicer's assignee and designee (the "Servicer's Assignee") shall have the
right to receive from the Trustee from amounts in the Certificate Account
collections that the Servicer would otherwise have the right to receive from the
Certificate Account, pursuant to Section 8.04(b)(ii) of this Agreement, amounts
available to reimburse previously unreimbursed Advances ("P&I Reimbursement
Amounts").
(b) If the Servicer enters into a P&I Advance Facility, the Servicer
and the related Advance Financing Person shall deliver to the Trustee a written
notice of the existence of such P&I Advance Facility (a "P&I Advance Facility
Notice"), stating the identity of the Advance Financing Person and the related
Servicer's Assignee, and specifying what Advances are covered by the P&I Advance
Facility. A P&I Advance Facility may only be terminated by the joint written
direction of the applicable Servicer and the related Advance Financing Person.
(c) P&I Reimbursement Amounts shall consist solely of amounts in
respect of Advances made with respect to the Delinquent Payments for which the
Servicer would be permitted to reimbursement in accordance with Section
8.04(b)(ii) hereof, assuming the Servicer had made the related Advance(s).
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(d) An Advance Financing Person who receives an assignment or pledge of
rights to receive P&I Reimbursement Amounts and/or whose obligations hereunder
are limited to the funding of Advances shall not be required to meet the
criteria for qualification as an Eligible Servicer.
(e) The documentation establishing any P&I Advance Facility shall
require that P&I Reimbursement Amounts be allocated to outstanding unreimbursed
Advances on a "first-in, first out" ("FIFO") basis. In the event that, as a
result of this FIFO allocation, some or all of a P&I Reimbursement Amount
related to Advances that were made by a Person other than Conseco Finance Corp.
or the Advance Financing Person, then the Servicer's Assignee shall be required
to remit any portion of such P&I Reimbursement Amount to each person entitled to
such portion of such P&I Reimbursement Amount. At any time when the Advance
Financing Person shall have ceased funding Advances, including without
limitation a servicing transfer pursuant to Article VII, and the Servicer's
Assignee shall have received from the Certificate Account P&I Reimbursement
Amounts sufficient to reimburse all Advances, the right to reimbursement for
which were assigned to the Servicer's Asignee, then the Servicer's Assignee and
the Advance Financing Person and the Servicer shall deliver a written notice to
the Trustee terminating the P&I Advance Facility, whereupon the applicable
Servicer shall again be entitled to receive from the Trustee the related P&I
Reimbursement Amounts from the Certificate Account pursuant to Section
8.04(b)(ii). Without limiting the generality of the foregoing, the Servicer
shall remain entitled to be reimbursed by the Advance Financing Person for all
Advances funded by the Servicer to the extent the related P&I Reimbursement
Amount(s) have not been assigned or pledged to an Advance Financing Person or
related Servicer's Assignee. By way of illustration, and not by way of limiting
the generality of the foregoing, if a Servicer who is a party to a P&I Advance
Facility resigns or is terminated, and is replaced by a successor Servicer, and
the successor Servicer directly funds Advances and does not assign or pledge the
related P&I Reimbursement Amounts to an Advance Financing Person, then after all
P&I Reimbursement Amounts that are owed to the predecessor Servicer and the
related Advance Financing Person, which were made prior to any advances made by
the successor Servicer, have been reimbursed in full, then the successor
Servicer shall be entitled to receive all P&I Reimbursement Amounts collected
with respect to the Loans.
(f) The Servicer is hereby authorized to enter into a financing or
other facility (any such arrangement, a "CLEAR Advance Facility"), the
documentation for which complies with Section 5.11(j) below, under which (1) the
Servicer assigns or pledges its rights under this Agreement to be reimbursed for
any or all Liquidation Expenses incurred by it as to which it is entitled to
reimbursement pursuant to Section 8.04(a)(ii) (a "Servicer Expense Advance") to
an SPV, which in turn, directly or through other assignees and/or pledges,
assigns or pledges such rights to an Advance Financing Person, and/or (2) an
Advance Financing Person agrees to fund some or all Servicer Expense Advances
required to be incurred by the Servicer pursuant to this Agreement. No consent
of the Trustee, Certificateholders or any other party is required before the
Servicer may enter into a CLEAR Advance Facility. Notwithstanding the existence
of any CLEAR Advance Facility under which an Advance Financing Person agrees to
fund Servicer Expense Advances on the Servicer's behalf, the Servicer shall
remain obligated pursuant to this Agreement to incur Liquidation Expenses
pursuant to and as required by this Agreement, and
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shall not be relieved of such obligations by virtue of such Advance Facility. If
the Servicer enters into a CLEAR Advance Facility, and for so long as a CLEAR
Advance Financing Person remains entitled to receive reimbursement for any
Servicer Expense Advances incurred and previously unreimbursed pursuant to this
Agreement, then the Trustee shall not reimburse the Servicer for Servicer
Expense Advances pursuant to Section 8.04(a)(ii) of this Agreement, but instead
the SPV, as the Servicer's assignee and designee (the "Servicer's Assignee"),
and the Advance Financing Person, as the pledgee and assignee of the Servicer's
Assignee, shall have the right to receive out of the Certificate Account
collections that the Servicer would otherwise have the right to receive from the
Certificate Account, pursuant to Section 8.04(a)(ii) of this Agreement, amounts
available to reimburse previously unreimbursed Servicer Expense Advances
("Expense Reimbursement Amounts").
(g) If the Servicer enters into a CLEAR Advance Facility, the Servicer
and the related Advance Financing Person shall deliver to the Trustee a written
notice of the existence of such Advance Facility (a "CLEAR Advance Facility
Notice"), stating the identity of the Advance Financing Person and the related
Servicer's Assignee, and specifying what Servicer Expense Advances are owned by
the CLEAR Advance Facility. A CLEAR Advance Facility may only be terminated by
the joint written direction of the applicable Servicer and the related Advance
Financing Person. Once a CLEAR Advance Facility Notice has been delivered to the
Trustee, and until a joint written direction that the Advance Facility has been
terminated is delivered to the Trustee, no amendment to this Agreement may be
made without the prior written consent of the Advance Financing Person unless a
transfer of servicing has occurred pursuant to Article VII and the Advance
Finance Person has received all Expense Reimbursement Amounts.
(h) Expense Reimbursement Amounts shall consist solely of amounts in
respect of Servicer Expense Advances incurred in connection with the liquidation
of Loans for which the Servicer would be permitted to be reimbursed in
accordance with Section 8.04(a)(ii) hereof, assuming the Servicer had incurred
the related Servicer Expense Advances.
(i) An Advance Financing Person who receives an assignment or pledge of
rights to receive Expense Reimbursement Amounts and/or whose obligations
hereunder are limited to the funding of Servicer Expense Advances shall not be
required to meet the criteria for qualification as an Eligible Servicer.
(j) The documentation establishing any CLEAR Advance Facility shall
require that Reimbursement Amounts be allocated to outstanding unreimbursed
Servicer Expense Advances on a FIFO basis. In the event that, as a result of
this FIFO allocation, some or all of an Expense Reimbursement Amount related to
Servicer Expense Advances made by a Person other than Conseco Finance Corp. or
the Advance Financing Person, then the Servicer's Assignee shall be required to
remit any portion of such Expense Reimbursement Amount to each person entitled
to such portion of such Expense Reimbursement Amount. At any time when the
Advance Financing Person shall have ceased funding Servicer Expense Advances,
including without limitation upon a servicing transfer pursuant to Article VII,
and the Trustee shall have withdrawn from the Certificate Account, and remitted
to the Advance Financing Person, Expense Reimbursement Amounts sufficient to
reimburse all Servicer Expense Advances, the right to
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reimbursement for which were assigned to the Servicer's Assignee and pledged and
assigned to the Advance Financing Person, then the Servicer's Assignee and the
Advance Financing Person and the Servicer shall deliver a written notice to the
Trustee terminating the CLEAR Advance Facility Notice, whereupon the applicable
Servicer shall again be entitled to payment of the related Expense Reimbursement
Amounts pursuant to Section 8.04(a)(ii). Without limiting the generality of the
foregoing, the Servicer shall remain entitled to reimbursement from the
Servicer's Assignee and/or the Advance Financing Person for all Servicer Expense
Advances funded by the Servicer to the extent the related Expense Reimbursement
Amount(s) have not been assigned or pledged to an Advance Financing Person or
related Servicer's Assignee. By way of illustration, and not by way of limiting
the generality of the foregoing, if a Servicer who is a party to a CLEAR Advance
Facility resigns or is terminated, and is replaced by a successor Servicer, and
the successor Servicer directly incurs Servicer Expense Advances with respect to
a Loan and does not assign or pledge the related Expense Reimbursement Amounts
to an Advance Financing Person, then after all Expense Reimbursement Amounts
attributable to that Loan that are owed to the predecessor Servicer and the
related Advance Financing Person, which were made prior to any Servicer Expense
Advances made by the successor Servicer, have been reimbursed in full, then the
successor Servicer shall be entitled to receive all Expense Reimbursement
Amounts subsequently collected with respect to that Loan.
SECTION 5.12. Backup Servicer.
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(a) Appointment Period. The Backup Servicer hereby acknowledges and
------------------
agrees that any time during the period beginning on the Closing Date and ending
on the date on which the Original Class Principal Balance of the Certificates
has been reduced to zero (such period, the "Appointment Period"), at the sole
option of the Trustee following a termination of Conseco Finance as the Servicer
hereunder, the Trustee may appoint the Backup Servicer as the successor Servicer
hereunder, subject to the provisions of Article VII herein relating to the
termination and succession of the Servicer. The Backup Servicer shall be
reimbursed under Section 8.04(b)(i) for any and all costs and expenses incurred
by it in and related to the transfer of servicing to the Backup Servicer under
this Agreement. Such costs and expenses include, without limitation, any costs
or expenses associated with the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Backup Servicer to correct any errors or insufficiencies in the servicing
data or otherwise to enable the Backup Servicer to service the Contracts
properly and effectively.
(b) Transfer of Servicing. The Backup Servicer hereby agrees that, in
---------------------
the event that pursuant to Article VII herein it becomes a successor Servicer
during the Appointment Period, as stated in Section 5.12(a) above, it shall
assume, the duties of the Servicer hereunder, and the rights of the Servicer
hereunder, including the rights to the compensation provided to the Servicer
hereunder, subject to the provisions of Article VII herein relating to the
termination and succession of the Servicer. Subject to the provisions of Article
VII herein relating to the termination and succession of the Servicer, the
Backup Servicer shall assume such duties and rights as expeditiously as
possible, but in no event greater than 60 days after receipt of notice from the
Trustee, that Conseco Finance is no longer the Servicer hereunder and that the
Trustee has directed that the Backup Servicer be appointed as successor
Servicer, and the Backup
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Servicer shall deliver at such time such written acceptance of appointment as
successor Servicer hereunder as the Trustee and the Trust shall reasonably
require. The Backup Servicer shall within 10 days, or whenever commercially
reasonable, send notices to obligors of the servicing transfer.
(c) Fee. For undertaking its role as Backup Servicer under this
---
Agreement, the Backup Servicer shall be entitled to receive the Backup Servicing
Fee pursuant in Section 8.04(b)(i) for its availability during the Appointment
Period.
(d) Due Diligence. The Backup Servicer shall perform such due diligence
-------------
and auditing of Conseco Finance Corp. and its servicing programs and systems as
it requires to permit the Backup Servicer to, and on or before 90 days after
closing the Backup Servicer shall, (i) perform a complete "data mapping" of
Conseco Finance Corp.'s servicing systems, (ii) identify the data (including
format) (the "Data") required to permit the Backup Servicer to assume the duties
of Servicer under this Agreement without delay on account of caused by the
absence of relevant servicing information, and (iii) deliver to Conseco Finance
Corp., the Trustee, S&P and Fitch a description of such Data. Conseco Finance
Corp. shall provide full access to the Backup Servicer, its employees and
agents, for the performance of such due diligence and auditing. The Backup
Servicer shall conduct all such reviews in a manner which does not unreasonably
interfere with the normal operations of Conseco Finance Corp. or its customer or
employee relations. Conseco Finance Corp. will reimburse the Backup Servicer for
all reasonable costs and expenses associated with the performance of such due
diligence in an amount not to exceed $100,000.
(e) Initial Information. Conseco Finance Corp. has delivered to the
-------------------
Backup Servicer a complete data file for each Loan, collateral and Certificate
cashflows, price and yield information for each Class of Certificates,
collateral modeling assumptions, tax treatment of the collateral and the each
Class of Certificates, and such other initial information as the Backup Servicer
has requested.
(f) Monthly Information. On at least a monthly basis each Payment Date
-------------------
beginning with the month of Payment Date in May, 2002, Conseco Finance Corp.
shall deliver to the Backup Servicer the then-current Data. The Backup Servicer
shall promptly notify the Trustee, Conseco Finance Corp. and the Rating Agencies
if the Backup Servicer does not receive the Data from Conseco Finance Corp. each
month during the Appointment Period or if the Backup Servicer determines that
the Data received by it is not sufficient to enable it to act as Servicer.
Except as provided in the foregoing sentence, unless and until the Backup
Servicer becomes the Servicer, the Backup Servicer will have no obligations with
respect to servicing data received by it, nor any reporting obligations. If the
Backup Servicer determines it reasonably requires additional information to
enable it to assume the duties of Servicer, it will notify Conseco Finance
Corp., the Trustee and the Rating Agencies of such additional required
information and thereafter the "Data" to be delivered under this Section 5.12(f)
shall include such additional information; provided that Conseco Finance Corp.
shall have a reasonable time to take such action as may reasonably be required
to enable it to furnish such additional information on a monthly basis.
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(g) Quarterly and Annual Information. Conseco Finance Corp. will
--------------------------------
provide to the Backup Servicer, on a quarterly basis, copies of all Form 1099
and Form 1066 filings, and, on an annual basis, copies of all Form 1099 and
Schedule Q filings.
(h) Periodic Inspection. During the Appointment Period, Conseco Finance
-------------------
Corp. will permit the Backup Servicer, upon reasonable notice and during normal
working hours, to perform periodic, on-site due diligence reviews of Conseco
Finance Corp.'s performance of its obligations as Servicer and to review all
records in the custody of Conseco Finance Corp. relating to the Loans. The
Backup Servicer will conduct all such reviews in a manner which does not
unreasonably interfere with the normal operations of Conseco Finance Corp. or
customer or employee relations. The Backup Servicer will be entitled to
reimbursement for all reasonable expenses incurred with regard to such
inspections under Section 8.04(b)(ii). Without otherwise limiting the scope of
the examination that the Backup Servicer may make, the Backup Servicer may,
using generally accepted auditing procedures, verify the status of each loan and
review the Electronic Ledger and records relating thereto for (i) conformity to
the servicing records provided pursuant to Section 5.12(e) and (ii) compliance
with the representations in this Agreement regarding the Contracts. If Conseco
Finance Corp. in any way materially changes its servicing system or reporting
format, it will promptly notify the Backup Servicer.
(i) Confidential Information. The Backup Servicer agrees to hold any
------------------------
servicing information in confidence and to disclose such information only as
required by this Agreement, applicable law or as necessary in the course of
prudent servicing practices.
(j) Limitation of Liability. The Backup Servicer, as Servicer, shall
-----------------------
have no liability for errors in withholding tax as required by Section 3.07,
provided that no provision of this Agreement shall be construed to relieve the
Backup Servicer from liability for its own negligence.
(k) Successor Backup Servicer. The Backup Servicer may at any time
-------------------------
resign and be discharged from its obligations under this Agreement, provided
that a successor Backup Servicer acceptable (as evidenced in writing) to the
Rating Agencies shall have executed and delivered to the Servicer, the
Originator, the Trustee and the predecessor Backup Servicer, an instrument
accepting such appointment and agreeing to be bound by the terms of this
Agreement. Upon such acceptance, the resignation of the predecessor Backup
Servicer shall become effective. The predecessor Backup Servicer shall cooperate
in effecting the transfer of its obligations to the successor.
(l) Termination. The Backup Servicer and the Trust hereby acknowledge
-----------
and agree that all obligations of the Backup Servicer hereunder shall terminate
upon the expiration of the Appointment Period.
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ARTICLE VI
REPORTS AND TAX MATTERS
SECTION 6.01. Monthly Reports. No later than one Business Day following
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each Determination Date, the Servicer shall deliver to the Trustee, the Backup
Servicer and the Rating Agencies a Monthly Report, substantially in the form of
Exhibit M hereto.
SECTION 6.02. Officer's Certificate. Each Monthly Report pursuant to
---------------------
Section 6.01 shall be accompanied by a certificate of a Servicing Officer
substantially in the form of Exhibit H, certifying the accuracy of the Monthly
Report and that no Event of Termination or event that with notice or lapse of
time or both would become an Event of Termination has occurred, or if such event
has occurred and is continuing, specifying the event and its status.
SECTION 6.03. Other Data. In addition, the Originator and (if different
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from the Originator) the Servicer shall, on request of the Trustee or any of the
Rating Agencies, furnish the Trustee and/or any such Rating Agencies such
underlying data as may be reasonably requested.
SECTION 6.04. Annual Report of Accountants. On or before May 1 of each
----------------------------
year, commencing May 1, 2003, Conseco Finance, if it is the Servicer, at its
expense shall cause PricewaterhouseCoopers LLP, or another firm of independent
public accountants which is a member of the American Institute of Certified
Public Accountants, to issue to the Servicer a report that such firm has
examined selected documents, records and management's assertions relating to
loans serviced by the Servicer and stating that, on the basis of such
examination, such servicing has been conducted in compliance with the minimum
servicing standards identified in the Mortgage Bankers Association of America's
Uniform Single Attestation Program for Mortgage Bankers, or any successor
uniform program, except for such significant exceptions or errors in records
that, in the opinion of such firm, generally accepted attestation standards
requires it to report.
SECTION 6.05. Statements to Certificateholders and the Class R
------------------------------------------------
Certificateholder.
-----------------
(a) The Servicer shall prepare and furnish to the Trustee the
statements specified below relating to the Class A, Class M, Class B, Class
B-3I, Class P and Class R Certificates on or before the third Business Day next
preceding each Payment Date.
(b) Concurrently with each distribution to Certificateholders, the
Trustee shall, so long as it has received the Monthly Report from the Servicer,
forward or cause to be forwarded by mail to each Holder of a Class A, Class M,
Class B, Class B-3I, Class P and Class R Certificate and (if the Originator is
not the Servicer) the Originator a statement setting forth the following:
(i) the amount of such distribution to Holders of each Class of
Certificates allocable to interest (separately identifying
any Unpaid Class Interest
87
Carry Forward Amount, Unpaid Class Basis Risk Carryover
Shortfall and Unpaid Class Realized Loss Interest Amount
included);
(ii) the amount of such distribution to Holders of each Class of
Certificates allocable to principal (separately identifying
the aggregate amount of any principal prepayments, any
Overcollateralization Increase Amount and payments in
respect of any Allocated Realized Loss Amounts) and the
amount by which each Class Formula Principal Distribution
Amount exceeds the Distribution Amount for such Class;
(iii) the Class Interest Carry Forward Amount, Unpaid Class
Interest Carry Forward Amount (after giving effect to any
payment to be made in reduction thereof on such Payment
Date), Class Basis Risk Carryover Shortfall and Unpaid Class
Basis Risk Carryover Shortfall (after giving effect to any
payment to be made in reduction thereof on such Payment
Date), if any, for each Class;
(iv) the Class Allocated Realized Loss Interest Amount, Unpaid
Class Realized Loss Interest Amount (after giving effect to
any payment to be made in reduction thereof on such Payment
Date) and Unpaid Class Realized Loss Amount (after giving
effect to any payment to be made in reduction thereof on
such Payment Date), if any, for each of the Class M-1, M-2,
B-1 and B-2 Certificates;
(v) the amount, if any, by which the Formula Principal
Distribution Amount for each of the Class A-1, the Class
A-2, the Class A-3, the Class M-1, the Class M-2, the Class
B-1 and the Class B-2 Certificates exceeds the Distribution
Amount for that Certificate;
(vi) the Pool Factor;
(vii) the Class A-1, the Class A-2, the Class A-3, the Class M-1,
the Class M-2, the Class B-1, the Class B-2 and the Class P
Principal Balances, and the notional principal amount for
the Class A-IO Certificates, after giving effect to the
distribution of principal and any Class Allocated Realized
Loss Amount on such Payment Date;
(viii) the Pool Scheduled Principal Balance, the
Overcollateralization Amount and the Required
Overcollateralization Amount on such Payment Date;
(ix) the Cumulative Realized Losses as of the last day of the
calendar month preceding such Payment Date;
(x) the amount of the Monthly Servicing Fee with respect to the
immediately preceding Due Period;
88
(xi) the Class R-III Distribution Amount (if any);
(xii) the number and aggregate Scheduled Principal Balances of the
Loans that are (A) delinquent (1) 30-59 days, (2) 60-89
days, and (3) 90 or more days, (B) in foreclosure, (C) in
bankruptcy and (D) REO;
(xiii) the number and aggregate Scheduled Principal Balance of the
Loans that became Defaulted Loans during the immediately
preceding Due Period;
(xiv) the number and aggregate Scheduled Principal Balance of the
Loans that were Defaulted Loans as of the last day of the
immediately preceding Due Period;
(xv) the number and aggregate Scheduled Principal Balance of the
Loans that became Liquidated Loans during the immediately
preceding Due Period and the related Net Liquidation Losses;
(xvi) the number and aggregate Scheduled Principal Balance of the
Loans (x) in foreclosure, (y) as to which foreclosure of the
related real property lien was completed during the related
Due Period, exclusive of any such Loans that are Liquidated
Loans and (z) foreclosed upon and in the Servicer's
inventory; and
(xvii) the amount of any distribution to Holders of the Class P
Certificate allocable to Prepayment Charges.
In the case of information furnished pursuant to clauses (i) through
(viii) above, the amounts shall be expressed as a dollar amount per $1,000
denomination of each Certificate.
(c) Copies of all reports and statements provided to the Trustee for
the Certificateholders shall also be provided to the Rating Agencies and the
Class R Certificateholder.
(d) In addition, within a reasonable period of time after the end of
each calendar year, the Servicer will furnish a report to each Certificateholder
of record at any time during such calendar year as to the aggregate of amounts
reported pursuant to (i) and (ii) above for such calendar year.
SECTION 6.06. Payment of Taxes. The Servicer shall be responsible for
----------------
and agrees to prepare, make and timely file all federal, state, local or other
tax returns, information statements and other returns and documents of every
kind and nature whatsoever required to be made or filed by or on behalf of the
Trust pursuant to the Code and other applicable tax laws and regulations. Each
such return, statement and document shall, to the extent required by the Code or
other applicable law and at the request of the Servicer, be signed on behalf of
the Trust by the Trustee. The Trustee shall have no responsibility whatsoever
for the accuracy or completeness of any such return, statement or document. The
Servicer agrees to indemnify the Trustee and
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hold it harmless for, from, against and in respect to any and all liability,
loss, damage and expense which may be incurred by the Trustee based upon or as a
result of the Trustee's execution of any and all such tax returns, statements
and documents. The Servicer, if and for so long as it is a Class R
Certificateholder, shall be designated the "tax matters person" on behalf of the
Trust in the same manner as a partnership may designate a "tax matters partner,"
as such term is defined in Section 6231(a)(7) of the Code. To the extent
permitted by the REMIC Provisions, any subsequent holder of the Class R
Certificate, by acceptance thereof, irrevocably designates and appoints the
Servicer as its agent to perform the responsibilities of the "tax matters
person" on behalf of the Trust if, and during such time as, the Servicer is not
the holder of the Class R Certificate. The Servicer may, at its expense if the
Originator or a subsidiary or affiliate of the Originator is the Servicer, and
otherwise subject to reimbursement under Section 5.08 and 8.04(b), retain such
outside assistance as it deems necessary in the performance of its obligations
under this paragraph. The Servicer shall provide to the Internal Revenue Service
the name, title, address and telephone number of the person who will serve as
the representative of the REMICs.
Each of the Holders of the Certificates or the Class R Certificate, by
acceptance thereof, agrees to file tax returns consistent with and in accordance
with any elections, decisions or other reports made or filed with regard to
federal, state or local taxes on behalf of the Trust. The Servicer, as tax
matters person or as agent for the tax matters person, shall represent the Trust
in connection with all examinations of the Trust's affairs by tax authorities,
including resulting administrative and judicial proceedings. Each of the Holders
of the Certificates and the Class R Certificate, by acceptance thereof, agrees
to cooperate with the Servicer in such matters and to do or refrain from doing
any or all things reasonably required by the Servicer to conduct such
proceedings, provided, that, no such action shall be required by the Servicer of
any Certificateholder that would entail unnecessary or unreasonable expenses for
such Certificateholder in the performance of such action.
The Class R Certificateholder shall pay, on behalf of the Trust, any
foreign, federal, state or local income, property, excise, sales, receipts or
any other similar or related taxes or charges which may be imposed upon the
Master REMIC, Intermediate REMIC, Subsidiary REMIC or Basement REMIC or
otherwise and shall, to the extent provided in Section 10.06, be entitled to be
reimbursed out of the Certificate Account or, if such tax or charge results from
a failure by the Trustee, the Originator or any Servicer to comply with the
provisions of Section 2.04 or 3.07, or a failure by any Servicer to comply with
the provisions of this Section 6.06, the Trustee, the Originator or such
Servicer, as the case may be, shall indemnify the Class R Certificateholder for
the payment of any such tax or charge. The Trustee shall be entitled to withhold
from amounts otherwise distributable to the Class R Certificateholder any taxes
or charges payable by the Class R Certificateholder hereunder.
In the event the Class R Certificate is transferred to a "disqualified
organization," within the meaning of Section 860E(e)(5) of the Code, pursuant to
Section 860D(a)(6)(B) of the Code the Originator shall provide to the Internal
Revenue Service and the persons specified in Sections 860(E)(e)(5) and (6) of
the Code all information necessary for the application of Section 860E(e) and
any other applicable provision of the Code with respect to the transfer of the
Class R Certificate to such disqualified organization including, without
limitation, a computation
90
showing the present value of the total anticipated excess inclusions with
respect to such Class R Certificate for periods after the transfer as defined in
the REMIC Provisions. In addition, to the extent required by the REMIC
Provisions, the Originator shall, upon the written request of persons designated
in Section 860E(e)(5) of the Code, furnish to such requesting party and the
Internal Revenue Service information sufficient to compute the present value of
anticipated excess inclusions within 60 days of the receipt of such written
request.
ARTICLE VII
SERVICE TRANSFER
SECTION 7.01. Events of Termination. "Event of Termination" means the
---------------------
occurrence of any of the following:
(i) any failure by the Servicer to make any payment or deposit
required to be made hereunder (including an Advance) and the
continuance of such failure for a period of four Business
Days;
(ii) failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement in this Agreement
(other than a covenant or agreement which is elsewhere in
this Section specifically dealt with) which continues
unremedied for 30 days;
(iii) any assignment or delegation by the Servicer of its duties
or rights hereunder except as specifically permitted
hereunder, or any attempt to make such an assignment or
delegation;
(iv) a court having jurisdiction in the premises shall have
entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of
the Servicer, as the case may be, or for any substantial
liquidation of its affairs;
(v) the Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or shall have consented to the entry
of an order for relief in an involuntary case under any such
law, or shall have consented to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee,
custodian or sequestrator (or other similar official) of the
Servicer or for any substantial part of its property, or
shall have made any general assignment for the benefit of
its creditors, or shall have failed to, or admitted in
writing its inability to, pay its debts as they become due,
or shall have taken any corporate action in furtherance of
the foregoing;
(vi) the failure of the Servicer to be an Eligible Servicer;
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(vii) if Conseco Finance Corp. is the Servicer, Conseco Finance
Corp.'s servicing rights under its master seller-servicer
agreement with GNMA are terminated by GNMA; or
(viii) if Conseco Finance Corp. is the Servicer, either the
Servicer Termination Delinquency Test or the Servicer
Termination Cumulative Loss Test for any Payment Date is not
satisfied.
SECTION 7.02. Transfer. If an Event of Termination has occurred and is
--------
continuing, either the Trustee or Certificateholders, in the aggregate,
representing 25% or more of the Aggregate Certificate Principal Balance, by
notice in writing to the Servicer and the Backup Servicer (and to the Trustee if
given by the Certificateholders) may terminate all (but not less than all) of
the Servicer's management, administrative, servicing and collection functions
(such notice being herein called a "Service Transfer Notice" and such
termination being herein called a "Service Transfer"). On receipt of such
Service Transfer Notice (or, if later, on a date designated therein) (the date
of receipt of such Service Transfer Notice being herein called a "Service
Transfer Notice Date," and the later of the Service Transfer Notice Date or such
designated date being herein called a "Service Transfer Date"), all authority
and power of the Servicer under this Agreement, whether with respect to the
Loans, the Loan Files or otherwise (except with respect to the Certificate
Account, the transfer of which shall be governed by Section 7.06), may pass to
and be vested in the Backup Servicer, or in the event the Backup Servicer is the
Servicer being terminated or the Trustee or its designee will otherwise become
the Servicer as hereinafter provided in this Section 7.02, the Trustee or its
designee pursuant to and under this Section 7.02; and, without limitation, the
Backup Servicer, if appointed as Servicer, or the Trustee or its designee, as
appropriate, is authorized and empowered to execute and deliver on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do any and all acts or things necessary or appropriate to
effect the purposes of such Service Transfer Notice. The Trustee shall provide
the Backup Servicer (unless it is the Servicer being terminated) with a copy of
any Service Transfer Notice on the Service Transfer Notice Date. The Backup
Servicer (unless it is the Servicer being terminated) shall take over the
servicing responsibilities of the Servicer under this Agreement and become the
Servicer no later than sixty days after the Service Transfer Notice Date (if
such Service Transfer Notice appoints the Backup Servicer as the Servicer);
provided, that, if the Backup Servicer either (i) is incapable of acting as
Servicer, or (ii) fails to become the Servicer prior to the Service Transfer
Date, then the Trustee or its designee shall become the Servicer. The Trustee or
its designee, as appropriate, shall cause all assignments of mortgages, deeds of
trust or security deeds securing the Loans to be duly recorded. Each of the
Originator and the Servicer agrees to cooperate with the Backup Servicer or the
Trustee or its designee, as appropriate, in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Backup Servicer or the Trustee or its designee,
as appropriate, for administration by it of all cash amounts which shall at the
time be held by the Servicer for deposit, or have been deposited by the
Servicer, in the Certificate Account, or for its own account in connection with
its services hereafter or thereafter received with respect to the Loans. The
Servicer shall transfer to the new servicer (i) the Servicer's records relating
to the Loans in such electronic form as the new servicer may reasonably request
and (ii) any Loan Files in the Servicer's possession.
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SECTION 7.03. Trustee to Act; Appointment of Successor. On and after
----------------------------------------
the time the Servicer receives a notice of termination pursuant to Section 7.02,
the Backup Servicer (if appointed by the Trustee) or the Trustee or its
designee, as appropriate, shall be the successor in all respects to the
terminated Servicer in its capacity as servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the
terminated Servicer by the terms and provisions hereof, and the terminated
Servicer shall be relieved of such responsibilities, duties and liabilities
arising after such Service Transfer; provided, however, that
(i) neither the Backup Servicer, the Trustee, nor any successor
servicer shall assume any obligations of the Originator
pursuant to Section 3.06, and
(ii) neither the Backup Servicer, the Trustee, nor any successor
servicer shall be liable for any acts or omissions of the
terminated Servicer occurring prior to such Service Transfer
or for any breach by the terminated Servicer of any of its
obligations contained herein or in any related document or
agreement.
As compensation therefor, the Backup Servicer or the Trustee or its designee, as
appropriate, shall be entitled to receive reasonable compensation out of the
Monthly Servicing Fee. Notwithstanding the above, the Trustee may, if it and the
Backup Servicer shall be unwilling so to act, or shall, if it and the Backup
Servicer are legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, an Eligible Servicer as the successor to the Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Servicer hereunder. Pending appointment of a successor to
the Servicer hereunder, unless the Trustee is prohibited by law from so acting,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements for
the compensation of such successor out of payments on Loans as it and such
successor shall agree; provided, however, that no such monthly compensation
shall, without the written consent of 100% of the Certificateholders, exceed the
Monthly Servicing Fee, and in the case of the Backup Servicer, be less than the
Monthly Servicing Fee. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
SECTION 7.04. Notification to Certificateholders and Class R
----------------------------------------------
Certificateholder.
-----------------
(a) Promptly following the occurrence of any Event of Termination, the
Servicer shall give written notice thereof to the Trustee, to the Backup
Servicer, to S&P, to Fitch, to ▇▇▇▇▇'▇, to the Certificateholders and to the
Class R Certificateholder at their respective addresses appearing on the
Certificate Register.
(b) Within ten days following any termination or appointment of a
successor to the Servicer pursuant to this Article VII, the Trustee shall give
written notice thereof to the Backup Servicer, to S&P, to Fitch, to ▇▇▇▇▇'▇, to
the Certificateholders and to the Class R Certificateholder at their respective
addresses appearing on the Certificate Register.
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SECTION 7.05. Effect of Transfer.
------------------
(a) After the Service Transfer, the Trustee or new Servicer shall
notify Obligors to make payments directly to the new Servicer that are due under
the Loans after the effective date of the Service Transfer.
(b) After the Service Transfer, the replaced Servicer shall have no
further obligations with respect to the management, administration, servicing or
collection of the Loans and the new Servicer shall have all of such obligations,
except (i) that the Backup Servicer shall have no responsibility or obligation
for any act or omission of the replaced Servicer and (ii) that the replaced
Servicer will transmit or cause to be transmitted directly to the new Servicer
for its own account, promptly on receipt and in the same form in which received,
any amounts (properly endorsed where required for the new Servicer to collect
them) received as payments upon or otherwise in connection with the Loans.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer
and the Originator pursuant to Article X and Sections 3.07, 11.06 and 11.12(vi))
other than those relating to the management, administration, servicing or
collection of the Loans after the Service Transfer.
SECTION 7.06. Transfer of Certificate Account. Notwithstanding the
-------------------------------
provisions of Section 7.02, if the Certificate Account shall be maintained with
the Servicer and an Event of Termination shall occur and be continuing, the
Servicer shall, after five days' written notice from the Trustee, or in any
event within ten days after the occurrence of the Event of Termination,
establish a new account or accounts in trust for the Certificateholders and the
Class R Certificateholder conforming with the requirements of this Agreement at
the corporate trust department of the Trustee or with an institution other than
the Servicer and promptly cause the Trustee to transfer all funds in the
Certificate Account to such new account, which shall thereafter be deemed the
Certificate Account for the purposes hereof.
ARTICLE VIII
PAYMENTS
SECTION 8.01. Monthly Payments.
----------------
(a) Subject to the terms of this Article VIII, each Holder of a
Certificate or Class R Certificate as of a Record Date shall be paid on the next
succeeding Payment Date by check mailed to such Certificateholder or Class R
Certificateholder at the address for such Certificateholder or Class R
Certificateholder appearing on the Certificate Register (or, if such
Certificateholder holds Certificates of a Class with an aggregate Percentage
Interest of at least 5% of such Class and so requests, by wire transfer pursuant
to instructions delivered to the Trustee at least ten days prior to such Payment
Date), the sum equal to such Certificateholder's or Class R Certificateholder's
Percentage Interest of the Class A-1 Distribution Amount, the Class A-2
Distribution Amount, the Class A-3 Distribution Amount, the Class A-IO
Distribution Amount, the Class X-IO Distribution Amount, the Class M-1
Distribution Amount, the
94
Class M-2 Distribution Amount, the Class B-1 Distribution Amount, the Class B-2
Distribution Amount, the Class B-3I Distribution Amount, the Class P
Distribution Amount and the Class R-III Distribution Amount, as applicable.
Final payment of any Certificate or the Class R Certificate shall be made only
upon presentation and surrender of such Certificate or Class R Certificate at
the office or agency of the Paying Agent.
(b) Each distribution with respect to a Book-Entry Certificate shall be
paid to the Depository, which shall credit the amount of such distribution to
the accounts of its Depository Participants in accordance with its normal
procedures. Each Depository Participant shall be responsible for disbursing such
distribution to the Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the Certificate Owners that it represents. All such credits
and disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions of
the Book-Entry Certificates. Neither the Trustee, the Certificate Registrar, the
Seller nor the Originator shall have any responsibility therefor except as
otherwise provided by applicable law. To the extent applicable and not contrary
to the rules of the Depository, the Trustee shall comply with the provisions of
the form of the Certificates as set forth in Exhibits A through C hereto, the
Class B-3I Certificate as set forth in Exhibit I hereto and the Class R
Certificate as set forth in Exhibit Q hereto.
(c) The Trustee shall either act as the paying agent or appoint an
Eligible Institution to be the paying agent (in either such case, the "Paying
Agent") to make the payments to the Certificateholders and the Class R
Certificateholder required hereunder. The Trustee's corporate trust operations
department, with an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇, shall initially act as Paying
Agent. The Trustee shall require the Paying Agent (if other than the Trustee) to
agree in writing that all amounts held by the Paying Agent for payment hereunder
will be held in trust for the benefit of the Certificateholders and the Class R
Certificateholder and that it will notify the Trustee of any failure by the
Servicer to make funds available to the Paying Agent for the payment of amounts
due on the Certificates and the Class R Certificate.
SECTION 8.02. Advances.
--------
(a) Not later than the Business Day immediately preceding each Payment
Date, the Servicer shall advance to the trust (each such advance, an "Advance")
all Delinquent Payments for the immediately preceding Due Period and all
preceding Due Periods by depositing the aggregate amount of such Delinquent
Payments in the Certificate Account; provided, however, that the Servicer shall
be obligated to advance Delinquent Payments for a Loan only to the extent that
the Servicer, in its sole discretion, expects to be able to recover such
Advances from subsequent collections on such Loan, including, without
limitation, Net Liquidation Proceeds and Repurchase Prices in respect of any
such Advances; and provided, further, that the Servicer will not be obligated to
advance Delinquent Payments with respect to any Loan that has become a
Liquidated Loan. If the Servicer or the Backup Servicer fail to advance all
Delinquent
95
Payments required under this Section 8.02, the Trustee shall be obligated to
advance such Delinquent Payments pursuant to Section 11.15.
(b) The Servicer and the Trustee shall be entitled to reimbursement of
an Advance from subsequent funds available therefor in the Certificate Account
in accordance with Section 8.04(b).
(c) The Servicer will deposit in the Simple Interest Excess Sub-Account
on or prior to each Determination Date an amount equal to the Net Simple
Interest Excess for the preceding Due Period. The Servicer will withdraw amounts
on deposit in the Simple Interest Excess Sub-Account for deposit to the
Certificate Account prior to each Payment Date to pay Net Simple Interest
Shortfalls.
(d) All funds in the Simple Interest Excess Sub-Account may be invested
in Eligible Investments. So long as no Event of Termination shall have occurred
and be continuing, any net investment earnings on funds held in the Simple
Interest Excess Sub-Account are for the account of the Servicer. The Servicer
will be required to reimburse the Simple Interest Excess Sub-Account for any net
investment losses.
SECTION 8.03. [Reserved].
----------
SECTION 8.04. Permitted Withdrawals from the Certificate Account;
--------------------------------------------------
Payments.
--------
(a) The Trustee shall, from time to time as provided herein, make
withdrawals from the Certificate Account of amounts deposited in said account
pursuant to Section 5.05 that are attributable to the Loans for the following
purposes:
(i) to pay to the Originator with respect to each Loan or
property acquired in respect thereof that has been
repurchased or replaced pursuant to Section 3.06, all
amounts received thereon and not required to be distributed
to Certificateholders as of the date on which the related
Scheduled Principal Balance or Repurchase Price is
determined;
(ii) only on each Payment Date, prior to the Trustee's remittance
of the Amount Available pursuant to Section 8.04(b), to pay
to the Servicer, the Servicer's Assignee or the Advance
Financing Person, as appropriate, the amounts of any
Liquidation Expense as to which Related Proceeds, net of any
Liquidation Expense previously reimbursed pursuant to this
Section 8.04(a) with respect to the related Loan, exceed
such Liquidation Expense;
(iii) to withdraw any amount deposited in the Certificate Account
that was not required to be deposited therein;
(iv) to make any rebates or adjustments deemed necessary by the
Servicer pursuant to Section 5.06(d), but not out of
collections in respect of any Loan that constitute Related
Proceeds, to the extent a Liquidation Expense
96
has been paid by the Servicer with respect to that Loan
which has not yet been reimbursed; or
(v) to make payments in the amounts and in the manner provided
for in Section 8.04(b), (c), (d) and (e).
(b) On each Payment Date, the Trustee shall make the following
distributions by 11:00 a.m. (New York time) of the Amount Available remaining
after payment of the amounts specified in Section 8.04(a)(i)-(iv) for such
Payment Date in the following order of priority:
(i) Servicing Fee, Backup Servicing Fee and Trustee Fee. To pay
---------------------------------------------------
the Monthly Servicing Fee and any other compensation owed to
the Servicer pursuant to Section 5.08 or Section 11.06 and,
to the extent not payable by the Originator, the Seller or
the Servicer under this Agreement or, if so payable, not
paid thereby, to pay the Backup Servicing Fee and any other
fees, expenses or indemnification owed to the Backup
Servicer pursuant to this Agreement (provided that any such
indemnification paid pursuant to this Section 8.04(b)(i)
shall not exceed $100,000 during any 12-month period or
$1,000,000 in the aggregate) and the Trustee Fee and any
other compensation owed to the Trustee pursuant to Section
11.06;
(ii) Advances. After payment of the amount specified in clause
--------
(i) above, to reimburse the Servicer or Trustee or pay to
the Servicer's Assignee, as appropriate, for Advances made
with respect to Delinquent Payments for prior Payment Dates,
(A) from that portion of the Amount Available representing
collections with respect to the related Loan or (B) from any
portion of the Amount Available to the extent necessary to
reimburse the Servicer or Trustee or pay to the Servicer's
Assignee, as appropriate, for Advances which the Servicer or
the Trustee, as applicable, does not expect to recover from
subsequent collection on the related Loan;
(iii) Class X-IO Preference. After payment of the amounts
---------------------
specified in clauses (i) and (ii) above, for any Payment
Date occurring in and including May 2002 through and
including October 2004, to the LIBOR Cap Counterparty on
behalf of the Class X-IO Certificateholder, the Class X-IO
Current Interest Amount;
(iv) Class A Interest. After payment of the amounts specified in
----------------
clauses (i) through (iii) above, the Class A Current
Interest Amount and the Class A-IO Current Interest Amount,
to be distributed to the Class A and Class A-IO Certificates
concurrently (or, if the remaining Amount Available is not
sufficient to pay such amounts in full, the remaining Amount
Available shall be distributed pro rata among the Class A
Certificates and the Class A-IO Certificates based upon the
ratio of (x) the Class Current Interest Amount for each such
Class to (y) the aggregate of the Class Current Interest
Amount for all such Classes);
97
(v) Class M-1 Interest. After payment of the amounts specified
------------------
in clauses (i) through (iv) above, the Class M-1 Current
Interest Amount, to be distributed to the Class M-1
Certificates;
(vi) Class M-2 Interest. After payment of the amounts specified
------------------
in clauses (i) through (v) above, the Class M-2 Current
Interest Amount, to be distributed to the Class M-2
Certificates;
(vii) Class B-1 Interest. After payment of the amounts specified
------------------
in clauses (i) through (vi) above, the Class B-1 Current
Interest Amount, to be distributed to the Class B-1
Certificates;
(viii) Class B-2 Interest. After payment of the amounts specified
------------------
in clauses (i) through (vii) above, the Class B-2 Current
Interest Amount, to be distributed to the Class B-2
Certificates;
(ix) Excess Cashflow. After payment of the amounts specified in
---------------
clauses (i) through (viii) above, any remaining Amount
Available shall be treated as Excess Cashflow and
distributed as described in subsection (e) below.
(c) On each Payment Date prior to the Stepdown Date or on which a
Trigger Event is in effect, the Trustee shall make the following distributions
by 11:00 a.m. (New York time), to the extent of the Amount Available remaining
after payment of the amounts specified in Sections 8.04(a) and 8.04(b) for such
Payment Date (up to the Formula Distribution Amount with respect to clauses
(i)-(v)), and in the following order of priority:
(i) Class A Principal. To the Class A Certificates in the
-----------------
following order of priority:
(A) first, to the Class A-1 Certificates and until the
Class A-1 Principal Balance has been reduced to zero;
(B) then, to the Class A-2 Certificates, until the Class
A-2 Principal Balance has been reduced to zero; and
(C) then, to the Class A-3 Certificates, until the Class
A-3 Principal Balance has been reduced to zero;
(ii) Class M-1 Principal. After payment of the amounts specified
-------------------
in clause (i) above, to the Class M-1 Certificates until the
Class M-1 Principal Balance has been reduced to zero;
(iii) Class M-2 Principal. After payment of the amounts specified
-------------------
in clauses (i) and (ii) above, to the M-2 Certificates until
the Class M-2 Principal Balance has been reduced to zero;
98
(iv) Class B-1 Principal. After payment of the amounts
-------------------
specified in clauses (i) through (iii) above, to the
Class B-1 Certificates until the Class B-1 Principal
Balance has been reduced to zero;
(v) Class B-2 Principal. After payment of the amounts
-------------------
specified in clauses (i) through (iv) above, to the Class
B-2 Certificates until the Class B-2 Principal Balance
has been reduced to zero; and
(vi) Excess Cashflow. After payment of the amounts
---------------
specified in clauses (i) through (v) above, the remaining
Amount Available shall be treated as Excess Cashflow and
distributed as specified in subsection (e) below.
(d) On each Payment Date on and after the Stepdown Date and so long
as a Trigger Event is not then in effect, the Trustee shall make the following
distributions by 11:00 a.m. (New York time), to the extent of the Amount
Available remaining after payment of the amounts specified in Sections 8.04(a)
and 8.04(b) for such Payment Date, and in the following order of priority:
(i) Class A Principal. To the Certificate Distribution
-----------------
Account, the Class A Formula Principal Distribution
Amount to be distributed to the Class A Certificates in
the following order of priority:
(A) first, to the Class A-1 Certificates until the
Class A-1 Principal Balance has been reduced to
zero;
(B) then, to the Class A-2 Certificates, until the
Class A-2 Principal Balance has been reduced to
zero; and
(C) then, to the Class A-3 Certificates, until the
Class A-3 Principal Balance has been reduced to
zero;
(ii) Class M-1 Principal. After payment of the amounts
-------------------
specified in clause (i) above, to the Class M-1 Formula
Principal Distribution Amount to the Class M-1
Certificates until the Class M-1 Principal Balance has
been reduced to zero;
(iii) Class M-2 Principal. After payment of the amounts
-------------------
specified in clauses (i) and (ii) above, to the Class M-2
Formula Principal Distribution Amount to the Class M-2
Certificates until the Class M-2 Principal Balance has
been reduced to zero;
(iv) Class B-1 Principal. After payment of the amounts
-------------------
specified in clauses (i) through (iii) above, to the
Class B-1 Formula Principal Distribution Amount to the
Class B-1 Certificates until the Class B-1 Principal
Balance has been reduced to zero;
99
(v) Class B-2 Principal. After payment of the amounts
-------------------
specified in clauses (i) through (iv) above, to the Class
B-2 Formula Principal Distribution Amount to the Class
B-2 Certificates until the Class B-2 Principal Balance
has been reduced to zero; and
(vi) Excess Cashflow. After payment of the amounts specified
---------------
in clauses (i) through (v) above, the remaining Amount
Available shall be treated as Excess Cashflow and
distributed as specified in subsection (e) below.
(e) Subject to Section 8.06(f) below, on each Payment Date, the
Trustee shall make the following deposits and distributions by 11:00 a.m. (New
York time), to the extent of the Excess Cashflow for such Payment Date and in
the following order of priority:
(i) Overcollateralization Increase Amount. To the Class A,
-------------------------------------
Class M and Class B Certificates, the
Overcollateralization Increase Amount in the order
provided in Section 8.04(c) or 8.04(d), as applicable;
(ii) Unpaid Class A and Class A-IO Interest Carry Forward
----------------------------------------------------
Amounts. After payment of the amount specified in clause
-------
(i) above, the Unpaid Class A Interest Carry Forward
Amount and the Unpaid Class A-IO Interest Carry Forward
Amount, to be distributed to the Class A and Class A-IO
Certificates concurrently in accordance with their
respective Unpaid Class Interest Carry Forward Amounts
(or, if the remaining Excess Cashflow is not sufficient
to pay such amounts in full, the remaining Excess
Cashflow shall be distributed pro rata among the Class A
Certificates and the Class A-IO Certificates based upon
the ratio of (x) the Unpaid Class Interest Carry Forward
Amount for each such Class to (y) the aggregate of the
Unpaid Class Interest Carry Forward Amount for all such
Classes);
(iii) Unpaid Class M-1 Interest Carry Forward Amount. After
----------------------------------------------
payment of the amounts specified in clauses (i) and (ii)
above, the Unpaid Class M-1 Interest Carry Forward
Amount, to be distributed to the Class M-1 Certificates;
(iv) Unpaid Class M-1 Realized Loss Interest Amount and Unpaid
---------------------------------------------------------
Class M-1 Realized Loss Amount. After payment of the
------------------------------
amounts specified in clauses (i) through (iii) above, in
the following order of priority (A) the Unpaid Class M-1
Realized Loss Interest Amount and (B) the Unpaid Class
M-1 Realized Loss Amount, to be distributed to the Class
M-1 Certificates;
(v) Unpaid Class M-2 Interest Carry Forward Amount. After
----------------------------------------------
payment of the amounts specified in clauses (i) through
(iv) above, the Unpaid Class M-2 Interest Carry Forward
Amount, to be distributed to the Class M-2 Certificates;
100
(vi) Unpaid Class M-2 Realized Loss Interest Amount an Unpaid
--------------------------------------------------------
Class M-2 Realized Loss Amount. After payment of the
------------------------------
amounts specified in clauses (i) through (v) above, in
the following order of priority (A) the Unpaid Class M-2
Realized Loss Interest Amount and (B) the Unpaid Class
M-2 Realized Loss Amount, to be distributed to the Class
M-2 Certificates;
(vii) Unpaid Class B-1 Interest Carry Forward Amount. After
----------------------------------------------
payment of the amounts specified in clauses (i) through
(vi) above, the Unpaid Class B-1 Interest Carry Forward
Amount, to be distributed to the Class B-1 Certificates;
(viii) Unpaid Class B-1 Realized Loss Interest Amount and Unpaid
---------------------------------------------------------
Class B-1 Realized Loss Amount. After payment of the
------------------------------
amounts specified in clauses (i) through (vii) above, in
the following order of priority (A) the Unpaid Class B-1
Realized Loss Interest Amount and (B) the Unpaid Class
B-1 Realized Loss Amount, to be distributed to the Class
B-1 Certificates;
(ix) Unpaid Class B-2 Interest Carry Forward Amount. After
----------------------------------------------
payment of the amounts specified in clauses (i) through
(viii) above, the Unpaid Class B-2 Interest Carry Forward
Amount, to be distributed to the Class B-2 Certificates;
(x) Unpaid Class B-2 Realized Loss Interest Amount and Unpaid
---------------------------------------------------------
Class B-2 Realized Loss Amount. After payment of the
------------------------------
amounts specified in clauses (i) through (ix) above, in
the following order of priority (A) the Unpaid Class B-2
Realized Loss Interest Amount and (B) the Unpaid Class
B-2 Realized Loss Amount, to be distributed to the Class
B-2 Certificates;
(xi) Unpaid Basis Risk Carryover Shortfall. After payment of
-------------------------------------
the amounts specified in clauses (i) through (x) above,
to the Basis Risk Reserve Fund, the sum of all Unpaid
Basis Risk Carryover Shortfalls for the Class A, Class
A-IO, Class M-1, Class M-2, Class B-1 and Class B-2
Certificates after taking into account (with respect to
the Class M-1, Class M-2 and Class B-1 Certificates) any
amounts to be applied to the payment thereof in
accordance with Section 8.09 hereof;
(xii) after payment of the amounts specified in caluses (i)
through (xi) above, to the Backup Servicer any
indemnification owed to it and not paid pursuant to
Section 8.04(b)(i);
(xiii) Class B-3I Certificates. After payment of the amounts
-----------------------
specified in clauses (i) through (xii) above, to the
Class B-3I Certificateholders the Class B-3I Distribution
Amount;
(xiv) Class P Certificate. After payment of the amounts
-------------------
specified in clauses (i) through (xiii) above, and
provided the current Payment Date is one
101
subsequent to the month in which Prepayment Charges are
no longer collectible on any Loan, to the Class P
Certificateholder until the Class P Principal Balance is
reduced to zero; and
(xv) Class R Certificate. After payment of the amounts
-------------------
specified in clauses (i) through (xiv) above, to pay the
remainder, if any, of the Excess Cashflow
(A) first, to the Class R Certificateholder, as
reimbursement for any taxes or charges paid by the
Class R Certificateholder pursuant to Section 6.06,
and
(B) any remainder to the Class R Certificateholder in
respect of the Class R-III Interest.
If the Trustee shall not have received the applicable Monthly Report by
any Payment Date, the Trustee shall, in accordance with this Section 8.04,
distribute all funds then in the Certificate Account to Certificateholders, to
the extent of such funds, on such Payment Date.
(f) On each Payment Date, the Trustee will pay to the Class P
Certificateholder, all Prepayment Charges included in the Certificate Account
for such Payment Date.
(g) Notwithstanding the priorities set forth above, any Pre-Funded
Amount deposited in the Certificate Account shall be applied solely to pay
principal of the Class A-1 Certificates, until reduced to zero and any amount
withdrawn from the Capitalized Interest Account and deposited in the Certificate
Account shall be applied solely as described in Section 8.11.
SECTION 8.05. Reassignment of Repurchased and Replaced Loans. Upon
----------------------------------------------
receipt by the Trust, by deposit in the Certificate Account, of the Repurchase
Price under Section 3.06(a), or upon receipt by the Trust of an Eligible
Substitute Loan under Section 3.06(b) and receipt by the Trust, by deposit in
the Certificate Account, of any additional amount under Section 3.06(b)(vi), and
upon receipt of a certificate of a Servicing Officer in the form attached hereto
as Exhibit J-1 or J-2, as applicable, the Trustee shall convey and assign to the
Originator all of the Certificateholders' right, title and interest in the
repurchased Loan or Replaced Loan without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Trustee. Upon such deposit of the Repurchase Price
or receipt of such Eligible Substitute Loan and related deposit of any
additional amount under Section 3.06(b)(vi), the Servicer shall be deemed to
have released any claims to such Loan as a result of Advances with respect to
such Loan.
SECTION 8.06. Class R Certificateholder's Purchase Option; Increase in
--------------------------------------------------------
Class A-3 Interest Rate.
-----------------------
(a) Beginning on the Payment Date when the condition set forth in
subsection (b)(i) hereof is satisfied as of the last day of the related Due
Period, the Class R Certificateholder shall, subject to subsection (b) hereof,
have the option to purchase all of the Loans and all property
102
acquired in respect of any Loan remaining in the Trust at a price (such price
being referred to as the "Minimum Purchase Price") equal to the greater of:
(i) the sum of
(x) 100% of the principal balance of each Loan (other
than any Loan as to which title to the underlying
property has been acquired and whose fair market
value is included pursuant to clause (y) below),
together with accrued and unpaid interest on each
such Loan at a rate per annum equal to the Weighted
Average Pass-Through Rate, plus
(y) the fair market value of such acquired property (as
reasonably determined by the Servicer as of the
close of business on the third Business Day
preceding the date of such purchase), and
(ii) the Aggregate Certificate Principal Balance as of the
date of such purchase (less any amounts on deposit in the
Certificate Account on such purchase date and
representing payments of principal in respect of the
Loans) plus an amount necessary to pay the Class A
Current Interest Amount, any Unpaid Class A Interest
Carry Forward Amount, any Unpaid Class A Basis Risk
Carryover Shortfall, the Class A-IO Current Interest
Amount, any Unpaid Class A-IO Interest Carry Forward
Amount, any Unpaid Class A-IO Basis Risk Carryover
Shortfall, the Class M-1 Current Interest Amount, any
Unpaid Class M-1 Interest Carry Forward Amount, any Class
M-1 Realized Loss Interest Amount, any Class M-1 Realized
Loss Amount, any Unpaid Class M-1 Basis Risk Carryover
Shortfall, the Class M-2 Current Interest Amount, any
Unpaid Class M-2 Interest Carry Forward Amount, any Class
M-2 Realized Loss Interest Amount, any Class M-2 Realized
Loss Amount, any Unpaid Class M-2 Basis Risk Carryover
Shortfall, the Class B-1 Current Interest Amount, any
Unpaid Class B-1 Interest Carry Forward Amount, any Class
B-1 Realized Loss Interest Amount, any Class B-1 Realized
Loss Amount, any Unpaid Class B-1 Basis Risk Carryover
Shortfall, the Class B-2 Current Interest Amount, any
Unpaid Class B-2 Interest Carry Forward Amount, any Class
B-2 Realized Loss Interest Amount, any Class B-2 Realized
Loss Amount, any Unpaid Class B-2 Basis Risk Carryover
Shortfall and the Class B-3I Distribution Amount due on
the Payment Date occurring in the calendar month
following such purchase date (less any amounts on deposit
in the Certificate Account on such purchase date and
representing payments of interest in respect of the Loans
at a rate per annum equal to the Weighted Average
Pass-Through Rate).
(b) The purchase by the Class R Certificateholder of all of the Loans
pursuant to this Section 8.06 shall be conditioned upon:
103
(i) the Aggregate Certificate Principal Balance, at the time
of any such purchase, aggregating not more than 10% of
the Original Aggregate Certificate Principal Balance,
(ii) such purchase being made pursuant to a plan of complete
liquidation in accordance with Section 860F of the Code,
as provided in Section 12.04,
(iii) the Class R Certificateholder having provided the
Trustee, the Servicer, the Backup Servicer and the
Depository (if any) with at least 30 days' written notice
specifying the purchase date and setting forth its
calculations of the purchase price,
(iv) the Trustee not having accepted a qualifying bid for the
Loans pursuant to subsection (e) below, and
(v) the Class R Certificateholder having delivered to the
Trustee the Early Termination Fee, which amount shall not
be part of any REMIC but shall be distributed as provided
in Section 8.06(c) below.
(c) The Trustee shall acknowledge in writing its receipt of notice
given under Section 8.06(b). On the purchase date specified in its notice, the
Class R Certificateholder shall deliver the Minimum Purchase Price and the
amount specified in Section 8.06(b)(v) to the Trustee, in immediately available
funds, the Trustee shall pay, on behalf of the Class R Certificateholder, the
sum described in Section 8.06(b)(v), to the LIBOR Cap Counterparty, not in
respect of any interest in any REMIC, and deposit the purchase price in the
Certificate Account for distribution in accordance with Section 12.04, and the
Trustee and the Servicer shall release to the Class R Certificateholder the Loan
Files for all the purchased Loans. The Trustee shall execute all assignments,
endorsements and other instruments necessary to effectuate such transfer.
(d) The Class R Certificateholder may assign its rights under this
Section 8.06, separately from its other rights as Holder of the Class R
Certificate, by giving written notice of such assignment to the Trustee and the
Servicer. Following the Trustee's receipt of such notice of assignment, the
Trustee shall recognize only such assignee (or its assignee in turn) as the
Person entitled to exercise the purchase option set forth in Section 8.06(a).
(e) The Servicer shall notify the Trustee, any assignee described in
Section 8.06(d), and the Class R Certificateholder (whether or not the Class R
Certificateholder has then assigned its rights under this Section 8.06 pursuant
to subsection (d)), no later than two Business Days after the Determination Date
occurring in the first Due Period which includes the date on which the Aggregate
Certificate Principal Balance first becomes less than or equal to 10% of the
Original Aggregate Certificate Principal Balance, to the effect that the
Aggregate Certificate Principal Balance is then less than or equal to 10% of the
Original Aggregate Certificate Principal Balance.
(f) If the Class R Certificateholder does not purchase the Loans on
or before the Payment Date occurring in the calendar month following the
Determination Date described in
104
Section 8.06(e), the Class A-3 Interest Rate will increase to 7.37% per annum
(but not in excess of the Adjusted Net WAC Cap Rate) beginning on such Payment
Date.
SECTION 8.07. Intermediate REMIC, Subsidiary REMIC and Basement REMIC
-------------------------------------------------------
Distributions.
-------------
(a) On each Payment Date, the Uncertificated Intermediate Interests
(or other appropriate Interest or account as the context implies) shall receive
distributions, to the extent of the Amount Available, in the following order of
priority:
(i) to each Class of Uncertificated Intermediate Interests, pro
rata based on its respective entitlement, accrued interest
as follows:
(A) for such Class other than the Class I-AIO and Class I-XIO
Interests, one-twelfth of the Adjusted Net WAC Cap Rate
times the Intermediate Interest Principal Balance of such
Class; provided, that, interest accrued on the Class
I-Accrual Interest shall be paid as principal to the
Intermediate REMIC Accretion Directed Interests pursuant to
Section 8.07(a)(ii), and added to the Intermediate Interest
Principal Balance of the Class I-Accrual Interest, in an
amount equal to the sum of (x) one-half the
Overcollateralization Increase Amount for that Payment Date
plus (y) any amount by which one-half the aggregate of the
Overcollateralization Increase Amount on prior Payment Dates
exceeds the aggregate amount so paid to the Intermediate
REMIC Accretion Directed Interests and added to the Class
I-Accrual Interest (such excess not to accrue interest);
(B) for the Class I-XIO Interest, interest equal to100% of the
interest payable on the Class S-XIO Interest;
(C) for the Class I-AIO Interest, interest equal to the sum of:
(1) with respect to the Class I-AIO(1) Interest,
interest at (A) the Class A-IO Interest Rate on
the Subsidiary Interest Adjusted Principal
Balance of the Class S-2(1) Interest from and
including the Closing Date through the March
2003 Payment Date, and (B) 0.0% thereafter;
(2) with respect to the Class I-AIO(2) Interest,
interest (A) at the Class A-IO Interest Rate on
the Subsidiary Interest Adjusted Principal
Balance of the Class S-2(2) Interest from and
including the Closing Date through the
September 2003 Payment Date and (B) 0.0%
thereafter;
(3) with respect to the Class I-AIO(3) Interest,
interest at (A) the Class A-IO Interest Rate on
the Subsidiary Interest Adjusted Principal
Balance of the Class S-2(3) Interest
105
from and including the Closing Date through the
March 2004 Payment Date, and (B) 0.0%
thereafter;
(4) with respect to the Class I-AIO(4) Interest,
interest at (A) the Class A-IO Interest Rate on
the Subsidiary Interest Adjusted Principal
Balance of the Class S-2(4) Interest from and
including the Closing Date through the
September 2004 Payment Date, and (B) 0.0%
thereafter;
(D) any Unpaid Intermediate Interest Shortfall with respect to
such Class;
(ii) To the Class I-Accrual Interest, principal in an amount equal to
one-half the principal distributed on the Class A, Class M and
Class B Certificates on such Payment Date; and to each
Intermediate REMIC Accretion Directed Interest, principal
(including that payable to the Intermediate REMIC Accretion
Directed Interests as described in Section 8.07(a)(i)(A) in an
amount equal to one-half the principal distributed to its
Corresponding Certificate Class on such Payment Date. Realized
losses shall be allocated to each Class of Uncertificated
Intermediate Interests in an amount sufficient to reduce the
Intermediate REMIC Principal Balance of
(A) the Class I-Accrual Interest to one-half the sum of (1) the
Pool Scheduled Principal Balance, (2) the Pre-Funded Amount
and (3) the Overcollateralization Amount and
(B) each Class of Intermediate REMIC Accretion Directed Interests
to one-half the Class Principal Balance of its Corresponding
Certificate Class after giving effect to distributions on
such Payment Date; and
(iii) To the holder of the Class R-II Interest, any remaining Amount
Available.
(b) On each Payment Date, the Uncertificated Subsidiary Interests (or
other appropriate Interest or account as the context implies) shall receive
distributions, to the extent of the Amount Available, in the following order of
priority:
(i) [RESERVED]
(ii) Each Class of Uncertificated Subsidiary Interests shall receive
distributions of interest, pro rata based on their respective entitlements, in
an amount equal to:
(A) for each Class other than the Class S-XIO Interest, interest
equal to (y) one-twelfth of the Net WAC Cap Rate times the
Subsidiary Interest Principal Balance of such Class, plus (z)
any Unpaid Subsidiary Interest Shortfall with respect to such
Class;
106
(B) for the Class S-XIO Interest, interest equal to: (1) the
Class X-IO Interest Rate on the Basement Interest Adjusted
Principal Balance of the Class BR-XIO Interest from and
including the Closing Date through the October 2004 Payment
Date, and (2) 0.0% thereafter;
(iii) Distributions of principal shall be made to each Class S-1 and
Class S-2 Interest sequentially, i.e., first to the Class S-1
Interest, second to the Class S-2(1) Interest and last (after each
other Class S-2 Interest) to the Class S-2(4) Interest, in each
instance such distribution shall be made up to an amount equal to
the respective Subsidiary Interest Principal Balance; and
(iv) Any remaining Amount Available shall be distributed to the holder
of the Class R-Ia Interest.
(c) On each Payment Date, the Uncertificated Basement Interests (or
other appropriate Interest, Certificate or account as the context implies) shall
receive distributions, to the extent of the Amount Available, in the following
order of priority:
(i) Payment of the Trustee Fee, the Servicing Fee, the Backup
Servicing Fee, and other items specified in Section
8.04(b)(i) and reimbursement of Advances pursuant to
Section 8.04(b)(ii), in the amounts specified in Sections
8.04(b)(i) and (ii);
(ii) Each of the Class BR-1 and BR-XIO Interests shall receive
distributions of interest, pro rata based on their
respective entitlements, in an amount equal to (i)
one-twelfth of the Basement WAC Cap Rate times the Basement
Interest Principal Balance of such Class, plus (ii) any
Unpaid Basement Interest Shortfall with respect to such
Class;
(iii) Distributions of principal shall be made to each Class BR-1
and Class BR-XIO Interest sequentially, i.e., first to the
Class BR-1 Interest and last to the Class BR-XIO Interest,
in each instance such distribution shall be made up to an
amount equal to the respective Basement Interest Principal
Balance;
(iv) All Prepayment Charges shall be paid to the Class P
Certificate; and
(v) Any remaining Amount Available shall be distributed to the
holder of the Class R-Ib Interest.
SECTION 8.08. Pre-Funding Account.
-------------------
(a) On or before the Closing Date, the Trustee shall establish the
Pre-Funding Account on behalf of the Trust, which must be an Eligible Account,
and shall deposit therein the amount received from the Seller pursuant to
Section 2.02(l). The Pre-Funding Account shall be entitled "Pre-Funding Account,
U.S. Bank National Association as Trustee for the benefit of
107
holders of Home Equity Loan Certificates, Series 2002-B." Funds deposited in the
Pre-Funding Account shall be held in trust by the Trustee for the Holders of the
Certificates and the Class R Certificate for the uses and purposes set forth
herein.
(b) On or before the Closing Date the Seller shall deposit in the
Pre-Funding Account the amount specified in Section 2.02(l). Amounts on deposit
in such account shall be withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee shall withdraw
from the Pre-Funding Account an amount equal to 100% of the
Cut-off Date Principal Balance of each Subsequent Loan
transferred and assigned to the Trustee on such Subsequent
Transfer Date and pay such amount to or upon the order of
the Originator upon satisfaction of the conditions set forth
in Section 2.03(b) with respect to such transfer and
assignment.
(ii) On the Business Day immediately preceding the Post-Funding
Payment Date, the Trustee shall deposit into the Certificate
Account any amounts remaining in the Pre-Funding Account,
net of investment earnings.
(c) The Pre-Funding Account shall be part of the Trust but not part of
any REMIC. The Trustee on behalf of the Trust shall be the legal owner of the
Pre-Funding Account. The Seller shall be the beneficial owner of the Pre-Funding
Account, subject to the foregoing power of the Trustee to transfer amounts in
the Pre-Funding Account to the Certificate Account. Funds in the Pre-Funding
Account shall, at the direction of the Servicer, be invested in Eligible
Investments of the kind described in clauses (i) and (ii)(A) of the definition
of "Eligible Investments" and that mature no later than the Business Day prior
to the next succeeding Payment Date. All amounts earned on deposits in the
Pre-Funding Account shall be taxable to the Seller. The Trustee shall release to
the Seller all investment earnings in the Pre-Funding Account on the first
Payment Date after the end of the Pre-Funding Period.
SECTION 8.09. Yield Maintenance Reserve Funds.
-------------------------------
(a) On or before the Closing Date, the Trustee shall establish three
Yield Maintenance Reserve Funds on behalf of the Class M-1, Class M-2 and Class
B-1 Certificateholders, respectively. Each must be an Eligible Account. Each
Yield Maintenance Reserve Fund shall be entitled "Yield Maintenance Reserve
Fund, U.S. Bank National Association as Trustee for the benefit of holders of
Home Equity Loan Certificates, Series 2002-B, Class [M-1], [M-2] [B-1]," as
applicable. The Trustee shall demand payment of all money payable by the LIBOR
Cap Counterparty under the Yield Maintenance Agreements. The Trustee shall
deposit in the applicable Yield Maintenance Reserve Fund any Reserve Fund
Addition received from the LIBOR Cap Counterparty pursuant to the related Yield
Maintenance Agreement. On each Payment Date the Trustee shall pay directly the
following amounts:
(i) Unpaid Class M-1 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class M-1 Certificateholders, the lesser of the Unpaid
Class M-1 Basis Risk
108
Carryover Shortfall and the amount on deposit in the
related Yield Maintenance Reserve Fund;
(ii) Unpaid Class M-2 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class M-2 Certificateholders, the lesser of the Unpaid
Class M-2 Basis Risk Carryover Shortfall and the amount on
deposit in the related Yield Maintenance Reserve Fund;
(iii) Unpaid Class B-1 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class B-1 Certificateholders, the lesser of the Unpaid
Class B-1 Basis Risk Carryover Shortfall and the amount on
deposit in the related Yield Maintenance Reserve Fund; and
(iv) Payment of Remainder. Any remaining amounts in any of the
--------------------
related Yield Maintenance Reserve Funds after payment to
the related Certificateholders pursuant to clauses (i),
(ii) or (iii) above to the Class X-IO Certificateholder,
not as a distribution in respect of any interest in any
REMIC.
(b) The Yield Maintenance Reserve Funds are outside reserve funds and
shall be part of the Trust but not part of any REMIC. The Trustee on behalf of
the Trust shall be the nominal owner of the Yield Maintenance Reserve Funds. The
Class X-IO Certificateholder shall be the beneficial owner of the Yield
Maintenance Reserve Funds, subject to the power of the Trustee to transfer
amounts under Section 8.09(a). For all federal tax purposes, all amounts
transferred by a REMIC to the LIBOR Cap Counterparty pursuant to Section
8.04(b)(iii) shall be treated as amounts distributed by a REMIC to the Class
X-IO Certificateholder or its transferee. Amounts in the Yield Maintenance
Reserve Funds shall, at the direction of the Class X-IO Certificateholder, be
invested in Eligible Investments that mature no later than the Business Day
prior to the next succeeding Payment Date. All net income and gain from such
investments shall be distributed to the Class X-IO Certificateholder, not as a
distribution in respect of any interest in any REMIC, on such Payment Date. All
amounts earned on amounts on deposit in the Yield Maintenance Reserve Funds
shall be taxable to the Class X-IO Certificateholder. Any losses on such
investments shall be deposited in the Yield Maintenance Reserve Funds by the
Class X-IO Certificateholder out of its own funds immediately as realized.
SECTION 8.10. Basis Risk Reserve Fund.
-----------------------
(a) On or before the Closing Date, the Trustee shall establish the
Basis Risk Reserve Fund on behalf of the Trust, which must be an Eligible
Account. On the Closing Date, the Trustee shall deposit therein the amount
described in Section 2.02(o). The Trustee shall deposit therein on each Payment
Date any amount available for that purpose pursuant to Section 8.04(e)(xi) or
Section 12.04(d)(i)(F), as applicable. The Basis Risk Reserve Fund shall be
entitled "Basis Risk Reserve Fund, U.S. Bank National Association as Trustee for
the benefit of holders of Home Equity Loan Certificates, Series 2002-B." On each
Payment Date the Trustee shall withdraw all amounts from the Basis Risk Reserve
Fund and pay the following amounts in the order of priority indicated:
109
(i) Unpaid Class A and Class A-IO Basis Risk Carryover
--------------------------------------------------
Shortfall. To the Class A-1, Class A-2, Class A-3 and Class
---------
A-IO Certificates, concurrently, the respective Unpaid
Class A Basis Risk Carryover Shortfall or Unpaid Class A-IO
Basis Risk Carryover Shortfall, as applicable, for each
such Class, and, if the amount available therefor is not
sufficient to pay the full amount of Unpaid Class A Basis
Risk Carryover Shortfall and Unpaid Class A-IO Basis Risk
Carryover Shortfall, then to each such Class pro rata based
upon its respective entitlement;
(ii) Unpaid Class M-1 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class M-1 Certificateholders, the Unpaid Class M-1 Basis
Risk Carryover Shortfall, less amounts distributed to such
Class under Section 8.09;
(iii) Unpaid Class M-2 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class M-2 Certificateholders, the Unpaid Class M-2 Basis
Risk Carryover Shortfall, less amounts distributed to such
Class under Section 8.09;
(iv) Unpaid Class B-1 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class B-1 Certificateholders, the Unpaid Class B-1 Basis
Risk Carryover Shortfall, less amounts distributed to such
Class under Section 8.09; and
(v) Unpaid Class B-2 Basis Risk Carryover Shortfall. To the
-----------------------------------------------
Class B-2 Certificateholders, the Unpaid Class B-2 Basis
Risk Carryover Shortfall; and
(vi) Payment of Remainder. Any remainder in excess of $5,000 to
--------------------
the Class B-3I Certificateholder. Any remainder equal to or
less than $5,000 shall be retained in the Basis Risk
Reserve Fund until the final Payment Date when such
remainder shall be so paid to the Class B-3I
Certificateholder.
(b) The Basis Risk Reserve Fund is an outside reserve fund and shall
be part of the Trust but not part of any REMIC. The Trustee on behalf of the
Trust shall be the nominal owner of the Basis Risk Reserve Fund. The Class B-3I
Certificateholder shall be the beneficial owner of the Basis Risk Reserve Fund,
subject to the power of the Trustee to transfer amounts under Section 8.10(a).
For all federal tax purposes, all amounts transferred by a REMIC to the Basis
Risk Reserve Fund pursuant to Section 8.04(e)(xi) shall be treated as amounts
distributed by a REMIC to the Class B-3I Certificateholder or its transferee.
Funds in the Basis Risk Reserve Fund shall, at the direction of the Class B-3I
Certificateholder, be invested in Eligible Investments that mature no later than
the Business Day prior to the next succeeding Payment Date. All net income and
gain from such investments shall be distributed to the Class B-3I
Certificateholder on such Payment Date. All amounts earned on amounts on deposit
in the Basis Risk Reserve Fund shall be taxable to the Class B-3I
Certificateholder. Any losses on such investments shall be deposited in the
Basis Risk Reserve Fund by the Class B-3I Certificateholder out of its own funds
immediately as realized.
110
SECTION 8.11. Capitalized Interest Account.
----------------------------
(a) On or before the Closing Date, the Trustee shall establish the
Capitalized Interest Account on behalf of the Trust, which must be an Eligible
Account, and shall deposit therein $-0- received from the Seller pursuant to
Section 2.02(m). The Capitalized Interest Account shall be entitled "Capitalized
Interest Account, U.S. Bank National Association as Trustee for the benefit of
holders of Home Equity Loan Certificates, Series 2002-B." On the Payment Date
occurring in each of May 2002, June 2002, and July 2002, if the Monthly Report
for such Payment Date indicates that the Amount Available (after payment of the
amount specified in clause (1) of Section 8.04(b) and including in the Amount
Available only payments in respect of interest on the Loans) is not sufficient
to pay the Class A Current Interest Amount, the Class A-IO Current Interest
Amount, the Class M-1 Current Interest Amount, the Class M-2 Current Interest
Amount, the Class B-1 Current Interest Amount and the Class B-2 Current 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 Certificate Account for
distribution on such Payment Date in order first to pay any deficiency in the
Amount Available to pay the Class A Current Interest Amount and the Class A-IO
Current Interest Amount pro rata, second to pay any deficiency in the Amount
Available to pay the Class M-1 Current Interest Amount, third to pay any
deficiency in the Amount Available to pay the Class M-2 Current Interest Amount,
fourth to pay any deficiency in the Amount Available to pay the Class B-1
Current Interest Amount and fifth to pay any deficiency in the Amount Available
to pay the Class B-2 Current Interest Amount.
(b) The Capitalized Interest Account shall be part of the Trust but
not part of the REMIC. The Trustee on behalf of the Trust shall be the legal
owner of the Capitalized Interest Account. The Seller shall be the beneficial
owner of the Capitalized Interest Account, subject to the foregoing power of the
Trustee to transfer amounts in the Capitalized Interest Account to the
Certificate Account. Funds in the Capitalized Interest Account shall, at the
direction of the Seller, be invested in Eligible Investments that mature no
later than the Business Day prior to the next succeeding Payment Date. All net
income and gain from such investments shall be distributed to the Seller on such
Payment Date. All amounts earned on amounts on deposit in the Capitalized
Interest Account shall be taxable to the Seller.
(c) Any funds remaining in the Capitalized Interest Account after the
Payment Date in July 2002 shall be distributed to the Seller. 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 Seller out of its own funds immediately as realized.
SECTION 8.12. Allocation of Realized Loss Amounts. On each Payment
-----------------------------------
Date, Realized Losses shall be distributed to the Uncertificated Basement
Interests in accordance with Section 8.07(c)(iii) (by virtue of the definition
of "Basement Interest Adjusted Principal Balance"), to the Uncertificated
Subsidiary Interests in accordance with Section 8.07(b)(iii) (by virtue of the
definition of "Subsidiary Interest Adjusted Principal Balance"), and to the
Uncertificated
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Intermediate Interests in accordance with Section 8.07(a)(ii), and the Trustee
shall allocate any Realized Loss Amount for such Payment Date to the Regular
Certificates as follows:
(a) to the Class B-2 Certificates up to an amount equal to the Class
B-2 Principal Balance, less distributions of principal on the Class B-2
Certificates on such Payment Date;
(b) any remainder, after allocation pursuant to clause (a) above, to
the Class B-1 Certificates up to an amount equal to the Class B-1 Principal
Balance, less distributions of principal on the Class B-1 Certificates on such
Payment Date;
(c) any remainder, after allocation pursuant to clauses (a) and (b)
above, to the Class M-2 Certificates up to an amount equal to the Class M-2
Principal Balance, less distributions of principal on the Class M-2 Certificates
on such Payment Date; and
(d) any remainder, after allocation pursuant to clauses (a), (b) and
(c) above, to the Class M-1 Certificates up to an amount equal to the Class M-1
Principal Balance, less distributions of principal on the Class M-1 Certificates
on such Payment Date.
ARTICLE IX
THE CERTIFICATES AND THE CLASS R CERTIFICATE
SECTION 9.01. The Certificates and the Class R Certificate. The Class
--------------------------------------------
A, Class A-IO, Class M, Class B, Class B-3I and Class R Certificates shall be
substantially in the forms set forth in Exhibits A, B, C, I and Q, as
applicable, and shall, on original issue, be executed by the Trustee on behalf
of the Trust to or upon the order of the Originator. The Class A, Class A-IO,
the Class M and the Class B Certificates shall be evidenced by (i) one or more
Class A-1 Certificates evidencing $95,000,000 in Original Class A-1 Principal
Balance, (ii) one or more Class A-2 Certificates evidencing $71,000,000 in
Original Class A-2 Principal Balance, (iii) one or more Class A-3 Certificates
evidencing $32,125,000 in Original Class A-3 Principal Balance, (iv) one or more
Class A-IO Certificates evidencing $81,900,000 in Original Class A-IO Notional
Amount, (v) one or more Class M-1 Certificates evidencing $17,500,000 in
Original Class M-1 Principal Balance, (vi) one or more Class M-2 Certificates
evidencing $15,625,000 in Original Class M-2 Principal Balance, (vii) one or
more Class B-1 Certificates evidencing $10,625,000 in Original Class B-1
Principal Balance (viii) one or more Class B-2 Certificates evidencing
$8,125,000 in Original Class B-2 Principal Balance, and (ix) one Class B-3I
Certificate evidencing the entire Class B-3I Notional Amount, beneficial
ownership of such Classes of Certificates (other than the Class B-3I
Certificate) to be held through Book-Entry Certificates in minimum dollar
denominations of $25,000 and integral multiples of $1.00 in excess thereof. The
Class B-3I Certificate shall be evidenced by a single certificate issued on the
Closing Date to the Originator. The Class P Certificate shall be an
Uncertificated interest, the owner of which will be the Class P
Certificateholder. The Class X-IO Certificate shall be an Uncertificated
interest, the owner of which will be the Class X-IO Certificateholder. The Class
R-I, Class R-II and Class R-III Interests shall be evidenced by a single Class R
Certificate, issued on the Closing Date to Green Tree Finance Corp.--Two and
shall represent 100% of the Percentage Interest of the Class R Certificate.
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The Certificates (other than the Class P and Class X-IO Certificates)
and the Class R Certificate shall be executed by manual signature on behalf of
the Trustee by a duly authorized Responsible Officer or authorized signatory.
Certificates or the Class R Certificate bearing the signatures of individuals
who were at any time the proper officers of the Trustee shall bind the Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the execution and delivery of such Certificate or Class R
Certificate, or did not hold such offices at the date of such Certificates or
Class R Certificate. No Certificate (other than the Class P Certificate) or
Class R Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless such Certificate or Class R Certificate has been
executed by manual signature in accordance with this Section, and such signature
upon any Certificate or Class R Certificate shall be conclusive evidence, and
the only evidence, that such Certificates or Class R Certificate has been duly
executed and delivered hereunder. All Certificates and the Class R Certificate
shall be dated the date of their execution, except for those Certificates and
the Class R Certificate executed on the Closing Date, which shall be dated the
Closing Date.
SECTION 9.03. Registration of Transfer and Exchange of Certificates
-----------------------------------------------------
and the Class R Certificate.
---------------------------
(a) The Trustee shall keep at the office or agency to be maintained in
accordance with Section 12.03 a "Certificate Register" in which the Trustee
shall provide for the registration of Certificates and the Class R Certificate
and of transfers and exchanges of Certificates and the Class R Certificate as
herein provided. The Trustee initially appoints itself to be the "Certificate
Registrar" and transfer agent for the purpose of registering Certificates and
the Class R Certificate and transfers and exchanges of Certificates and the
Class R Certificate as provided herein. The Trustee will give prompt written
notice to Certificateholders, the Class R Certificateholder, the Backup Servicer
and the Servicer of any change in the Certificate Registrar.
(b)
(i) Subject to clauses (ii) and (iii) below, no transfer of Class
R Certificate shall be made by the Seller or any other Person
unless such transfer is exempt from the registration
requirements of the Securities Act of 1933 (the "Act"), as
amended, and any applicable state securities laws or is made
in accordance with the Act and laws. In the event that any
such transfer is to be made,
(A) the Originator may require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to
the Originator that such transfer may be made pursuant
to an exemption, describing the applicable exemption
and the basis therefor, from the Act and laws or is
being made pursuant to the Act and laws, which Opinion
of Counsel shall not be an expense of the Trustee or
the Originator, and
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(B) the Trustee shall require the transferee to
execute an investment letter substantially in the
form of Exhibit K attached hereto, which
investment letter shall not be an expense of the
Trustee or the Originator. The Class R
Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the
Trustee, the Originator and the Certificate
Registrar against any liability that may result if
the transfer is not so exempt or is not made in
accordance with such federal and state laws.
(ii) No transfer of a Class B-3I, Class B-2, Class P or
Class R Certificate or any interest therein shall be
made to any employee benefit plan that is subject to
ERISA, or that is described in Section 4975(e)(1) of
the Code or to any person or entity purchasing on
behalf of, or with assets of, such an employee benefit
plan (each, a "Plan"), unless the Plan delivers to the
Originator and the Trustee, an Opinion of Counsel in
form satisfactory to the Originator and the Trustee
that the purchase and holding of such Class B-3I
Certificate, Class B-2, Class P or Class R Certificate
by such Plan will not result in the assets of the Trust
being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code
and will not subject the Trustee, the Originator, the
Seller, the Backup Servicer or the Servicer to any
obligation or liability in addition to those undertaken
in this Agreement. Unless such opinion is delivered and
in the case of Definitive Certificates, each person
acquiring such a Certificate or Class R Certificate
will be deemed to represent to the Trustee, the
Originator, the Seller, the Backup Servicer and the
Servicer either
(A) that such person is neither a Plan, nor acting on
behalf of a Plan, subject to ERISA or to Section
4975 of the Code, or
(B) that the purchase and holding of the Class B-3I
Certificate, Class B-2, Class P or Class R
Certificate by such Plan will not result in the
assets of the Trust being deemed to be Plan assets
and subject to the prohibited transaction
provisions of ERISA and the Code and will not
subject the Trustee, the Originator or the
Servicer to any obligation or liability in
addition to those undertaken in this Agreement.
(iii) Notwithstanding anything to the contrary contained
herein,
(A) no Class B-3I, Class B-2, Class P or Class R
Certificate, nor any interest therein, shall be
transferred, sold or otherwise disposed of to a
"disqualified organization," within the meaning of
Section 860E(e)(5) of the Code (a "Disqualified
Organization"), including, but not limited to,
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(1) the United States, a State or political
subdivision thereof, a foreign government, an
international organization or an agency or
instrumentality of any of the foregoing,
(2) an organization (other than a cooperative
described in Section 521 of the Code) which is
exempt from the taxes imposed by Chapter 1 of the
Code and not subject to the tax imposed on
unrelated business income by Section 511 of the
Code, or
(3) a cooperative described in Section 1381(a)(2)(C)
of the Code, and
(B) prior to any registration of any transfer, sale or
other disposition of a Class B-3I or Class R
Certificate, the proposed transferee shall deliver to
the Trustee, under penalties of perjury, an affidavit
that such transferee is not a Disqualified
Organization, with respect to which the Trustee shall
have no actual knowledge that such affidavit is false,
and the transferor and the proposed transferee shall
each deliver to the Trustee an affidavit with respect
to any other information reasonably required by the
Trustee pursuant to the REMIC Provisions, including,
without limitation, information regarding the transfer
of non-economic residual interests and transfers of any
residual interest to or by a foreign person; provided,
however, that, upon the delivery to the Trustee of an
Opinion of Counsel, in form and substance satisfactory
to the Trustee and rendered by Independent counsel, to
the effect that the beneficial ownership of the Class
B-3I or Class R Certificate, as applicable, by any
Disqualified Organization will not result in the
imposition of federal income tax upon the Trust or any
Class B-3I Certificateholder or Class R
Certificateholder or any other person or otherwise
adversely affect the status of the Trust as a REMIC,
the foregoing prohibition on transfers, sales and other
dispositions, as well as the foregoing requirement to
deliver a certificate prior to any registration
thereof, shall, with respect to such Disqualified
Organization, terminate. Notwithstanding any transfer,
sale or other disposition of a Class B-3I or Class R
Certificate, or any interest therein, to a Disqualified
Organization or the registration thereof in the
Certificate Register, such transfer, sale or other
disposition and any registration thereof, unless
accompanied by the Opinion of Counsel described in the
preceding sentence, shall be deemed to be void and of
no legal force or effect whatsoever and such
Disqualified Organization shall be deemed not to be a
Class B-3I or Class R Certificateholder, as applicable,
for any purpose hereunder, including, but not limited
to, the receipt of
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distributions on such Class B-3I or Class R
Certificate, and shall be deemed to have no interest
whatsoever in such Class B-3I or Class R Certificate.
Each Class B-3I or Class R Certificateholder, by his
acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this Section
9.02(b)(3).
(iv) Any transfer, sale or other disposition not in compliance with
the provisions of this Section 9.02(b) shall be deemed to be
void and of no legal force or effect whatsoever and such
transferee shall be deemed not to be the Class B-3I
Certificateholder or Class R Certificateholder, as applicable,
for any purpose hereunder, including, but not limited to, the
receipt of distributions on the Class B-3I Certificate or
Class R Certificate, and shall be deemed to have no interest
whatsoever in the Class B-3I Certificate or Class R
Certificate.
(v) The Trustee shall give notice to the Rating Agencies promptly
following any transfer, sale or other disposition of a Class
B-3I or Class R Certificate.
(c) At the option of a Certificateholder (other than the Class P
Certificateholder) or a Class R Certificateholder, Certificates (other than the
Class P Certificate) and the Class R Certificate may be exchanged for other
Certificates or Class R Certificate of authorized denominations of a like
aggregate original denomination, upon surrender of such Certificates or the
Class R Certificate to be exchanged at the Corporate Trust Office. Whenever any
Certificates or the Class R Certificate are so surrendered for exchange, the
Trustee shall execute and deliver the Certificates or Class R Certificate which
the Certificateholder or Class R Certificateholder making the exchange is
entitled to receive. Every Certificate or Class R Certificate presented or
surrendered for transfer or exchange shall be duly endorsed by, or shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the holder thereof or
his or her attorney duly authorized in writing.
(d) Except as provided in paragraph (e) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times:
(i) registration of such Certificates may not be transferred by
the Trustee except to another Depository;
(ii) the Depository shall maintain book-entry records with respect
to the Certificate Owners and with respect to ownership and
transfers of such Certificates;
(iii) ownership and transfers of registration of such Certificates
on the books of the Depository shall be governed by applicable
rules established by the Depository;
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(iv) the Depository may collect its usual and customary
fees, charges and expenses from its Depository
Participants;
(v) the Trustee shall deal with the Depository,
Depository Participants and indirect participating
firms as representatives of the Certificate Owners of
such Certificates for purposes of exercising the
rights of Holders under this Agreement, and requests
and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are
made with respect to different Certificate Owners;
and
(vi) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository
with respect to its Depository Participants and
furnished by the Depository Participants with respect
to indirect participating firms and persons shown on
the books of such indirect participating firms as
direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(e) If (x)
(i) the Seller or the Depository advises the Trustee in
writing that the Depository is no longer willing or
able properly to discharge its responsibilities as
Depository, and
(ii) the Trustee or the Originator is unable to locate a
qualified successor, or
(y) the Originator at its sole option advises the Trustee
in writing that it elects to terminate the book-entry
system through the Depository;
the Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of definitive, fully
registered Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same.
Upon surrender to the Trustee of the Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall issue the Definitive Certificates. Neither the Originator nor
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
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(f) On or prior to the Closing Date, there shall be delivered to the
Depository one Class A-1 Certificate, one Class A-2 Certificate, one Class A-3
Certificate, one Class A-IO Certificate, one Class M-1 Certificate, one Class
M-2 Certificate and one Class B-1 Certificate, each in registered form
registered in the name of the Depository's nominee, Cede & Co., the total face
amount of which represents 100% of the Original Class Principal Balance of each
Class, respectively (or in the case of the Class A-IO Certificate, the Class
A-IO Original Notional Amount). At any time after the Closing Date, subject to
compliance with the normal procedures of the Trustee and the Depository, the
Class B-2 Certificateholders may deliver to the Depository one Class B-2
Certificate, registered in the name of Cede & Co. (or other nominee of the
Depository), the total face amount of which represents 100% of the Original
Principal Balance of the Class B-2 Certificate. Each such Certificate registered
in the name of the Depository's nominee shall bear the following legend:
"Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of transfer, exchange or payment, and any
certificate issued is registered in the name of Cede & Co. or in such other name
as requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein."
(g) Each of the Certificates (other than the Class P Certificates) and
the Class R Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(8) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the State of Minnesota from time to time.
(h) Each of the Class M-1, Class M-2 and Class B-1 Certificates, as
beneficiaries of the Yield Maintenance Agreements, may be sold under the
Exemption only to a Qualified Plan Investor.
(i) The Class P Certificate shall be nontransferable.
SECTION 9.03. No Charge; Disposition of Void Certificates or Class R
------------------------------------------------------
Certificate. No service charge shall be made to a Certificateholder or Class R
-----------
Certificateholder for any transfer or exchange of a Certificate or a Class R
Certificate, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of a Certificate or a Class R
Certificate. All Certificates and Class R Certificate surrendered for transfer
and exchange shall be disposed of in a manner approved by the Trustee.
SECTION 9.04. Mutilated, Destroyed, Lost or Stolen Certificates or
----------------------------------------------------
Class R Certificate.
-------------------
If
(i) any mutilated Certificate or Class R Certificate is
surrendered to the Certificate Registrar, or the Certificate
Registrar receives evidence to its
118
satisfaction of the destruction, loss or theft of any
Certificate or Class R Certificate, and
(ii) there is delivered to the Certificate Registrar and the
Trustee such security or indemnity as may be required by each
to save it harmless, then in the absence of notice to the
Certificate Registrar or the Trustee that such Certificate or
Class R Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate or Class R Certificate, a new Certificate
or Class R Certificate of like tenor and original
denomination.
Upon the issuance of any new Certificate or Class R Certificate under this
Section 9.04, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses connected therewith. Any duplicate Certificate or Class R
Certificate issued pursuant to this Section 9.04 shall constitute complete and
indefeasible evidence of ownership of the Percentage Interest, as if originally
issued, whether or not the mutilated, destroyed, lost or stolen Certificate or
Class R Certificate shall be found at any time.
SECTION 9.05. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate or Class R Certificate for registration of transfer, the Servicer,
the Seller, the Trustee, the Paying Agent and the Certificate Registrar may
treat the person in whose name any Certificate or Class R Certificate is
registered as the owner of such Certificate or Class R Certificate for the
purpose of receiving remittances pursuant to Section 8.01 and for all other
purposes whatsoever, and none of the Servicer, the Seller, the Trustee, the
Certificate Registrar, the Paying Agent or any agent of the Servicer, the
Seller, the Trustee, the Paying Agent or the Certificate Registrar shall be
affected by notice to the contrary.
SECTION 9.06. Access to List of Certificateholders' and Class R
-------------------------------------------------
Certificateholder's Names and Addresses. The Certificate Registrar will furnish
---------------------------------------
to the Trustee and the Servicer, within five days after receipt by the
Certificate Registrar of a request therefor from the Trustee in writing, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Certificateholders and the Class R Certificateholder as of the most
recent Record Date. If Holders of Certificates representing, in the aggregate,
25% or more of the Aggregate Certificate Principal Balance apply in writing to
the Trustee (hereinafter referred to as "Applicants"), and such application
states that the Applicants desire to communicate with other Certificateholders
or the Class R Certificateholder with respect to their rights under this
Agreement or under the Certificates or the Class R Certificate and is
accompanied by a copy of the communication which such Applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such Applicants access during normal business hours to
the most recent list of Certificateholders and the Class R Certificateholder
held by the Trustee. If such list is as of a date more than 90 days prior to the
date of receipt of such Applicants' request, the Trustee shall promptly request
from the Certificate Registrar a current list as provided above, and shall
afford such Applicants access to such list promptly upon receipt. Every
119
Certificateholder and the Class R Certificateholder, by receiving and holding a
Certificate or a Class R Certificate, agrees with the Certificate Registrar and
the Trustee that none of the Originator, the Certificate Registrar or the
Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Certificateholders or the Class
R Certificateholder hereunder, regardless of the source from which such
information was derived.
SECTION 9.07. Authenticating Agents. The Trustee may appoint one or
---------------------
more Authenticating Agents with power to act on its behalf and subject to its
direction in the execution and delivery of the Certificates or the Class R
Certificate. For all purposes of this Agreement, the execution and delivery of
Certificates or the Class R Certificate by the Authenticating Agent pursuant to
this Section shall be deemed to be the execution and delivery of Certificates or
the Class R Certificate "by the Trustee."
ARTICLE X
INDEMNITIES
SECTION 10.01. Real Estate. The Seller and Originator will jointly and
-----------
severally defend and indemnify the Trust, the Trustee (including the Custodian
and any other agents of the Trustee), the Backup Servicer, the
Certificateholders and the Class R Certificateholder against any and all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation arising out of or resulting from
the use or ownership of any real estate related to a Loan by the Originator or
the Servicer or any Affiliate of either; provided that the amount paid to the
Backup Servicer pursuant to Section 8.04(b)(i) in respect of indemnification
shall not exceed $100,000 in any year or $1,000,000 in the aggregate.
Notwithstanding any other provision of this Agreement, the obligation of the
Originator under this Section shall not terminate upon a Service Transfer
pursuant to Article VII, except that the obligation of the Originator under this
Section shall not relate to the actions of the Backup Servicer or any other
subsequent Servicer after a Service Transfer.
SECTION 10.02. Liabilities to Obligors. No obligation or liability to
-----------------------
any Obligor under any of the Loans is intended to be assumed by the Trust, the
Certificateholders or the Class R Certificateholder under or as a result of this
Agreement and the transactions contemplated hereby and, to the maximum extent
permitted and valid under mandatory provisions of law, the Trust, the
Certificateholders and the Class R Certificateholder expressly disclaim such
assumption.
SECTION 10.03. Tax Indemnification. The Originator agrees to pay, and
-------------------
to indemnify, defend and hold harmless the Trust, the Trustee (including the
Custodian and any other agents of the Trustee), the Backup Servicer, the
Certificateholders and the Class R Certificateholders from, any taxes which may
at any time be asserted with respect to, and as of the date of, the transfer of
the Loans to the Trust, including, without limitation, any sales, gross
receipts, general corporation, personal property, privilege or license taxes
(but not including any federal, state or other taxes arising out of the creation
of the Trust and the issuance of the Certificates and the Class R Certificate)
and costs, expenses and reasonable counsel fees in defending against the
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same, whether arising by reason of the acts to be performed by the Originator,
the Seller, the Servicer, the Backup Servicer or the Trustee under this
Agreement or imposed against the Trust, a Certificateholder, a Class R
Certificateholder or otherwise.
SECTION 10.04. Servicer's Indemnities. The Servicer shall defend and
----------------------
indemnify the Trust, the Trustee (including the Custodian and any other agents
of the Trustee), the Backup Servicer, the Certificateholders and the Class R
Certificateholder against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, in respect of any action taken or omitted to be taken by the
Servicer (including the Backup Servicer if it is the Servicer) with respect to
any Loan. This indemnity shall survive any Service Transfer (but the original
Servicer's obligations under this Section 10.04 shall not relate to any actions
or omissions of any subsequent Servicer after a Service Transfer and a
subsequent Servicer's obligations under this Section 10.04 shall not relate to
any act or omission of any predecessor Servicer) and any payment of the amount
owing under, or any repurchase by the Originator of, any such Loan.
SECTION 10.05. Operation of Indemnities. Indemnification under this
------------------------
Article shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Originator or the Servicer has made
any indemnity payments to the Trust, the Trustee, the Backup Servicer, the
Certificateholders or the Class R Certificateholder pursuant to this Article and
they thereafter collect any of such amounts from others, they will repay such
amounts collected to the Originator or the Servicer, as the case may be, without
interest.
SECTION 10.06. REMIC Tax Matters. If a Class R Certificateholder,
-----------------
pursuant to Section 6.06, pays any taxes or charges imposed upon the Master
REMIC, Intermediate REMIC, Subsidiary REMIC or Basement REMIC, as the case may
be, or otherwise, such taxes or charges, except to the extent set forth in the
following proviso, shall be expenses and costs of the Trust and the Class R
Certificateholder shall be entitled to be reimbursed therefor out of the
Certificate Account as provided in Section 8.04; provided, however, that any
such taxes or charges shall not be expenses or costs of the Trust, nor will the
Class R Certificateholder be entitled to reimbursement therefor out of the
Certificate Account, if and to the extent that such taxes or charges resulted
from a failure (i) by the Originator, the Trustee or any Servicer to comply with
the provisions of Section 2.05, (ii) by any Servicer to comply with the
provisions of Section 6.06, or (iii) by the Trustee to execute any tax returns
pursuant to Section 11.11.
SECTION 10.07. Indemnification of Backup Servicer. The Seller and
----------------------------------
Originator will jointly and severally defend and indemnify the Backup Servicer,
its Affiliates, officers, directors, employees or agents against any and all
costs, expenses. losses, damages, claims, actions, judgments, suits and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation of any third-party claims arising out of actions taken or not taken
by the Backup Servicer, its Affiliates, officers, directors, employees or agents
under this Agreement, unless such action or inaction constitutes a breach of
this Agreement or results from the negligence or willful misconduct of the
Backup Servicer. To the extent the Seller and Originator fail to indemnify the
Backup Servicer, its Affiliates, officers, directors, employees or agents for
any amounts due under this Section 10.06 within 15 Business Days of written
demand for such
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indemnification hereunder, the Backup Servicer, its Affiliates, officers,
directors, employees or agents will be entitled to the payment of such amounts
under Section 8.04(b)(ii) and Section 8.04(e)(xii) of this Agreement.
SECTION 10.08. Limitation of Liability. In no event shall the Backup
-----------------------
Servicer be liable for any consequential, incidental or punitive damages.
ARTICLE XI
THE TRUSTEE
SECTION 11.01. Duties of Trustee. The Trustee, prior to the occurrence
-----------------
of an Event of Termination and after the curing of all Events of Termination
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If an Event of Termination has
occurred (which has not been cured), the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
Subject to Section 11.03, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Termination, and after the
curing of all such Events of Termination which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or opinions furnished to
the Trustee and conforming to the requirements of this Agreement;
(b) The Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Certificateholders representing, in the aggregate, 25%
or more of the Aggregate Certificate Principal Balance relating to the time,
method and place of conducting any proceeding for any
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remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(d) The Trustee shall not be charged with knowledge of any event
referred to in Section 7.01 unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such event or the Trustee
receives written notice of such event from the Servicer or the
Certificateholders representing, in the aggregate, 25% or more of the Aggregate
Certificate Principal Balance.
None of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Originator, the Seller or the Servicer under
this Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement. The Trustee shall
not be required to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 11.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officer's Certificate, certificate of a
Servicing Officer, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Trustee may consult with counsel and any opinion of any counsel
for the Originator, the Seller or the Servicer shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by the Trustee hereunder in good faith and in accordance with such
Opinion of Counsel;
(c) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Termination (which has not been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs;
(d) Prior to the occurrence of an Event of Termination and after the
curing of all Events of Termination which may have occurred, the Trustee shall
not be bound to make any
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investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing so to do
by Certificateholders representing, in the aggregate, 25% or more of the
Aggregate Certificate Principal Balance; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such cost, expense or liability as a condition to
so proceeding. The reasonable expense of every such examination shall be paid by
the Servicer or, if paid by the Trustee, shall be reimbursed by the Servicer
upon demand; provided, that, such obligation not be transferred to the Backup
Servicer or other successor Servicer; and
(e) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian and shall not be liable for any acts or omissions of
such agents, attorneys or custodians if appointed by it with due care hereunder.
SECTION 11.03. Trustee Not Liable for Certificates, Class R Certificate or
-----------------------------------------------------------
Loans. The Trustee assumes no responsibility for the correctness of the recitals
-----
contained herein, in the Certificates or in the Class R Certificate (other than
the Trustee's execution thereof). The Trustee makes no representations as to the
validity or sufficiency of this Agreement, of the Certificates or of the Class R
Certificate (other than its execution thereof) or of any Loan, Loan File or
related document. The Trustee shall not be accountable for the use or
application by the Servicer, the Originator or the Seller of funds paid to the
Originator or the Seller, as applicable in consideration of conveyance of the
Loans to the Trust by the Originator and the Seller or deposited in or withdrawn
from the Certificate Account by the Servicer.
SECTION 11.04. Trustee May Own Certificates. The Trustee in its individual
----------------------------
or other capacity may become the owner or pledgee of Certificates representing
less than all the beneficial interest in the Trust with the same rights as it
would have if it were not Trustee.
SECTION 11.05. Rights of Certificateholders to Direct Trustee and to Waive
-----------------------------------------------------------
Events of Termination. Holders of Certificates representing, in the aggregate,
---------------------
25% or more of the Aggregate Certificate Principal Balance shall have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that, subject to Section 11.01, the Trustee shall
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceedings so directed would be
illegal or involve it in personal liability or be unduly prejudicial to the
rights of Certificateholders not parties to such direction; and provided,
further, that nothing in this Agreement shall impair the right of the Trustee to
take any action deemed proper by the Trustee and which is not inconsistent with
such direction by the Certificateholders. Holders of the Certificates
representing, in the aggregate, 51% or more of the Aggregate Certificate
Principal Balance may on behalf of all Certificateholders waive any past Event
of
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Termination hereunder and its consequences, except a default in respect of a
covenant or provision hereof which under Section 12.08 cannot be modified or
amended without the consent of all Certificateholders, and upon any such waiver,
such Event of Termination shall cease to exist and shall be deemed to have been
cured for every purpose of this Agreement; but no such waiver shall extend to
any subsequent or other Event of Termination or impair any right consequent
thereon.
SECTION 11.06. The Servicer to Pay Trustee's Fees and Expenses. The
-----------------------------------------------
Servicer agrees:
(i) to pay to the Trustee reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of
a trustee of an express trust);
(ii) except as otherwise expressly provided herein, to reimburse the
Trustee, to the extent requested by the Trustee, for all
reasonable expenses, disbursements and advances incurred or made
by the Trustee in accordance with any provision of this
Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except
any such expense, disbursement or advance as may be attributable
to its negligence or bad faith; and
(iii) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust and its duties
hereunder, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
The covenants in this Section 11.06 shall be for the benefit of the Trustee
in its capacities as Trustee, Paying Agent and Certificate Registrar hereunder,
and shall survive the termination of this Agreement. If any entity other than
the Originator or a subsidiary or affiliate of the Originator is the Servicer,
the Servicer shall be reimbursed for any costs and expenses incurred by it in
this Section 11.06 pursuant to Sections 5.08 and 8.04(b), provided that, if for
any Payment Date the Originator is not the Servicer, the obligations of the
Servicer under this Section 11.06 shall be limited to the funds remaining after
distributions under Section 8.04(b)(i) (without taking into account any amounts
to be reimbursed to the Backup Servicer under this Section 11.06) for that
Payment Date.
SECTION 11.07. Eligibility Requirements for Trustee. The Trustee hereunder
------------------------------------
shall at all times be a financial institution organized and doing business under
the laws of the United States of America or any State, authorized under such
laws to exercise corporate trust powers, and shall have a combined capital and
surplus of at least $50,000,000 or shall be a member of a bank holding system
the aggregate combined capital and surplus of which is $50,000,000, provided,
that, the Trustee's separate capital and surplus shall at all times be at least
the amount required by Section 310(a)(2) of the Trust Indenture Act of 1939, as
amended. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of a supervising or
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examining authority, then for the purposes of this Section 11.07, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. In
addition, the Trustee shall at all times have
(i) a long-term deposit rating from S&P of at least BBB or as shall
be otherwise acceptable to S&P,
(ii) a long-term deposit rating from Fitch of at least BBB or as
shall be otherwise acceptable to Fitch, and
(iii) a long-term deposit rating from ▇▇▇▇▇'▇ of at least Baa2 or as
shall be otherwise acceptable to ▇▇▇▇▇'▇.
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 11.07, the Trustee shall resign immediately
in the manner and with the effect specified in Section 11.08.
SECTION 11.08. Resignation or Removal of Trustee. The Trustee may at any
---------------------------------
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer and the Originator. Upon receiving such notice of
resignation, the Originator shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to each of the Servicer, the Backup Servicer, and the Originator and
one copy to the successor Trustee. If no successor Trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 11.07 and shall fail to resign after written request
therefor by the Originator, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the Originator may
remove the Trustee. If the Originator shall have removed the Trustee under the
authority of the immediately preceding sentence, the Originator shall promptly
appoint a successor Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 11.08 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 11.09.
SECTION 11.09. Successor Trustee. Any successor Trustee appointed as
-----------------
provided in Section 11.08 shall execute, acknowledge and deliver to the
Servicer, the Backup Servicer, the Originator and to its predecessor Trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee shall become effective and
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such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee. The
predecessor Trustee shall deliver or cause to be delivered to the successor
Trustee the Loans and the Loan Files and any related documents and statements
held by it hereunder; and, if the Loans are then held by a Custodian pursuant to
a custodial agreement, the predecessor Trustee and the Custodian shall amend
such custodial agreement to make the successor Trustee the successor to the
predecessor Trustee thereunder; and the Servicer, the Originator and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this Section
11.09 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 11.07.
Upon acceptance of appointment by a successor ▇▇▇▇▇▇▇ as provided in this
Section 11.09, the Servicer shall cause notice of the succession of such Trustee
hereunder to be mailed to the Rating Agencies and to each Certificateholder and
the Class R Certificateholder at their addresses as shown in the Certificate
Register. If the Servicer fails to mail such notice within ten days after
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of the Servicer.
SECTION 11.10. Merger or Consolidation of Trustee. Any Person into which
----------------------------------
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided, however, that such Person shall be eligible under the provisions of
Section 11.07, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee shall promptly notify the Rating Agencies in the
event it is a party to any merger, conversion or consolidation.
SECTION 11.11. Tax Returns. Upon the Servicer's request, the Trustee will
-----------
furnish the Servicer with all such information as the Servicer may reasonably
require in connection with preparing all tax returns of the Trust and the
Trustee shall execute such returns.
SECTION 11.12. Obligor Claims. In connection with any offset defenses, or
--------------
affirmative claims for recovery, asserted in legal actions brought by Obligors
under one or more Loans based upon provisions therein complying with, or upon
other rights or remedies arising from, any legal requirements applicable to the
Loans, including, without limitation, the Federal Trade Commission's Trade
Regulation Rule Concerning Preservation of Consumers' Claims and Defenses (16
C.F.R. (S) 433) as amended from time to time:
(i) The Trustee is not, and shall not be deemed to be, either in any
individual capacity, as trustee hereunder or otherwise, a
creditor, or a joint venturer with or an Affiliate of, or acting
in concert or cooperation with, any home equity lender, in the
arrangement, origination or making of Loans. The
127
Trustee is the holder of the Loans only as trustee on behalf of
the Certificateholders and the Class R Certificateholder, and
not as a principal or in any individual or personal capacity;
(ii) The Trustee shall not be personally liable for or obligated to
pay Obligors any affirmative claims asserted thereby, or
responsible to Certificateholders or the Class R
Certificateholder for any offset defense amounts applied against
Loan payments, pursuant to such legal actions;
(iii) The Trustee will pay, solely from available Trust monies,
affirmative claims for recovery by Obligors only pursuant to
final judicial orders or judgments, or judicially approved
settlement agreements, resulting from such legal actions;
(iv) The Trustee will comply with judicial orders and judgments which
require its actions or cooperation in connection with Obligors'
legal actions to recover affirmative claims against
Certificateholders and the Class R Certificateholder;
(v) The Trustee will cooperate with and assist Certificateholders
and the Class R Certificateholder in their defense of legal
actions by ▇▇▇▇▇▇▇▇ to recover affirmative claims if such
cooperation and assistance is not contrary to the interests of
the Trustee as a party to such legal actions and if the Trustee
is satisfactorily indemnified for all liability, costs and
expenses arising therefrom; and
(vi) The Originator hereby agrees to indemnify, hold harmless and
defend the Trustee, Certificateholders and the Class R
Certificateholder from and against any and all liability, loss,
costs and expenses of the Trustee, Certificateholders and the
Class R Certificateholder resulting from any affirmative claims
for recovery asserted or collected by Obligors under the Loans.
Notwithstanding any other provision of this Agreement, the
obligation of the Originator under this Section 11.12(vi) shall
not terminate upon a Service Transfer pursuant to Article VII.
SECTION 11.13. Appointment of Co-Trustee or Separate Trustee.
---------------------------------------------
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction having authority over the
Trust, the Loans or the Obligors, the Originator and the Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity,
such title to the Trust, or any part thereof, and, subject to the other
provisions of this Section 11.13, such powers, duties, obligations, rights and
trusts as the Originator and the Trustee may consider necessary or desirable. If
the Originator shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in case an Event of Termination
shall have occurred and be continuing, the Trustee alone
128
shall have the power to make such appointment. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 11.07 hereunder and no notice to Certificateholders or a
Class R Certificateholder of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 11.09.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 11.13 all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such co-trustee or separate trustee jointly, except
to the extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed by such co-trustee or separate
trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then co-trustees and separate trustees, as
effectively as if given to each of them. Every instrument appointing any
co-trustee or separate trustee shall refer to this Agreement and the conditions
of this Article XI. Each co-trustee and separate trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any co-trustee or separate trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any co-trustee or separate trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 11.14. Trustee and U.S. Bancorp. In the event the Trustee ceases to
------------------------
be a direct, wholly owned subsidiary of U.S. Bancorp, the Trustee shall promptly
notify the Rating Agencies.
SECTION 11.15. Trustee Advances.
----------------
(a) If the Servicer fails to deposit into the Certificate Account Advances
as required by Section 8.02, then the Trustee shall, subject to the provisions
of paragraph (b) below, from its own funds, deposit into the Certificate Account
the amount not so deposited by the Servicer on or before the Business Day
preceding the related Payment Date (a "Trustee Advance").
(b) The Trustee shall not be required to make any Trustee Advance if and to
the extent that it determines in good faith that the funds, if advanced, would
not be recoverable by it
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from subsequent amounts available in the Certificate Account in accordance with
Section 8.04(b).
(c) The Trustee shall be entitled to reimbursement of a Trustee Advance
from funds subsequently available therefor in the Certificate Account in
accordance with Section 8.04(b).
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Servicer Not to Resign; Delegation of Servicing Duties. The
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Originator as Servicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that the performance of its duties
hereunder is no longer permissible under this Agreement or under applicable law.
Any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel for the Servicer to such effect delivered to
the Trustee. No such resignation shall become effective until the Trustee or a
successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 7.03.
Notwithstanding the foregoing, Conseco Finance Corp., if it is the
Servicer, may delegate some or all of its servicing duties to a wholly owned
subsidiary of the Originator, for so long as said subsidiary remains, directly
or indirectly, a wholly-owned subsidiary of Conseco Finance Corp.
Notwithstanding any such delegation, Conseco Finance Corp. shall retain all of
the rights and obligations of the Servicer hereunder.
The Backup Servicer, if it is the Servicer, may delegate some or all of its
servicing duties to an Affiliate. Notwithstanding any such delegation, the
Backup Servicer shall retain all of the rights and obligations of the Servicer
hereunder.
SECTION 12.02. Conseco Finance Corp. and Seller Not to Engage in Certain
---------------------------------------------------------
Transactions with Respect to the Trust. Neither Conseco Finance Corp. nor the
--------------------------------------
Seller shall:
(i) Provide credit to any Certificateholder for the purpose of
enabling such Certificateholder to purchase Certificates;
(ii) Purchase any Certificates in an agency or trustee capacity; or
(iii) Loan any money to the Trust (other than Advances pursuant to
Section 8.02).
SECTION 12.03. Maintenance of Office or Agency. The Trustee will maintain
-------------------------------
in Minneapolis or St. ▇▇▇▇, Minnesota, an office or agency where Certificates or
the Class R Certificate may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee in respect of the
Certificates, the Class R Certificate and this Agreement may be served. On the
date hereof the Trustee's office for such purposes is located at ▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The Trustee will give prompt
130
written notice to the Originator, the Seller, the Servicer, the Backup Servicer,
the Certificateholders and the Class R Certificateholder of any change in the
location of the Certificate Register or any such office or agency.
SECTION 12.04. Termination.
-----------
(a) The Trust created hereby and the respective obligations and
responsibilities of the Originator, the Seller, the Servicer, the Guarantor and
the Trustee created hereby (other than the responsibility of the Trustee to make
any final distributions to Certificateholders and the Class R Certificateholder
as set forth below) shall terminate on the earlier of
(i) the Payment Date on which the principal balance of all of
the Loans is reduced to zero; or
(ii) the Payment Date occurring in the month following the sale
of the Loans pursuant to Section 8.06;
provided, that, in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States to the Court of St.
▇▇▇▇▇, living on the date hereof, and provided, further, that the Servicer's and
the Originator's representations and warranties and indemnities by the
Originator and the Servicer shall survive termination. Any termination of the
Trust must be conducted so as to qualify as a "qualified liquidation" of the
Basement REMIC, Subsidiary REMIC, Intermediate REMIC and Master REMIC, as
applicable, within the meaning of the REMIC Provisions.
(b) Any termination of the Trust must be conducted so as to qualify
as a "qualified liquidation" of the Basement REMIC, Subsidiary REMIC,
Intermediate REMIC and Master REMIC, as applicable, within the meaning of the
REMIC Provisions. The Trustee's acknowledgment of a notice given under Section
8.06(b)(iii) shall constitute a plan of complete liquidation of the Master
REMIC, Intermediate REMIC, Subsidiary REMIC and Basement REMIC within the
meaning of Section 860F of the Code.
(c) The Trustee shall give notice of the Final Payment Date to the
Certificateholders, the Rating Agencies, the Backup Servicer and the Certificate
Registrar. The Servicer shall direct the Trustee to give such notice ten days
prior to the date the Trustee is to mail such notice. The Trustee shall mail the
notice no later than the fifth Business Day of the month of the Final Payment
Date. The notice shall specify:
(i) the Final Payment Date (which shall be a date that would
otherwise be a Payment Date);
(ii) the Final Payment Date upon which final payment on the
Certificates and the Class R Certificate will be made upon
presentation and surrender of Certificates (except in the
case of the Class P Certificate) and the Class R Certificate
at the office or agency of the Trustee therein designated;
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(iii) the amount of any such final payment; and
(iv) that the Record Date otherwise applicable to such Payment
Date is not applicable, payments being made only upon
presentation and surrender of the Certificates and the
Class R Certificate at the office or agency of the Trustee
therein specified.
(d) Upon presentation and surrender of the Certificates and the Class
R Certificate, the Trustee shall cause to be distributed from the Certificate
Account, in the following order of priority and to the Certificateholders on the
Final Payment Date in proportion to their respective Percentage Interests:
(i) to the extent the Amount Available is sufficient therefor,
and in the order of priority provided for in Section
8.04(b), an amount equal to
(A) concurrently (1) as to Class A Certificates, the Class
A Principal Balance, together with any Unpaid Class A
Interest Carry Forward Amount and interest accrued
during the related Accrual Period at the Interest Rate
for each Class of Class A Certificates on the Class
Principal Balance, respectively, and (2) as to the
Class A-IO Certificates, the Class A-IO Current
Interest Amount, if any, for such Payment Date,
together with any Unpaid Class A-1 Interest Carry
Forward Amount,
(B) as to the Class M-1 Certificates, the Class M-1
Principal Balance, together with any Unpaid Class M-1
Interest Carry Forward, any Unpaid Class M-1 Realized
Loss Interest Amount, any Unpaid Class M-1 Realized
Loss Amount and interest accrued during the related
Accrual Period at the Class M-1 Interest Rate on the
Class M-1 Principal Balance,
(C) as to Class M-2 Certificates, the Class M-2 Principal
Balance, together with any Unpaid Class M-2 Interest
Carry Forward Amount, any Unpaid Class M-2 Realized
Loss Interest Amount, any Unpaid Class M-2 Realized
Loss Amount and interest accrued during the related
Accrual Period at the Class M-2 Interest Rate on the
Class M-2 Principal Balance,
(D) as to Class B-1 Certificates, the Class B-1 Principal
Balance, together with any Unpaid Class B-1 Interest
Carry Forward Amount any Unpaid Class B-1 Realized Loss
Interest Amount, any Unpaid Class B-1 Realized Loss
Amount and interest accrued during the related Accrual
Period at the Class B-1 Interest Rate on the Class B-1
Principal Balance,
132
(E) as to Class B-2 Certificates, the Class B-2 Principal
Balance, together with any Unpaid Class B-2 Interest
Carry Forward Amount, any Unpaid Class B-2 Realized
Loss Interest Amount, any Unpaid Class B-2 Realized
Loss Amount and interest accrued during the related
Accrual Period at the Class B-2 Interest Rate on the
Class B-2 Principal Balance,
(F) to the Basis Risk Reserve Fund the sum of all Unpaid
Class A, Class A-IO, Class M-1, Class M-2, Class B-1
and Class B-2 Basis Risk Carryover Shortfalls,
(G) as to the Class B-3I Certificate, the Class B-3I
Formula Distribution Amount, and
(H) as to the Class P Certificate, the Class P Principal
Balance.
(ii) to the Class P Certificateholder, any Prepayment Charges;
and;
(iii) to the Class R Certificateholder, the amount which remains
on deposit in the Certificate Account (other than amounts
retained to meet claims) after application pursuant to
clauses (i) and (ii) above.
SECTION 12.05. Acts of Certificateholders and Class R Certificateholder.
--------------------------------------------------------
(a) Except as otherwise specifically provided herein, whenever
Certificateholder approval, authorization, direction, notice, consent, waiver,
or other action is required hereunder, such approval, authorization, direction,
notice, consent, waiver or other action shall be deemed to have been given or
taken on behalf of, and shall be binding upon, all Certificateholders if agreed
to by Holders of Certificates representing, in the aggregate, 51% or more of the
Aggregate Certificate Principal Balance.
(b) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders or the Class R Certificateholder may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders or the Class R Certificateholder in person or by an
agent duly appointed in writing; and except as herein otherwise expressly
provided such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where required, to the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and (subject to Section 11.01)
conclusive in favor of the Trustee, the Servicer and the Originator if made in
the manner provided in this Section.
(c) The fact and date of the execution by any Certificateholder or
Class R Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
133
(d) The ownership of Certificates and the Class R Certificate shall be
proved by the Certificate Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder or the Class R Certificateholder
shall bind every holder of every Certificate or the Class R Certificate, as
applicable, issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done
by the Trustee, the Servicer or the Originator in reliance thereon, whether or
not notation of such action is made upon such Certificates or Class R
Certificate.
(f) The Trustee may require such additional proof of any matter
referred to in this Section as it shall deem necessary.
SECTION 12.06. Assignment or Delegation by Company. Except as
-----------------------------------
specifically authorized hereunder, and except for its obligations as Servicer
which are dealt with under Article V and Article VII, the Originator may not
convey and assign or delegate any of its rights or obligations hereunder absent
the prior written consent of Holders of Certificates representing, in the
aggregate, 66-2/3% or more of the Aggregate Certificate Principal Balance, and
any attempt to do so without such consent shall be void.
SECTION 12.07. Amendment.
---------
(a) This Agreement may be amended from time to time by the Originator,
the Servicer and the Trustee, with the consent of the Backup Servicer, if the
amendment materially affects its rights and obligations herein, but without the
consent of any of the Certificateholders or the Class R Certificateholder, to
correct manifest error, to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein, as
the case may be, to make such changes as are necessary to maintain the status of
the Trust as a "real estate mortgage investment conduit" under the REMIC
Provisions of the Code or to otherwise effectuate the benefits of such status to
the Trust, the Certificateholders or the Class R Certificateholder, including,
without limitation, to implement any provision permitted by law that would
enable a REMIC to avoid the imposition of any tax, or to make any other
provisions with respect to matters or questions arising under this Agreement
that shall not be inconsistent with the provisions of this Agreement; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel for
the Servicer, adversely affect in any material respect the interests of any
Certificateholder.
(b) This Agreement may also be amended from time to time by the
Servicer, the Originator and the Trustee, with the consent of the Backup
Servicer, if the amendment materially affects its rights and obligations herein,
and with the consent of Holders of Certificates representing, in the aggregate,
66-2/3% or more of the Aggregate Certificate Principal Balance, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of such
Certificateholders; provided, however, that no such amendment shall
134
(i) reduce in any manner the amount of, or delay the timing of,
collections of payments on the Loans or distributions which
are required to be made on any Certificate,
(ii) reduce the aforesaid percentage required to consent to any
such amendment, without the consent of the holders of all
Certificates then outstanding,
(iii) result in the disqualification of the Master REMIC,
Intermediate REMIC, Subsidiary REMIC or Basement REMIC
under the Code,
(iv) adversely affect the status of the Master REMIC,
Intermediate REMIC, Subsidiary REMIC or Basement REMIC as a
REMIC or the status of the Certificates as "regular
interests" in the REMIC, or
(v) cause any tax (other than any tax imposed on "net income
from foreclosure property" under Section 860G(c)(1) of the
Code that would be imposed without regard to such
amendment) to be imposed on the Trust, including, without
limitation, any tax imposed on "prohibited transactions"
under Section 860F(a)(1) of the Code or on "contributions
after the startup date" under Section 860G(d)(1) of the
Code.
This Agreement may not be amended without the consent of the Class R
Certificateholder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement which would
modify in any manner the rights of the Class R Certificateholder.
(c) This Agreement shall not be amended under this Section without
the consent of 100% of the Certificateholders and the Class R Certificateholder
if such amendment would result in the disqualification of the Master REMIC,
Intermediate REMIC, Subsidiary REMIC or Basement REMIC under the Code.
(d) Concurrently with the solicitation of any consent pursuant to
this Section 12.08, the Trustee shall furnish written notification to the Backup
Servicer, S&P, Fitch and Moody's. Promptly after the execution of any amendment
or consent pursuant to this Section 12.08, the Trustee shall furnish written
notification of the substance of such amendment to S&P, Fitch and Moody's, each
Certificateholder and Class R Certificateholder, and the Backup Servicer.
(e) It shall not be necessary for the consent of Certificateholders
and the Class R Certificateholder under this Section 12.08 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders and the Class R Certificateholder shall be subject to such
reasonable requirements as the Trustee may prescribe.
135
(f) The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustee's own rights, duties or immunities
under this Agreement or otherwise.
(g) In connection with any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel to the Originator to
the effect that such amendment is authorized or permitted by this Agreement.
(h) Upon the execution of any amendment or consent pursuant to this
Section 12.08, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every Certificateholder or the Class R Certificateholder hereunder shall be
bound thereby.
(i) In the absence of the consent described in subsection (d) of this
Section, in connection with any amendment pursuant to this Section, the Trustee
shall have received an unqualified Opinion of Counsel, the expense of which
shall not be an expense of the Trust, stating that any such amendment (i) will
not adversely affect the status of the Master REMIC, Intermediate REMIC,
Subsidiary REMIC or Basement REMIC as a REMIC or the status of the Certificates
as "regular interests" therein, and (ii) will not cause any tax (other than any
tax imposed on "net income from foreclosure property" under Section 860G(c)(1)
of the Code that would be imposed without regard to such amendment) to be
imposed on the Trust, including, without limitation, any tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code.
(j) Notwithstanding anything to the contrary herein, so long as the
Yield Maintenance Agreements are in effect, this Agreement may not be amended
without the consent of the LIBOR Cap Counterparty if such amendment would (1)
reduce in any manner or delay any payments to the LIBOR Cap Counterparty, (2)
adversely affect in any material respect the interests of the LIBOR Cap
Counterparty in any manner other than as described in clause (1) or (3) modify
the consents required by the immediately preceding clauses (1) and (2).
SECTION 12.08. Notices. All communications and notices pursuant hereto
-------
to the Seller, the Servicer, the Originator, the Trustee and the Rating Agencies
shall be in writing and delivered or mailed to it at the appropriate following
address:
If to the Seller:
Conseco Finance Securitizations Corp.
300 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-1639
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
136
If to the Servicer:
Conseco Finance Corp.
1100 Landmark Towers
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-1639
Attention: Chief Financial Officer
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Backup Servicer:
▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Conseco 2002-B
and after May 6, 2002:
▇▇▇▇▇ Fargo Bank Minnesota, National Association
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Conseco 2002-B
If to the Trustee:
U.S. Bank National Association
Corporate Trust Department
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇
Telecopier Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to S&P:
Standard & Poor's
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Mortgage Surveillance
If to Fitch:
Fitch Ratings, Inc.
One State Street Plaza
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
137
If to Moody's:
▇▇▇▇▇'▇ Investors Service, Inc
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
or at such other address as the party may designate by notice to the other
parties hereto, which notice shall be effective when received.
All communications and notices pursuant hereto to a Certificateholder
or the Class R Certificateholder shall be in writing and delivered or mailed at
the address shown in the Certificate Register.
SECTION 12.9. Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
SECTION 12.10. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
SECTION 12.11. Governing Law. This Agreement shall be governed by, and
-------------
construed and enforced in accordance with, the laws of the State of Minnesota.
138
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized this 25/th/ day
of April, 2002.
CONSECO FINANCE CORP.
By:_________________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and Assistant Treasurer
CONSECO FINANCE SECURITIZATIONS CORP.
By:_________________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President and Assistant Treasurer
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity but solely as Trustee
By:_________________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇
Vice President
▇▇▇▇▇ FARGO BANK MINNESOTA, NATIONAL ASSOCIATION
By:_________________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
139
STATE OF MINNESOTA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me this 25/th/ day of
April, 2002, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a Vice President and Assistant Treasurer of
Conseco Finance Corp., a Delaware corporation, on behalf of the corporation.
___________________________________
Notary Public
[SEAL]
STATE OF MINNESOTA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me this 25/th/ day of
April, 2002, by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a Vice President and Assistant Treasurer of
Conseco Finance Securitizations Corp., a Minnesota corporation, on behalf of the
corporation.
___________________________________
Notary Public
[SEAL]
STATE OF MINNESOTA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me this 25/th/ day of
April, 2002, by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇, a Vice President of U.S. Bank National
Association, a national banking association, on behalf of the national banking
association.
___________________________________
Notary Public
[SEAL]
140
STATE OF MINNESOTA )
) ss.
COUNTY OF ▇▇▇▇▇▇ )
The foregoing instrument was acknowledged before me this 25/th/ day of
April, 2002, by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, a Vice President of ▇▇▇▇▇ Fargo Bank
Minnesota, National Association, a national banking association, on behalf of
the national banking association.
___________________________________
Notary Public
[SEAL]
141
EXHIBIT A-1
FORM OF CLASS A-[1][2][3] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
Class A-[1][2][3] NO.
(Senior) Pass-Through Rate: [For A-1: A Floating Rate equal to
the lesser of One-Month LIBOR plus the Class A-1 Margin
Cut-off Date: as defined in the Pooling and or the Adjusted Net WAC Cap Rate, but in no event
Servicing Agreement dated April 1, 2002 greater than 15.00% per annum] [For A-2: ____%, or the
Adjusted Net WAC Cap Rate, if less] [For A-3: ____%,
First Payment Date: or the Adjusted Net WAC Cap Rate, if less]
May 15, 2002
Servicer:
Conseco Finance Corp. Denomination: U.S. $__________
Final Scheduled Payment Date: Aggregate Denomination of all
_________________ 2033 (or if such day is
not a Business Day, then the next succeeding Class A-[1][2][3] Certificates:
Business Day) $__________________
CUSIP No. _____________________
CERTIFICATE FOR HOME EQUITY LOANS
SERIES 2002-B, CLASS A-[1][2][3] (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________is the registered owner of
the undivided Percentage Interest represented by the original principal amount
set forth above in the Certificates for Home Equity Loans, Series 2002-B, Class
A-[1][2][3] issued by Conseco Finance Home Equity Loan Trust 2002-B (the
"Trust"), which includes among its assets a pool of closed-end home equity loans
(the "Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
April 1, 2002,
A-1-1
among Conseco Finance Corp., as Originator and Servicer (the "Originator"),
Conseco Finance Securitizations Corp., as Seller (the "Seller"), U.S. Bank
National Association, as Trustee of the Trust (the "Trustee") and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, as Backup Servicer (the "Backup
Servicer"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in May, 2002, so long as
the Agreement has not been terminated, by check (or, if such Certificateholder
holds Class A-[1][2][3] Certificates with an aggregate Percentage Interest of at
least 5% of the Class A-[1][2][3] Certificates and so desires, by wire transfer
pursuant to instructions delivered to the Trustee at least ten days prior to
such Payment Date) to the registered Certificateholder at the address appearing
on the Certificate Register as of the Business Day immediately preceding such
Payment Date, in an amount equal to the Certificateholder's Percentage Interest
of the Class A-[1][2][3] Distribution Amount for such Payment Date.
Distributions of interest and principal on the Class A-[1][2][3] Certificates
will be made primarily from amounts available in respect of the Loans. The final
scheduled Payment Date of this Certificate is [_____________ 15, 2033] or the
next succeeding Business Day if such [__________________] is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account and the Basis Risk
Reserve Fund to the extent available for distribution to the Certificateholder
as provided in the Agreement for payment hereunder and that the Trustee in its
individual capacity is not personally liable to the Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Certificateholder agrees to disclosure of
his, her or its name and address to other Certificateholders under the
conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. ▇▇▇▇, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
A-1-2
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Originator,
the Seller, the Servicer, the Backup Servicer the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator, the
Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the State of Minnesota from time to time.
A-1-3
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-B has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________________
CONSECO FINANCE HOME EQUITY LOAN
TRUST 2002-B
By: U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Authorized Officer
A-1-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-B, and does hereby irrevocably constitute and appoint
_________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: _____________________
By: ____________________________________
Signature
A-1-5
EXHIBIT A-2
FORM OF CLASS A-IO CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
Class A-IO NO.
(Senior)
Pass-Through Rate: 7.25% per year (or the Net WAC Cap
Cut-off Date: as defined in the Pooling and Rate, if less).
Servicing Agreement dated April 1, 2002
Aggregate Original Notional Amount of all Class A-IO
First Payment Date: Certificates: the lesser of (a) from and including the
May 15, 2002 Closing Date through the March 2003 Payment Date,
$81,900,000, from and including the April 2003 Payment
Servicer: Date through the September 2003 Payment Date,
Conseco Finance Corp. $69,600,000, from and including the October 2003
Payment Date through the March 2004 Payment Date,
Final Scheduled Payment Date: $60,000,000, from and including the April 2004 Payment
September 15, 2004 (or if such day is not a Date through the September 2004 Payment Date,
Business Day, then the next succeeding $51,700,000, and for any Payment Date thereafter, $0,
Business Day) and (b) the Pool Scheduled Principal Balance.
CUSIP No. ___________
CERTIFICATE FOR HOME EQUITY LOANS
SERIES 2002-B, CLASS A-IO (SENIOR)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________is the registered owner of
the undivided Percentage Interest represented by the original principal amount
set forth above in the Certificates for Home Equity Loans, Series 2002-B, Class
A-IO issued by Conseco Finance Home Equity Loan Trust 2002-B (the "Trust"),
which includes among its assets a pool of closed-end home equity loans (the
"Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due
A-2-1
on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
April 1, 2002, among Conseco Finance Corp., as Originator and Servicer (the
"Originator"), Conseco Finance Securitizations Corp., as Seller (the "Seller"),
U.S. Bank National Association, as Trustee of the Trust (the "Trustee") and
▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Backup Servicer (the
"Backup Servicer"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in May 2002, so long as
the Agreement has not been terminated, by check (or, if such Certificateholder
holds Class A-IO Certificates with an aggregate Percentage Interest of at least
5% of the Class A-IO Certificates and so desires, by wire transfer pursuant to
instructions delivered to the Trustee at least ten days prior to such Payment
Date) to the registered Certificateholder at the address appearing on the
Certificate Register as of the Business Day immediately preceding such Payment
Date, in an amount equal to the Certificateholder's Percentage Interest of the
Class A-IO Distribution Amount. Distributions of interest on the Class A-IO
Certificates will be made primarily from amounts available in respect of the
Loans. The final scheduled Payment Date of this Certificate is September 15,
2004 or the next succeeding Business Day if such September 15 is not a Business
Day.
THIS CERTIFICATE IS AN INTEREST-ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE OR AN INTEREST HEREIN SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF
PRINCIPAL WITH RESPECT TO THE LOANS.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account and the Basis Risk
Reserve Fund to the extent available for distribution to the Certificateholder
as provided in the Agreement for payment hereunder and that the Trustee in its
individual capacity is not personally liable to the Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Certificateholder agrees to disclosure of
his, her or its name and address to other Certificateholders under the
conditions specified in the Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the
A-2-2
Trustee in Minneapolis or St. ▇▇▇▇, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder hereof or his or her attorney duly
authorized in writing, and thereupon one or more new Certificates evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Originator,
the Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator, the
Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the State of Minnesota from time to time.
A-2-3
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-B has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ____________________
CONSECO FINANCE HOME EQUITY LOAN
TRUST 2002-B
By: U.S. BANK NATIONAL ASSOCIATION
By: _________________________________
Authorized Officer
A-2-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-B, and does hereby irrevocably constitute and appoint
_________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: _____________________
By: ____________________________________
Signature
A-2-5
EXHIBIT B
FORM OF CLASS M-[1][2] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES [AND THE CLASS M-1 CERTIFICATES] AS
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
Class M-[1][2] NO.
(Subordinate) Pass-Through Rate: A Floating Rate equal to the lesser
of One-Month LIBOR plus the Class M-[1][2] Margin or
Cut-off Date: as defined in the Pooling and the Adjusted Net WAC Cap Rate, but in no event greater
Servicing Agreement dated April 1, 2002 than 15.00% per annum
Denomination: U.S. $__________
First Payment Date:
May 15, 2002 Aggregate Denomination of all
Class M-[1][2] Certificates:
$___________________
Servicer: Final Scheduled Payment Date: ___________, 2033 (or if
Conseco Finance Corp. such day is not a Business Day, then the next
succeeding Business Day)
CUSIP No. _____________________
CERTIFICATE FOR HOME EQUITY LOANS
SERIES 2002-B, CLASS M-[1][2] (SUBORDINATE)
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________ is the registered owner of
the undivided Percentage Interest represented by the original principal amount
set forth above in the
B-1
Certificates for Home Equity Loans, Series 2002-B, Class M-[1][2] issued by
Conseco Finance Home Equity Loan Trust 2002-B (the "Trust"), which includes
among its assets a pool of closed-end home equity loans (the "Loans")
(including, without limitation, all mortgages, deeds of trust and security deeds
relating to such Loans and any and all rights to receive payments due on the
Loans after the applicable Cut-off Date). The Trust has been created pursuant to
a Pooling and Servicing Agreement (the "Agreement"), dated as of April 1, 2002,
among Conseco Finance Corp., as Originator and Servicer (the "Originator"),
Conseco Finance Securitizations Corp., as Seller (the "Seller"), U.S. Bank
National Association, as Trustee of the Trust (the "Trustee") and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, as Backup Servicer (the "Backup
Servicer"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the fifteenth
day (or if such day is not a Business Day, the next succeeding Business Day)
(the "Payment Date") of each calendar month commencing in May, 2002, so long as
the Agreement has not been terminated, by check (or, if such Certificateholder
holds Class M-[1][2] Certificates with an aggregate Percentage Interest of at
least 5% of the Class M-[1][2] Certificates and so desires, by wire transfer
pursuant to instructions delivered to the Trustee at least ten days prior to
such Payment Date) to the registered Certificateholder at the address appearing
on the Certificate Register as of the Business Day immediately preceding such
Payment Date, in an amount equal to the Interest of the Class M-[1][2]
Distribution Amount for such Payment Date. Distributions of interest and
principal on the Class M-[1][2] Certificates will be made primarily from amounts
available in respect of the Loans. The final scheduled Payment Date of this
Certificate is ______________, 2033 or the next succeeding Business Day if such
________ is not a Business Day.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds in the Certificate Account, the related Yield
Maintenance Reserve Fund and the Basis Risk Reserve Fund to the extent available
for distribution to the Certificateholder as provided in the Agreement, for
payment hereunder and that the Trustee in its individual capacity is not
personally liable to the Certificateholder for any amounts payable under this
Certificate or the Agreement or, except as expressly provided in the Agreement,
subject to any liability under the Agreement. By acceptance of this Certificate,
the Certificateholder agrees to disclosure of his, her or its name and address
to other Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject
B-2
the Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for information with respect to the interests, rights,
benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and immunities of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder free of charge upon a written
request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. ▇▇▇▇, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder hereof or his or her attorney duly authorized in writing,
and thereupon one or more new Certificates evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
[Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC") to the Trustee or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the registered owner
hereof, Cede & Co., has an interest herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Originator,
the Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Originator, the
Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent, the
Certificate Registrar nor any such agent shall be affected by any notice to the
contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the State of Minnesota from time to time.
B-3
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-B has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: ________________________
CONSECO FINANCE HOME EQUITY LOAN
TRUST 2002-B
By: U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Authorized Officer
B-4
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-B, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: __________________________
By: _____________________________________
Signature
B-5
EXHIBIT C
FORM OF CLASS B-[1][2] CERTIFICATE
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE
CODE.
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M CERTIFICATES [AND THE
CLASS B-1 CERTIFICATES] AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
[THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS CERTIFICATE, AGREES THAT
THIS CERTIFICATE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS AND ONLY (1)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON THAT
THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A (A "QIB"), PURCHASING FOR ITS OWN ACCOUNT OR A QIB
PURCHASING FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE,
THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (3) IN CERTIFICATED FORM TO AN
"INSTITUTIONAL ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE
501(a)(1), (2), (3) or (7) OF REGULATION D UNDER THE ACT OR ANY ENTITY IN WHICH
ALL OF THE EQUITY OWNERS COME WITHIN SUCH PARAGRAPHS PURCHASING NOT FOR
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, SUBJECT TO (A) THE RECEIPT BY
THE TRUSTEE OF A LETTER SUBSTANTIALLY IN THE FORM PROVIDED IN THE AGREEMENT AND
(B) THE RECEIPT BY THE TRUSTEE OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE TRUSTEE
THAT SUCH REOFFER, RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS OR IN EACH CASE IN ACCORDANCE WITH ALL
APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION.]
[THE SECURITIES REPRESENTED BY THIS CERTIFICATE, IF NOT HELD BY A
UNITED STATES PERSON (AS DEFINED IN RULE 902 UNDER THE SECURITIES ACT OF 1933,
AS AMENDED), MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OFFERED OR
OTHERWISE DISPOSED OF EXCEPT (I) PURSUANT TO AN EFFECTIVE
C-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (II) PURSUANT TO AN
AVAILABLE EXEMPTION FROM REGISTRATION.]
Class B-[1][2] NO.
(Subordinate) Pass-Through Rate: [For B-1: A Floating Rate equal to
the lesser of One-Month LIBOR plus the Class B-1 Margin
Cut-off Date: as defined in the Pooling and Servicing or the Adjusted Net WAC Cap Rate, but in no event
Agreement dated April 1, 2002 greater than 15.00% per annum] [For B-2: ___%, or the
Adjusted Net WAC Cap Rate, if less]
First Payment Date:
May 15, 2002 Denomination: U.S. $__________
Servicer: Aggregate Denomination of all
Conseco Finance Corp. Class B-[1][2] Certificates: $________________
Final Scheduled Payment Date:
______________, 2033 (or if such day is not a Business
Day, then the next succeeding Business Day)
CUSIP No. _____________________
CERTIFICATES FOR HOME EQUITY LOANS
SERIES 2002-B, CLASS B-[1][2] (SUBORDINATE)
BY ACCEPTANCE OF THIS CERTIFICATE, ANY PERSON THAT ACQUIRES THIS
CERTIFICATE OR ANY INTEREST HEREIN, ON BEHALF OF OR WITH PLAN ASSETS OF ANY
EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR THAT IS DESCRIBED IN SECTION 4975(e)(1) OF
THE CODE (EACH, A "PLAN") ACKNOWLEDGES THAT THE CERTIFICATEHOLDER EITHER HAS
DELIVERED TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, WILL NOT RESULT IN THE
ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH
OPINION IS DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE
C-2
ORIGINATOR, THE SELLER AND THE SERVICER EITHER (I) THAT SUCH PERSON IS NEITHER A
PLAN, NOR ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE
CODE, OR (II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN
WILL NOT RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND
SUBJECT TO THE PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL
NOT SUBJECT THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY
OBLIGATION OR LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR AN INTEREST IN
CONSECO FINANCE CORP. OR ANY AFFILIATE THEREOF, EXCEPT TO THE EXTENT SET FORTH
IN THE POOLING AND SERVICING AGREEMENT.
This certifies that ____________________________is the registered owner
of the undivided Percentage Interest represented by the original principal
amount set forth above in the Certificates for Home Equity Loans, Series 2002-B,
Class B-[1][2], issued by Conseco Finance Home Equity Loan Trust 2002-B (the
"Trust"), which includes among its assets a pool of closed-end home equity loans
(the "Loans") (including, without limitation, all mortgages, deeds of trust and
security deeds relating to such Loans and any and all rights to receive payments
due on the Loans after the applicable Cut-off Date). The Trust has been created
pursuant to a Pooling and Servicing Agreement (the "Agreement"), dated as of
April 1, 2002, among Conseco Finance Corp., as Originator and Servicer (the
"Originator"), Conseco Finance Securitizations Corp., as Seller (the "Seller"),
U.S. Bank National Association as Trustee of the Trust (the "Trustee") and ▇▇▇▇▇
Fargo Bank Minnesota, National Association, as Backup Servicer (the "Backup
Servicer"). This Certificate is one of the Certificates described in the
Agreement and is issued pursuant and subject to the Agreement. By acceptance of
this Certificate the holder assents to and becomes bound by the Agreement. To
the extent not defined herein, all capitalized terms have the meanings assigned
to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in May
2002, so long as the Agreement has not been terminated, by check (or, if such
Certificateholder holds Class B-[1][2] Certificates with an aggregate Percentage
Interest of at least 5% of the Class B-[1][2] Certificates and so desires, by
wire transfer pursuant to instructions delivered to the Trustee at least ten
days prior to such Payment Date) to the registered Certificateholder at the
address appearing on the Certificate Register as of the Business Day immediately
preceding such Payment Date, in an amount equal to the Certificateholder's
Percentage Interest of the Class B-[1][2] Distribution Amount for such Payment
Date. Distributions of interest and principal on the Class B-[1][2] Certificates
will be made primarily from amounts available in respect of the Loans. The final
scheduled Payment Date of this Certificate is _____________ or the next
succeeding Business Day if such ________ is not a Business Day.
C-3
The Certificateholder, by its acceptance of this Certificate, agrees
that it will look solely to the funds in the Certificate Account, the related
Yield Maintenance Reserve Fund and the Basis Risk Reserve Fund, to the extent
available for distribution to the Certificateholder as provided in the
Agreement, for payment hereunder and that the Trustee in its individual capacity
is not personally liable to the Certificateholder for any amounts payable under
this Certificate or the Agreement or, except as expressly provided in the
Agreement, subject to any liability under the Agreement. By acceptance of this
Certificate, the Certificateholder agrees to disclosure of his, her or its name
and address to other Certificateholders under the conditions specified in the
Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Certificateholder free of
charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register of the Certificate Registrar upon surrender of this Certificate for
registration of transfer at the office or agency maintained by the Trustee in
Minneapolis or St. ▇▇▇▇, Minnesota, accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Certificate Registrar duly
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon one or more new Certificates evidencing the same
aggregate Percentage Interest will be issued to the designated transferee or
transferees.
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC") to the Trustee
or its agent for registration of
C-4
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL in as much as the registered owner hereof, Cede & Co., has an interest
herein.]
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Backup Servicer, the Trustee, the
Paying Agent or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and neither
the Originator, the Seller, the Servicer, the Backup Servicer, the Trustee, the
Paying Agent, the Certificate Registrar nor any such agent shall be affected by
any notice to the contrary.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the State of Minnesota from time to time.
C-5
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-B has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: _______________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-B
By: U.S. BANK NATIONAL ASSOCIATION
By: _______________________________
Authorized Officer
C-6
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-B, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: _____________________
By: _____________________________________
Signature
C-7
EXHIBIT D
FORM OF ASSIGNMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of April 1, 2002, among the undersigned, Conseco Finance
Corp., U.S. Bank National Association as Trustee (the "Trustee") and ▇▇▇▇▇ Fargo
Bank Minnesota, National Association, as Backup Servicer (the "Backup
Servicer"), the undersigned does hereby transfer, convey and assign, set over
and otherwise convey, without recourse, to Conseco Finance Home Equity Loan
Trust 2002-B, created by the Agreement, to be held in trust as provided in the
Agreement, (i) all right, title and interest in the home equity loans identified
in the List of Loans attached to the Agreement (including, without limitation,
all related mortgages, deeds of trust and security deeds and any and all rights
to receive payments on or with respect to the Loans due after the applicable
Cut-off Date), (ii) all rights under any hazard, flood or other individual
insurance policy on the real estate securing a Loan for the benefit of the
creditor of such Initial Loan, (iii) all rights Conseco Finance Securitizations
Corp. may have against the originating lender with respect to Initial and
Additional Loans originated by a lender other than Conseco Finance
Securitizations Corp., (iv) all rights of the Seller under the Transfer
Agreement, (v) all rights under the Errors and Omissions Protection Policy and
the Fidelity Bond as such policy and bond relate to the Initial and Additional
Loans, (vi) all rights under any title insurance policies, if applicable, on any
of the properties securing Initial and Additional Loans, (vii) all documents
contained in the Loan Files relating to the Initial and Additional Loans, (viii)
all rights under the Yield Maintenance Agreements, (ix) amounts in the
Certificate Account, the Capitalized Interest Account, the Basis Risk Reserve
Fund, the Yield Maintenance Reserve Funds and the Pre-Funding Account (including
all proceeds of investments of the funds in Certificate Account) and (x) all
proceeds and products of the foregoing.
This Assignment is made pursuant to and upon the representations and
warranties on the part of the undersigned contained in Article III of the
Agreement and no others. All undefined capitalized terms used in this Assignment
have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this _____ day of ___________________, 2002.
CONSECO FINANCE SECURITIZATIONS CORP.
By: __________________________________
[Name]
[Title]
[SEAL]
D-1
EXHIBIT E
FORM OF CERTIFICATE OF OFFICER
[Conseco Finance Corp.]
[Conseco Finance Securitizations Corp.]
I, _______________________, hereby certify that I am a [title] of
[Conseco Finance Corp., a Delaware corporation] [Conseco Finance Securitizations
Corp., a Minnesota corporation] (the "Company"), and that as such I am duly
authorized to execute and deliver this certificate on behalf of [Conseco Finance
Corp.] [Conseco Finance Securitizations Corp.] in connection with the Pooling
and Servicing Agreement dated as of April 1, 2002 (the "Agreement") among
Conseco Finance Corp., Conseco Finance Securitizations Corp., U.S. Bank National
Association, as Trustee and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
Backup Servicer (the "Backup Servicer") (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:
(i) attached hereto as Exhibit I are true and correct copies
of the [Restated] [Articles] [Certificate] of Incorporation of [Conseco
Finance Corp.] [Conseco Finance Securitizations Corp.], [together with
all amendments thereto] as in effect on the date thereof;
(ii) attached hereto as Exhibit II are true and correct
copies of the Bylaws of [Conseco Finance Corp.] [Conseco Finance
Securitizations Corp.], as amended, as in effect on the date hereof;
(iii) the representations and warranties of [Conseco Finance
Securitizations Corp.] contained in Sections 3.01 and 3.03 of the
Agreement are true and correct on and as of the date hereof and, to the
best of my knowledge, the representations and warranties of [Conseco
Finance Corp.] contained in Sections 3.02, 3.04 and 3.05 of the
Agreement are true and correct on and as of the date hereof;
(iv) no event with respect to [Conseco Finance Corp.]
[Conseco Finance Securitizations Corp.] has occurred and is continuing
which would constitute an Event of Termination or an event that with
notice or lapse of time or both would become an Event of Termination
under the Agreement; and
(v) each of the agreements and conditions of [Conseco
Financen Corp.] [Conseco Finance Securitizations Corp.] to be performed
on or before the date hereof pursuant to the Agreement have been
performed in all material respects.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of _______________________, 2002.
______________________________
[Name]
[Title]
E-1
EXHIBIT F
FORM OF OPINION OF COUNSEL FOR THE ORIGINATOR
The opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP shall be to the effect that
(capitalized terms have the meanings set forth in the Pooling and Servicing
Agreement):
1. the Originator is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, with corporate
power to execute, deliver and perform its obligations under the Pooling and
Servicing Agreement, the Certificates and the Class R Certificate.
2. The Pooling and Servicing Agreement has been duly authorized by all
requisite corporate action, duly executed and delivered by the Originator, and
constitutes the valid and binding obligation of the Originator enforceable in
accordance with its terms. The Certificates have been duly authorized by all
requisite corporate action and, when duly and validly executed by the Trustee in
accordance with the Pooling and Servicing Agreement, will be validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing Agreement.
3. No consent, approval, authorization or order of any state or federal
court or governmental agency or body is required to be obtained by the
Originator for the consummation of the transactions contemplated by the Pooling
and Servicing Agreement, except such as may be required under blue sky laws
under any jurisdiction in connection with the offering of the Certificates by
the Underwriters pursuant to the Underwriting Agreement.
4. The Pooling and Servicing Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as now in effect, and the Trust is not
required to be registered as an investment company under the Investment Company
Act of 1940.
5. Neither the transfer of the Loans to the Trustee acting on behalf of
the Trust, nor the assignment of the Originator's lien on the related real
estate which is the subject of a home equity loan, nor the issuance or sale of
the Certificates and the Class R Certificate, nor the execution and delivery of
the Pooling and Servicing Agreement, nor the consummation of any other of the
transactions contemplated in the Pooling and Servicing Agreement, nor the
fulfillment of the terms of the Certificates, the Class R Certificate or the
Pooling and Servicing Agreement by the Originator will conflict with, or result
in a breach, violation or acceleration of, or constitute a default under, any
term or provision of the Restated Certificate of Incorporation or Bylaws of the
Originator or of any indenture or other agreement or instrument known to us to
which the Originator is a party or by which it is bound, or result in a
violation of, or contravene the terms of any statute, order or regulation,
applicable to the Originator, of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it.
6. There are no actions or proceedings pending, nor to the best of our
knowledge, are there any investigations pending or overtly threatened against
the Originator before any court, administrative agency or other tribunal (A)
asserting the invalidity of the Pooling and Servicing Agreement, the
Certificates, the Class R Certificate, the hazard or flood insurance policies
F-1
applicable to any Loans or the Errors and Omissions Protection Policy, (B)
seeking to prevent the issuance of the Certificates or the Class R Certificate
or the consummation of any of the transactions contemplated by the Pooling and
Servicing Agreement, (C) which is likely materially and adversely to affect the
performance by the Originator of its obligations under, or the validity or
enforceability of the Pooling and Servicing Agreement, the Certificates or the
Class R Certificate, or (D) seeking adversely to affect the federal income tax
attributes of the Certificates or the Class R Certificate described in the
Prospectus and the Prospectus Supplement under the heading "Certain Federal
Income Tax Consequences."
7. The transfer of the Loans to the Trust in accordance with Section
2.01 of the Pooling and Servicing Agreement would not be avoidable as a
preferential transfer under Section 547 of the United States Bankruptcy Code (11
U.S.C. (S) 547), as in effect on the date hereof, in the event that the
Originator became a debtor under the United States Bankruptcy Code.
8. Pursuant to the Pooling and Servicing Agreement the Originator has
transferred to the Trustee acting on behalf of the Trust all of the Originator's
right, title and interest in the Loans, free and clear of any and all other
assignments, encumbrances, options, rights, claims, liens or security interests
(except tax or possessory liens) that may affect the right of the Trustee in and
to such Loans, and has delivered the Loan Files to the Trustee or its custodian.
No filing or other action, other than the filing of a financing statement on
Form UCC-1 with the Secretary of State of the State of Minnesota identifying the
Loans as collateral and naming the Originator as debtor and the Trust as secured
party, and the filing of continuation statements as required by Section 4.01 of
the Pooling and Servicing Agreement, is necessary to perfect as against third
parties the assignment of the Loans by the Originator to the Trust. We have
separately provided you with our opinion concerning whether such assignment
could be recharacterized as a pledge rather than a sale in the event the
Originator became a debtor under the United States Bankruptcy Code. However, in
the event such assignment were characterized as a pledge securing a loan from
the Certificateholders to the Originator, it is our opinion that the Trustee
would be deemed to have a valid and perfected security interest in the Loans and
the proceeds thereof, which security interest would be prior to any other
security interest that may be perfected under the Uniform Commercial Code as in
effect in the State of Minnesota and over any "lien creditor" (as defined in
Minn. Stat. (S)336.9-301(3)) who becomes such after the Closing Date, except
that a subsequent purchaser of any Loan who gives new value and takes possession
thereof in the ordinary course of his business would have priority over the
Trustee's security interest in such Loan, if such purchaser acts without
knowledge that such Loan was subject to a security interest. We have assumed for
the purposes of this opinion that during the term of the Pooling and Servicing
Agreement the Trustee, or its custodian, shall maintain possession of the Loan
Files for the purpose of perfecting the assignment to the Trustee of the Loans.
We express no opinion with respect to the enforceability of any individual Loan
or the existence of any claims, rights or other matters in favor of any Obligor
or the owner of any financed home improvement.
9. In reliance upon certain representations and warranties set forth in
the Pooling and Servicing Agreement and assuming that the Originator and the
Trustee comply with the requirements of the Pooling and Servicing Agreement,
including the filing on behalf of the REMIC of a proper election to be taxed as
a REMIC, as of the date hereof the REMIC created
F-2
pursuant to the Pooling and Servicing Agreement will qualify as a REMIC.
Further, the Certificates will evidence ownership of the "regular interests" in
the Master REMIC and the Class R-Ib, Class R-Ia, Class R-II and Class R-III
Certificates will evidence ownership of the single Class of "residual interest"
in the Basement REMIC, Subsidiary REMIC, Intermediate REMIC and Master REMIC,
respectively. For Minnesota income tax purposes, and subject to the foregoing
assumptions, and the provisions of Minnesota law as of the date hereof, the
Trust (excluding the Yield Maintenance Reserve Funds, the Basis Risk Reserve
Fund and the Pre-Funding Account) will not be subject to tax and the income of
the Trust will be taxable to the holders of interests therein, all in accordance
with the provisions of the Code concerning REMICs. Moreover, ownership of
Certificates will not be a factor in determining whether such owner is subject
to Minnesota income taxes. Therefore, if the owner of Certificates is not
otherwise subject to Minnesota income or franchise taxes in the State of
Minnesota, such owner will not become subject to such Minnesota taxes solely by
virtue of owning Certificates.
10. The transfer of the Loans and the proceeds thereof by the
Originator to the Trustee on the date hereof pursuant to the Pooling and
Servicing Agreement would not be avoidable as a fraudulent transfer under the
Uniform Fraudulent Transfer Act as in effect in Minnesota on the date hereof
(Minn. Stat. (S)(S) 513.41 through 513.51), nor, should the Originator become a
debtor under the United States Bankruptcy Code, as a fraudulent transfer under
Section 548 of the United States Bankruptcy Code (11 U.S.C. (S) 548) as in
effect on the date hereof.
F-3
EXHIBIT G
FORM OF TRUSTEE'S ACKNOWLEDGMENT
U.S. Bank National Association, a national banking association
organized under the laws of the United States, acting as trustee (the "Trustee")
of Conseco Finance Home Equity Loan Trust 2002-B (the "Trust") created pursuant
to the Pooling and Servicing Agreement dated as of April 1, 2002 among Conseco
Finance Corp., Conseco Finance Securitizations Corp. (the "Seller"), the Trustee
and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Backup Servicer (the
"Backup Servicer") (the "Agreement") (all capitalized terms used herein without
definition having the respective meanings specified in the Agreement)
acknowledges, pursuant to Section 2.04 of the Agreement, that the Trustee has
received the following: (i) all right, title and interest in the home equity
loans identified in the List of Loans attached to the [Agreement] [Subsequent
Transfer Instrument of even date herewith] (the ["Initial and Additional Loans"]
["Subsequent Loans"]), including, without limitation, all related mortgages and
deeds of trust and any and all rights to receive payments on or with respect to
the [Initial and Additional/Subsequent] Loans (due after the [Cut-off Date]
[Subsequent Cut-off Date]), (ii) all rights under any hazard, flood or other
individual insurance policy on the real estate securing [an Initial and
Additional] [a Subsequent] Loan for the benefit of the creditor of such [Initial
and Additional/Subsequent] Loan, (iii) all rights the Seller may have against
the originating lender with respect to [Initial and Additional/Subsequent] Loans
originated by a lender other than the Seller, (iv) all rights under the Errors
and Omissions Protection Policy and the Fidelity Bond as such policy and bond
relate to the [Initial and Additional/Subsequent] Loans, (v) all rights under
any title insurance policies, if applicable, on any of the properties securing
[Initial and Additional/Subsequent] Loans and all rights under the Transfer
Agreement dated April 1, 2002 between Conseco Finance Corp. and the Seller, (vi)
all documents contained in the Loan Files relating to the Initial and
Additional/Subsequent Loans, (vii) amounts in the Certificate Account, Basis
Reserve Fund, Yield Maintenance Reserve Funds and the Pre-Funding Account
(including all proceeds of investments of funds in the Certificate Account,
(viii) all rights of Seller under the Transfer Agreement, and (ix) all proceeds
and products of the foregoing; and declares that, directly or through a
Custodian, it will hold all Loan Files that have been delivered in trust, upon
the trusts set forth in the Agreement for the use and benefit of all
Certificateholders and the holders of the Residual Certificate.
[From Trustee or Custodian as applicable.] The Trustee acknowledges
that it has conducted a cursory review of the Loan Files and hereby confirms
that except as noted on the document exception listing attached hereto, each
Loan File contained (a) an original promissory note, (b) with respect to each
Loan, an original or a copy of the mortgage or deed of trust or similar evidence
of a lien on the related improved real estate, (c) in the case of Loans
originated by a lender other than the Seller, an original or a copy of an
assignment of the mortgage, deed of trust or security deed by the lender to the
Seller, and (d) any extension, modification or waiver agreement(s). The Trustee
has not otherwise reviewed the Loans and Loan Files for compliance with the
terms of the Pooling and Servicing Agreement.
G-1
IN WITNESS WHEREOF, ____________________________ as Trustee has caused
this acknowledgment to be executed by its duly authorized officer and its
corporate seal affixed hereto as of this _____, day of ________________, 2002.
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By _____________________________________
[Name]
[Title]
[SEAL]
G-2
EXHIBIT H
FORM OF CERTIFICATE OF SERVICING OFFICER
CONSECO FINANCE CORP.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 6.02 of the Pooling and Servicing Agreement (the
"Agreement") dated as of April 1, 2002 between the Company, Conseco Finance
Securitizations Corp. and U.S. Bank National Association, as Trustee of Conseco
Finance Home Equity Loan Trust 2002-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 Sections 6.01 and 6.02 of the Agreement; and
2. As of the date hereof, no Event of Termination or event that with
notice or lapse of time or both would become an Event of Termination has
occurred.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day
of _______________________, 2002.
CONSECO FINANCE CORP.
By: ____________________________________
[Name]
[Title]
H-1
EXHIBIT I
FORM OF CLASS B-3I CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M CERTIFICATES, AND THE
CLASS B CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
NO PERSON MAY ACQUIRE THIS CERTIFICATE OR ANY INTEREST HEREIN ON BEHALF
OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT
IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH, A "PLAN") UNLESS IT
DELIVERS TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE, WILL NOT RESULT IN THE
ASSETS OF THE TRUST BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE
PROHIBITED TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE
TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH
OPINION IS DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE
SELLER AND THE SERVICER EITHER (I) THAT SUCH PERSON IS NEITHER A PLAN, NOR
ACTING ON BEHALF OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THE CODE, OR
(II) THAT THE PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT
RESULT IN THE ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO
THE PROHIBITED TRANSACTION PROVISIONS OR ERISA AND THE CODE AND WILL NOT SUBJECT
THE TRUSTEE, THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR
LIABILITY IN ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS
ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF
I-1
THE INTERNAL REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A
PERMITTED TRANSFEREE (AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN); ANY SUCH TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF
SECTION 9.02 OF SUCH POOLING AND SERVICING AGREEMENT.
Class B-3I NO.
(Subordinate) Percentage Interest:. _________%
Cut-off Date: as defined in the Pooling and Servicing [CUSIP No. _____________________]
Agreement dated April 1, 2002
Final Scheduled Payment Date:
First Payment Date: _____________, 2033 (or if such day is not a Business
May 15, 2002 Day, then the next succeeding Business Day)
Servicer:
Conseco Finance Corp.
CERTIFICATE FOR HOME EQUITY LOANS, SERIES 2002-B
ORIGINAL AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE TRUST:
$250,000,000
This certifies that __________________________________ is the
registered owner of the Undivided Percentage Interest represented by this
Certificate, and entitled to certain distributions out of Conseco Finance Home
Equity Loan Trust 2002-B (the "Trust"), which includes among its assets a pool
of closed-end home equity loans (the "Loans") (including, without limitation,
all mortgages, deeds of trust and security deeds relating to such Loans and any
and all rights to receive payments due on the Loans after the applicable Cut-off
Date). The Trust has been created pursuant to a Pooling and Servicing Agreement
(the "Agreement"), dated as of April 1, 2002, among Conseco Finance Corp., as
Servicer (the "Originator"), Conseco Finance Securitizations Corp., as Seller
(the "Seller"), U.S. Bank National Association, as Trustee of the Trust (the
"Trustee") and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Backup
Servicer (the "Backup Servicer"). This Class B-3I Certificate is described in
the Agreement and is issued pursuant and subject to the Agreement. By acceptance
of this Class B-3I Certificate the holder assents to and becomes bound by the
Agreement. To the extent not defined herein, all capitalized terms have the
meanings assigned to such terms in the Agreement.
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in May
2002, so long as the Agreement has not been terminated, by check to the
registered Certificateholder at the address appearing on the Certificate
Register as of the Business Day immediately preceding such Payment Date, in an
amount equal to the Class B-3I Distribution Amount for such Payment Date. The
final scheduled Payment Date of
I-2
this Class B-3I Certificate is _____________ or the next succeeding Business Day
if such ________ is not a Business Day.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE. THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTIONS OF PRINCIPAL WITH RESPECT
TO THE CONTRACTS.
The Class B-3I Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Class B-3I Certificateholder as
provided in the Agreement for payment hereunder and that the Trustee in its
individual capacity is not personally liable to the Class B-3I Certificateholder
for any amounts payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement. By acceptance of this Certificate, the Class B-3I Certificateholder
agrees to disclosure of his, her or its name and address to other
Certificateholders under the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Class B-3I Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class B-3I Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class B-3I Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class
B-3I Certificate for registration of transfer at the office or agency maintained
by the Trustee in Minneapolis or St. ▇▇▇▇, Minnesota, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly
I-3
executed by the holder thereof or his or her attorney duly authorized in
writing, and thereupon a new Class B-3I Certificate evidencing the same Class
B-3I Certificate will be issued to the designated transferee or transferees.
The Originator, the Seller, the Servicer, the Backup Servicer, the Trustee,
the Paying Agent and the Certificate Registrar and any agent of the Originator,
the Seller, the Servicer, the Backup Servicer, the Trustee, the Paying Agent or
the Certificate Registrar may treat the person in whose name this Class B-3I
Certificate is registered as the owner hereof for all purposes, and neither the
Originator, the Seller, the Servicer, the Backup Servicer, the Trustee, the
Paying Agent, the Certificate Registrar nor any such agent shall be affected by
any notice to the contrary.
This Certificate shall be a "security" for purposes of Article 8, Section
102(a)(15)(B) of the Uniform Commercial Code and shall be governed by such
Article 8 as in effect in the State of Minnesota from time to time.
I-4
IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-B has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: _________________________
CONSECO FINANCE HOME EQUITY LOAN
TRUST 2002-B
By: U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Authorized Officer
I-5
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-B, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: ______________________
By: ____________________________________
Signature
I-6
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
CONSECO FINANCE CORP.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Sections 3.06 and 8.05 of the Pooling and Servicing
Agreement (the "Agreement") dated as of April 1, 2002 among the Company, Conseco
Finance Securitizations Corp., U.S. Bank National Association, as Trustee of
Conseco Finance Home Equity Loan Trust 2002-B and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as Backup Servicer (the "Backup Servicer") (all
capitalized terms used herein without definition having the respective meanings
specified in the Agreement), and further certifies that:
1. The Loans on the attached schedule are to be repurchased by the
Company on the date hereof pursuant to Section 3.06 of the Agreement.
2. Upon deposit of the Repurchase Price for such Loans, such Loans may,
pursuant to Section 8.05 of the Agreement, be assigned by the Trustee to the
Company.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day of
_____________________, 2002.
CONSECO FINANCE CORP.
By: __________________________
[Name]
[Title]
J-1-1
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING REPURCHASED LOANS
Conseco Finance Corp.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Sections 3.06(b) and 8.05 of the Pooling and Servicing
Agreement (the "Agreement") dated as of April 1, 2002 among the Company, Conseco
Finance Securitizations Corp., U.S. Bank National Association, as Trustee of
Conseco Finance Home Equity Loan Trust 2002-B and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as Backup Servicer (the "Backup Servicer") (all
capitalized terms used herein without definition having the respective meanings
specified in the Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan have been
delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on the date
hereof pursuant to Section 3.06(b) of the Agreement and each such Loan is an
Eligible Substitute Loan [description, as to each Loan, as to how it satisfies
the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 3.05(b)(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to the
Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Loans.
5. The requirements of Section 3.06(b) of the Agreement have been met with
respect to each such Eligible Substitute Loan.
[6. There has been deposited in the Certificate Account the amounts listed
on the schedule attached hereto as the amount by which the Scheduled Principal
Balance of each Replaced Loan exceeds the Scheduled Principal Balance of each
Loan being substituted therefor.]
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day of
______________________, 2002.
CONSECO FINANCE CORP.
By: _______________________________
[Name]
[Title]
J-2-1
EXHIBIT J-3
FORM OF CERTIFICATE REGARDING SUBSTITUTION FOR PREPAID LOANS
Conseco Finance Corp.
I, ____________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Company pursuant to Section 2.06 of the Pooling and Servicing Agreement (the
"Agreement") dated as of April 1, 2002 among the Company, Conseco Finance
Securitizations Corp., U.S. Bank National Association, as Trustee of Conseco
Finance Home Equity Loan Trust 2002-B and ▇▇▇▇▇ Fargo Bank Minnesota, National
Association, as Backup Servicer (the "Backup Servicer") (all capitalized terms
used herein without definition having the respective meanings specified in the
Agreement), and further certifies that:
1. The Loan and Loan File for each such Eligible Substitute Loan have been
delivered to [the Trustee] [the Custodian].
2. The Loans on the attached schedule are to be substituted on the date
hereof pursuant to Section 2.06 of the Agreement and each such Loan is an
Eligible Substitute Loan [description, as to each Loan, as to how it satisfies
the definition of "Eligible Substitute Loan"].
3. The UCC-1 financing statements in respect of the Loans to be
substituted, in the form required by Section 2.06(iii) of the Agreement, have
been filed with the appropriate offices.
4. The Company has delivered to the Trustee an executed assignment to the
Trustee on behalf of the Trust in recordable form for each mortgage securing
such Eligible Substitute Loans.
5. The requirements of Section 2.06 of the Agreement have been met with
respect to each such Eligible Substitute Loan.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day of
______________________, 2002.
CONSECO FINANCE CORP.
By: ___________________________________
[Name]
[Title]
J-3-1
EXHIBIT J-4
SERVICER REQUEST FOR RELEASE OF LOAN FILE
To: U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement dated as of April 1, 2002, among
Conseco Finance Securitizations Corp., as Seller, Conseco Finance
Corp., as Originator and Servicer, U.S. Bank National Association, as
Trustee, and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
Backup Servicer (the "Backup Servicer") relating to Conseco Finance
Securitizations Corp., Certificates for Home Equity Loans, Series
2002-B
The undersigned certifies that [s]he is authorized to sign this Servicer
Request for Release of Loan File on behalf of [Conseco Finance Corp.], as
Servicer, under the Pooling and Servicing Agreement dated as of April 1, 2002
among Conseco Finance Corp., Conseco Finance Securitizations Corp., the Trustee
and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Backup Servicer (the
"Backup Servicer"). In connection with the administration of the Loans held by
you, as Trustee, pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the Loan
File for the Loan described below, for the reason indicated.
Mortgage Loan Number:
--------------------
Mortgagor Name, Address & Zip Code:
----------------------------------
Reason for Requesting Documents (check only):
-------------------------------
_______ 1. Mortgage Paid in Full
_______ 2. Foreclosure
_______ 3. Substitution
_______ 4. Other Liquidation
_______ 5. Nonliquidation Reason:____________________________
Servicer:__________________________
By:________________________________
(Authorized signer)
Address:___________________________
___________________________
Date:______________________________
J-4-1
Please acknowledge the execution of the above request by your signature and date
below:
U.S. Bank National Association
By: ________________________________ _____________________________________
Signature Date
Documents returned to Trustee
____________________________________ _____________________________________
Trustee Date
J-4-2
EXHIBIT K
FORM OF REPRESENTATION LETTER
U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Conseco Finance Securitizations Corp.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Certificates for Home Equity Loans, Series 2002-B, Class B-2/B-3I/R]
The undersigned purchaser (the "Purchaser") understands that the purchase
of the above-referenced certificates (the "Certificates") may be made only by
institutions which are "Accredited Investors" under Regulation D, as promulgated
under the Securities Act of 1933, as amended (the "1933 Act"), which includes
banks, savings and loan associations, registered brokers and dealers, insurance
companies, investment companies, and organizations described in Section
501(c)(3) of the Internal Revenue Code, corporations, business trusts and
partnerships, not formed for the specific purpose of acquiring the Certificates
offered, with total assets in excess of $5,000,000. The undersigned represents
on behalf of the Purchaser that the Purchaser is an "Accredited Investor" within
the meaning of such definition. The Purchaser is urged to review carefully the
responses, representations and warranties it is making herein.
Representations and Warranties
------------------------------
The Purchaser makes the following representations and warranties in order
to permit the Trustee, Conseco Finance Securitizations Corp., and
____________________________ to determine its suitability as a purchaser of
Certificates and to determine that the exemption from registration relied upon
by Conseco Finance Securitizations Corp. under Section 4(2) of the 1933 Act is
available to it.
1. The Purchaser understands that the Certificates have not been and will
not be registered under the 1933 Act and may be resold (which resale is not
currently contemplated) only if registered pursuant to the provisions of the
1933 Act or if an exemption from registration is available, that Conseco Finance
Securitizations Corp. is not required to register the Certificates and that any
transfer must comply with Section 9.02 of the Pooling and Servicing Agreement
relating to the Certificates.
2. The Purchaser will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Certificates.
3. The Purchaser is a sophisticated institutional investor and has
knowledge and experience in financial and business matters and is capable of
evaluating the merits and risks of its investment in the Certificates and is
able to bear the economic risk of such investment. The
K-1
Purchaser has reviewed the Prospectus Supplement dated April 17, 2002, to the
Prospectus dated April 17, 2002 (the "Prospectus") with respect to the
Certificates, and has been given such information concerning the Certificates,
the underlying home equity loans and Conseco Finance Securitizations Corp. as it
has requested.
4. The Purchaser is acquiring the Certificates as principal for its own
account (or for the account of one or more other institutional investors for
which it is acting as duly authorized fiduciary or agent) for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law that the
disposition of the Purchaser's property shall at all times be and remain within
its control.
5. The Purchaser either (check one box):
[_] is not, and is not acting on behalf of or with assets of, an
employee benefit plan that is subject to the Employee Retirement
Income Security Act of 1974, as amended or that is described in
Section 4975(e)(1) of the Internal Revenue Code of 1986, as
amended, or
[_] has provided the Trustee and Servicer with the opinion of counsel
described in Section 9.02(b)(2) of the Pooling and Servicing
Agreement, or
[_] acknowledges that it is deemed to make the representation set
forth in Section 9.02(b)(2) of the Pooling and Servicing
Agreement.
6. The Purchaser understands that such Certificate will bear a legend
substantially as set forth in the form of Certificate included in the Pooling
and Servicing Agreement.
7. The Purchaser, as holder of the "_______" Certificate, acknowledges
(i) it may incur tax liabilities in excess of any cash flows generated by the
interest and (ii) it intends to pay the taxes associated with holding the
"_______" Certificate as they become due.
8. The Purchaser agrees that it will obtain from any purchaser of the
Certificates from it the same representations, warranties and agreements
contained in the foregoing paragraphs 1 through 7 and in this paragraph 8. The
representations and warranties contained herein shall be binding upon the heirs,
executors, administrators and other successors of the undersigned. If there is
more than one signatory hereto, the obligations, representations, warranties and
agreements of the undersigned are made jointly and severally.
K-2
Executed at _____________________________, _____________________________,
this ______ day of _________________, 2002.
________________________________________
Purchaser's Name (Print)
By: ____________________________________
Signature
Its:
Address of Purchaser ___________________
____________________________________
____________________________________
Purchaser's Taxpayer
Identification Number___________________
K-3
EXHIBIT L
LIST OF INITIAL AND ADDITIONAL LOANS
[To Be Supplied]
L-1
EXHIBIT M
FORM OF MONTHLY REPORT
CERTIFICATES FOR HOME EQUITY LOANS, SERIES 2002-B
Payment Date: ________________
1. Amount Available _________
2. Servicing Fee _________
3. Backup Servicing Fee _________
4. Indemnity amounts paid pursuant to Section 8.04(b)(i) _________
5. Trustee Fee _________
6. Unreimbursed Advances _________
7. Yield Maintenance _________
8. Class X-IO Preference _________
9. Liquidation Expenses incurred this month and not in excess of Related Proceeds _________
10. Liquidation Expenses incurred this month that exceed Related Proceeds _________
Interest
--------
Class A Certificates
--------------------
11.
Current interest
(a) Class A-1 Pass-Through Rate _________
(a floating rate per annum equal to the lesser of one-month
LIBOR plus 0.23% per annum or the Adjusted Net WAC Cap Rate,
but in no case more than 15.00% per annum)
(b) Class A-1 Interest _________
(c) Class A-2 Pass-Through Rate (5.31%, or the Adjusted Net WAC Cap Rate, if less) _________
(d) Class A-2 Interest _________
(e) Class A-3 Pass-Through Rate (6.87%, or the Adjusted Net WAC Cap Rate, if less) _________
(f) Class A-3 Interest _________
(g) Class A-IO Pass-Through Rate (a rate per annum equal to 7.25%) _________
M-1
(h) Class A-IO Interest _________
12. Amount applied to Unpaid Class A Interest Carry Forward Amount _________
13. Remaining Unpaid Class A Interest Carry Forward Amount _________
14. Amount applied to Unpaid Class A-IO Interest Carry Forward Amount _________
15. Remaining Unpaid Class A-IO Interest Carry Forward Amount _________
Class M-1 Certificates
----------------------
16. Amount Available less all preceding distributions _________
17. Class M-1 Principal Balance _________
18. Class M-1 Current Interest _________
(a) Class M-1 Pass-Through Rate _________
(a floating rate per annum equal to the lesser of one-month
LIBOR plus 1.75% per annum or the Adjusted Net WAC Cap Rate,
but in no case more than 15.00% per annum)
(b) Class M-1 Interest _________
19. Amount applied to Unpaid Class M-1 Interest Carry Forward Amount _________
20. Remaining Unpaid Class M-1 Interest Carry Forward Amount _________
Class M-2 Certificates
----------------------
21. Amount Available less all preceding distributions _________
22. Class M-2 Principal Balance _________
23. Class M-2 Current Interest _________
(a) Class M-2 Pass-Through Rate _________
(a floating rate per annum equal to the lesser of one-month
LIBOR plus 2.50% per annum or the Adjusted Net WAC Cap Rate,
but in no case more than 15.00% per annum)
(b) Class M-2 Interest _________
24. Amount applied to Unpaid Class M-2 Interest Shortfall _________
25. Remaining Unpaid Class M-2 Interest Carry Forward Amount _________
Class B-1 Certificates
----------------------
26. Amount Available less all preceding distributions _________
M-2
27. Class B-1 Principal Balance Current Interest
(a) Class B-1 Pass-Through Rate _________
(a floating rate per annum equal to the lesser of one-month
LIBOR plus 5.25% per annum or the Adjusted Net WAC Cap Rate,
but in no case more than 15.00% per annum)
(b) Class B-1 Interest _________
28. Amount applied to Unpaid Class B-1 Interest Shortfall _________
29. Remaining Unpaid Class B-1 Interest Shortfall _________
Class B-2 Certificates
----------------------
30. Amount Available less all preceding distributions _________
31. Class B-2 Principal Balance _________
32. Current Interest
(a) Class B-2 Pass-Through Rate (9.00% or the Adjusted Net WAC Cap Rate, _________
if less
(b) Class B-2 Interest _________
33. Amount applied to Unpaid Class B-2 Interest Shortfall _________
34. Remaining Unpaid Class B-2 Interest Shortfall _________
Principal
---------
35. Trigger Event:
(a) Average Sixty-Day Delinquency Ratio Test
(i) Sixty-Day Delinquency Ratio for current Payment Date _________
(ii) Average Sixty-Day Delinquency Ratio Test (arithmetic average of _________
ratios for this month and two preceding months
may not exceed 42.25% of the Senior Enhancement Percentage)
(b) Cumulative Realized Losses Test
(i) Cumulative Realized Losses for current Payment Date _________
(ii) Cumulative Realized Losses Ratio _________
(Losses as a percentage of Cut-off Date Principal: 4.25%
from May 1, 2005 to April 30, 2006, 5.75% from
May 1, 2006 to April 30, 2007, 6.50% from May 1,
2007 to April 30, 2008, and 6.75% thereafter)
36. Senior Enhancement Percentage _________
M-3
A. Prior to the Stepdown Date and where no Trigger Event is in Effect:
------------------------------------------------------------------
Class A Certificates
37. Amount Available less all preceding distributions _________
38. Class A principal distribution:
(a) Class A-1 _________
(b) Class A-2 _________
(c) Class A-3 _________
39. (a) Class A-1 Principal Balance _________
(b) Class A-2 Principal Balance _________
(c) Class A-3 Principal Balance _________
Class M-1 Certificates
----------------------
40. Amount Available less all preceding distributions _________
41. Class M-1 principal distribution _________
42. Class M-1 Principal Balance _________
Class M-2 Certificates
----------------------
43. Amount Available less all preceding distributions _________
44. Class M-2 principal distribution _________
45. Class M-2 Principal Balance _________
Class B-1 Certificates
----------------------
46. Amount Available less all preceding distributions _________
47. Class B-1 principal distribution _________
48. Class B-1 Principal Balance _________
Class B-2 Certificates
----------------------
49. Amount Available less all preceding distributions _________
50. Class B-2 principal distribution _________
51. Class B-2 Principal Balance _________
M-4
B. Principal Distributions after the Stepdown Date and so long as a Trigger
------------------------------------------------------------------------
Event is not then in effect:
----------------------------
Class A Certificates
--------------------
52. Amount Available less all preceding distributions _________
53. Class A Formula Principal Distribution Amount:
Class A-1 _________
Class A-2 _________
Class A-3 _________
54. (a) Class A-1 Principal Balance _________
(c) Class A-2 Principal Balance _________
(d) Class A-3 Principal Balance _________
Class M-1 Certificates
----------------------
55. Amount Available less all preceding distributions _________
56. Class M-1 Formula Principal Distribution Amount _________
57. Class M-1 Principal Balance _________
Class M-2 Certificates
----------------------
58. Amount Available less all preceding distributions _________
59. Class M-2 Formula Principal Distribution Amount _________
60. Class M-2 Principal Balance _________
Class B-1 Certificates
----------------------
61. Amount Available less all preceding distributions _________
62. Class B-1 Formula Principal Distribution Amount _________
63. Class B-1 Principal Balance _________
Class B-2 Certificates
----------------------
64. Amount Available less all preceding distributions _________
65. Class B-2 Formula Principal Distribution Amount _________
M-5
66. Class B-2 Principal Balance _________
Excess Cashflows
----------------
67. Extra Principal Distribution Amount _________
68. Unpaid Class A Interest Carry Forward Amount _________
69. Unpaid Class M-1 Interest Carry Forward Amount _________
70. Unpaid Class M-1 Realized Loss Interest Amount and Unpaid _________
Class M-1 Realized Loss Amount
71. Unpaid Class M-2 Interest Carry Forward Amount _________
72. Unpaid Class M-2 Realized Loss Interest Amount and Unpaid _________
Class M-2 Realized Loss Amount
73. Unpaid Class B-1 Interest Carry Forward Amount _________
74. Unpaid Class B-1 Realized Loss Interest Amount and Unpaid _________
Class B-1 Realized Loss Amount
75. Unpaid Class B-2 Interest Carry Forward Amount _________
76. Unpaid Class B-2 Realized Loss Interest Amount and Unpaid _________
Class B-2 Realized Loss Amount
77. Amounts Deposited in Basis Risk Reserve Fund _________
(a) Unpaid Class A Basis Risk Carry-over Shortfall
(b) Unpaid Class M-1 Basis Risk Carry-over Shortfall
(c) Unpaid Class M-2 Basis Risk Carry-over Shortfall
(d) Unpaid Class B-1 Basis Risk Carry-over Shortfall
(e) Unpaid Class B-2 Basis Risk Carry-over Shortfall
78. [Any remaining amounts, to the Backup Servicer for any applicable
indemnification and to the Class B-3I, Class P and Class
R Certificates] _________
Class A, Class A-IO, Class M and Class B Certificates
-----------------------------------------------------
79. Pool Scheduled Principal Balance _________
80. Pool Factor _________
81. Loans Delinquent: _________
30 - 59 days
60 - 89 days
90 or more days
M-6
82. Principal Balance of Defaulted Loans _________
83. Principal Balance of Loans with Extensions _________
84. Number of Liquidated Loans and Net Liquidation Loss _________
85. Number of Loans Remaining _________
86. Pre-Funded Amount _________
87. Liquidation Expenses Incurred _________
Class B-3I Certificate
----------------------
88. Class B-3I Distribution Amount _________
Class P Certificate
-------------------
Class P Distribution Amount _________
Class R-III Certificate
-----------------------
Class R-III Distribution Amount _________
Please contact the Bondholder Relations Department of U.S. Bank
National Association at (▇▇▇) ▇▇▇-▇▇▇▇ with any questions regarding this
Statement or your Distribution.
M-7
EXHIBIT N
FORM OF ADDITION NOTICE
_____________, 2002
U.S. Bank National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Agreement"), dated as of April
1, 2002, among Conseco Finance Corp. (the "Originator"), Conseco
Finance Securitizations Corp. (the "Seller"), U.S. Bank National
Association as Trustee (the "Trustee") and ▇▇▇▇▇ Fargo Bank Minnesota,
National Association, as Backup Servicer (the "Backup Servicer")
relating to Certificates for Home Equity Loans, Series 2002-B
Ladies and Gentlemen:
Capitalized terms not otherwise defined in this Notice have the meanings
given them in the Agreement. The Seller hereby notifies the Trustee of an
assignment to the Trust of Subsequent Loans on the date and in the amounts set
forth below:
Subsequent Transfer Date: _______________
Cut-off Date Principal Balance of Subsequent Loans to be assigned to
Trust on Subsequent Transfer Date:
$______________.
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
CONSECO FINANCE CORP.
By: ____________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
U.S. BANK NATIONAL ASSOCIATION
By: ______________________________________
Name:
Title:
N-1
EXHIBIT O
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
In accordance with the Pooling and Servicing Agreement (the
"Agreement") dated as of April 1, 2002, among the undersigned, Conseco Finance
Securitizations Corp. (the "Seller") and U.S. Bank National Association as
Trustee (the "Trustee") and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
Backup Servicer, the undersigned does hereby transfer, assign, set over and
otherwise convey, without recourse, to Conseco Finance Home Equity Loan Trust
2002-B, created by the Agreement, to be held in trust as provided in the
Agreement, (i) all right, title and interest in the home equity loans identified
in the List of Loans attached hereto (each a "Subsequent Loan"), including,
without limitation, all related mortgages, deeds of trust, security deeds and
any and all rights to receive payments on or with respect to the Subsequent
Loans (excluding principal due before the Subsequent Cut-off Date), (ii) all
rights under any hazard, flood or other individual insurance policy on the real
estate securing a Subsequent Loan for the benefit of the creditor of such Loan,
(iii) all rights the Originator may have against the originating lender with
respect to the Subsequent Loans originated by a lender other than the
Originator, (iv) all rights under the Errors and Omissions Protection Policy and
the Fidelity Bond as such policy and bond relate to the Subsequent Loans, (v)
all rights under any title insurance policies, if applicable, on any of the
properties securing Subsequent Loans, (vi) all documents contained in the
related Loan Files, and (vii) all proceeds and products of the foregoing and all
rights of the Seller under the Subsequent Transfer Agreement between the Seller
and the undersigned and all rights of the Seller under the Subsequent Transfer
Agreement with Conseco Finance Corp.
Each of the Subsequent Loans constitutes a Subsequent Loan under the
Agreement.
This Assignment is made pursuant to and upon the representation and
warranties on the part of the undersigned contained in Section 2.03 and Article
III of the Agreement and no others. All undefined capitalized terms used in this
Assignment have the meanings given them in the Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this ____ day of __________________, 2002.
CONSECO FINANCE CORP.
By: ____________________________________
Name:
Title:
[SEAL]
O-1
EXHIBIT P
FORM OF OFFICER'S CERTIFICATE (SUBSEQUENT TRANSFER)
I, __________________________, hereby certify that I am a [title] of
Conseco Finance Corp., a Delaware corporation (the "Company"), and that as such
I am duly authorized to execute and deliver this certificate on behalf of the
Originator in connection with the Pooling and Servicing Agreement dated as of
April 1, 2002 (the "Agreement") among the Originator, Conseco Finance
Securitizations Corp., U.S. Bank National Association, as Trustee and ▇▇▇▇▇
Fargo Bank Minnesota, National Association, as Backup Servicer (the "Backup
Servicer"). All capitalized terms used herein without definition have the
respective meanings specified in the Agreement. The undersigned further
certifies that:
1. This Certificate is delivered in connection with the sale to the
Trust on __________________ (the "Subsequent Transfer Date") of Loans (the
"Subsequent Loans") identified in the List of Loans attached to the Subsequent
Transfer Instrument of even date herewith.
2. As of the Subsequent Transfer Date, all representations and
warranties in Section 3.01, 3.02, 3.03, 3.04 and 3.05 of the Agreement are true
and correct; all representations and warranties in Sections 3.02 and 3.03 of the
Agreement with respect to the Subsequent Loans are true to the best of his
knowledge; and all representations in Section 3.04 of the Agreement with respect
to the Subsequent Loans are true and correct.
3. All conditions precedent to the sale of the Subsequent Loans to the
Trust under Section 2.03 of the Agreement have been satisfied.
4. Each of the Subsequent Loans constitutes a Subsequent Loan under the
Agreement.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of _______________________, 2002.
By: _______________________________
Name:
Title:
P-1
EXHIBIT Q
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES, THE CLASS A-IO CERTIFICATES, THE CLASS M CERTIFICATES AND THE
CLASS B CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND
LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM
REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 9.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NO PERSON MAY ACQUIRE THIS CERTIFICATE OR ANY INTEREST HEREIN ON BEHALF
OF OR WITH PLAN ASSETS OF ANY EMPLOYEE BENEFIT PLAN THAT IS SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THAT
IS DESCRIBED IN SECTION 4975(e)(1) OF THE CODE (EACH, A "PLAN") UNLESS IT
DELIVERS TO THE ORIGINATOR AND THE TRUSTEE AT ITS OWN EXPENSE AN OPINION OF
COUNSEL (SATISFACTORY TO THE ORIGINATOR AND THE TRUSTEE) THAT THE PURCHASE AND
HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL RESULT IN THE ASSETS OF THE TRUST
BEING DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE, THE
ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT, OR, IF NO SUCH OPINION IS
DELIVERED, IS DEEMED TO REPRESENT TO THE TRUSTEE, THE ORIGINATOR, THE SELLER AND
THE SERVICER EITHER (I) THAT SUCH PERSON IS NEITHER A PLAN, NOR ACTING ON BEHALF
OF A PLAN, SUBJECT TO ERISA OR TO SECTION 4975 OF THIS CODE, OR (II) THAT THE
PURCHASE AND HOLDING OF THIS CERTIFICATE BY SUCH PLAN WILL NOT RESULT IN THE
ASSETS OF THE TRUST BEING DEEMED TO BE PLAN ASSETS AND SUBJECT TO THE PROHIBITED
TRANSACTION PROVISIONS OF ERISA AND THE CODE AND WILL NOT SUBJECT THE TRUSTEE,
THE ORIGINATOR, THE SELLER OR THE SERVICER TO ANY OBLIGATION OR LIABILITY IN
ADDITION TO THOSE UNDERTAKEN IN THE AGREEMENT.
Q-1
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE. THIS CERTIFICATE MAY ONLY BE TRANSFERRED TO A PERMITTED TRANSFEREE
(AS DEFINED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN); ANY SUCH
TRANSFER MUST ALSO SATISFY THE OTHER REQUIREMENTS OF SECTION 9.02 OF SUCH
POOLING AND SERVICING AGREEMENT.
Class R NO.
(Subordinate) Percentage Interest:. _________%
Cut-off Date: as defined in the Pooling and
Servicing Agreement dated April 1, 2002
First Payment Date:
May 15, 2002
Servicer: Conseco Finance Corp.
CERTIFICATE FOR HOME EQUITY LOANS, SERIES 2002-B
ORIGINAL AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE TRUST: $250,000,000
This certifies that __________________________________ is the
registered owner of the Residual Interest represented by this Certificate, and
entitled to certain distributions out of Conseco Finance Home Equity Loan Trust
2002-B (the "Trust"), which includes among its assets a pool of closed-end home
equity loans (the "Loans") (including, without limitation, all mortgages, deeds
of trust and security deeds relating to such Loans and any and all rights to
receive payments due on the Loans after the applicable Cut-off Date). The Trust
has been created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of April 1, 2002, among Conseco Finance Corp., as
Servicer (the "Originator"), Conseco Finance Securitizations Corp., as Seller
(the "Seller"), U.S. Bank National Association, as Trustee of the Trust (the
"Trustee") and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as Backup
Servicer (the "Backup Servicer"). This Class R Certificate is described in the
Agreement and is issued pursuant and subject to the Agreement. The Class R
Certificate will represent collectively the Class R-III Certificates, the Class
R-II Certificates, Class R-Ia Certificates and the Class R-Ib Certificates,
which represent "residual interests" in the Master REMIC, the Intermediate
REMIC, the Subsidiary REMIC and the Basement REMIC, respectively. By acceptance
of this Class R Certificate the holder assents to and becomes bound by the
Agreement. To the extent not defined herein, all capitalized terms have the
meanings assigned to such terms in the Agreement.
Q-2
The Agreement contemplates, subject to its terms, payment on the
fifteenth day (or if such day is not a Business Day, the next succeeding
Business Day) (the "Payment Date") of each calendar month commencing in May
2002, so long as the Agreement has not been terminated, by check to the
registered Class R Certificateholder at the address appearing on the Certificate
Register as of the Business Day immediately preceding such Payment Date, in an
amount equal to Prepayment Charges. The final scheduled Payment Date of this
Class R Certificate is _________________ 15, 2033 or the next succeeding
Business Day if such _______________ 15, is not a Business Day.
The Class R Certificateholder, by its acceptance of this Certificate,
agrees that it will look solely to the funds in the Certificate Account to the
extent available for distribution to the Class R Certificateholder as provided
in the Agreement for payment hereunder and that the Trustee in its individual
capacity is not personally liable to the Class R Certificateholder for any
amounts payable under this Certificate or the Agreement or, except as expressly
provided in the Agreement, subject to any liability under the Agreement. By
acceptance of this Certificate, the Class R Certificateholder agrees to
disclosure of his, her or its name and address to other Certificateholders under
the conditions specified in the Agreement.
No transfer of this Certificate or any interest herein to any employee
benefit plan that is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or that is described in Section 4975(e)(1) of the
Code or to any person or entity purchasing on behalf of, or with assets of, such
an employee benefit plan (each, a "Plan") will be registered unless the
transferee, at its expense, delivers to the Originator and the Trustee an
opinion of counsel (satisfactory to the Originator and the Trustee) that the
purchase and holding of this Certificate by such Plan will not result in the
assets of the Trust being deemed to be "plan assets" and subject to the
prohibited transaction provisions of ERISA and the Code and will not subject the
Trustee, the Originator, the Seller or the Servicer to any obligation or
liability in addition to those undertaken in the Agreement. Unless such opinion
is delivered, each person acquiring this Certificate will be deemed to represent
to the Trustee, the Originator, the Seller and the Servicer either (i) that such
person is neither a Plan, nor acting on behalf of a Plan, subject to ERISA or to
Section 4975 of the Code, or (ii) that the purchase and holding of this
Certificate by such Plan will not result in the assets of the Trust being deemed
to be Plan assets and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Originator, the Seller or the
Servicer to any obligation or liability in addition to those undertaken in the
Agreement.
This Class R Certificate does not purport to summarize the Agreement
and reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and immunities of the Trustee. Copies of the Agreement
and all amendments thereto will be provided to any Class R Certificateholder
free of charge upon a written request to the Trustee.
As provided in the Agreement and subject to the limitations set forth
therein, the transfer of this Class R Certificate is registrable in the
Certificate Register of the Certificate Registrar upon surrender of this Class R
Certificate for registration of transfer at the office or agency
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maintained by the Trustee in Minneapolis or St. ▇▇▇▇, Minnesota, accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder thereof or his or her attorney
duly authorized in writing, and thereupon a new Class R Certificate evidencing
the same Class R Certificate will be issued to the designated transferee or
transferees.
The Originator, the Seller, the Servicer, the Backup Servicer, the
Trustee, the Paying Agent and the Certificate Registrar and any agent of the
Originator, the Seller, the Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the person in whose name this Class R
Certificate is registered as the owner hereof for all purposes, and neither the
Originator, the Seller, the Servicer, the Backup Servicer, the Trustee, the
Paying Agent, the Certificate Registrar nor any such agent shall be affected by
any notice to the contrary.
The holder of this Class R Certificate, by acceptance hereof, agrees
that, in accordance with the requirements of Section 860D(b)(1) of the Code, the
federal tax return of the Trust for its first taxable year shall provide that
the Trust (exclusive of the Pre-Funding Account, the Yield Maintenance Reserve
Fund and the Basis Risk Reserve Fund) elects to be treated as one or more "real
estate mortgage investment conduits" (each, a "REMIC") under the Code for such
taxable year and all subsequent taxable years. The Certificates shall be
"regular interests" in the REMIC and the Class R Certificate shall represent the
"residual interest" in the REMIC. In addition, the holder of this Class R
Certificate, by acceptance hereof, (i) agrees to file tax returns consistent
with and in accordance with any elections, decisions or other reports made or
filed with regard to federal, state or local taxes on behalf of the Trust, and
(ii) agrees to cooperate with the Originator in connection with examinations of
the Trust's affairs by tax authorities, including administrative and judicial
proceedings, and (iii) makes the additional agreements, designations and
appointments, and undertakes the responsibilities, set forth in Section 6.06 of
the Agreement.
This Certificate shall be a "security" for purposes of Article 8,
Section 102(a)(15)(B) of the Uniform Commercial Code and shall be governed by
such Article 8 as in effect in the State of Minnesota from time to time.
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IN WITNESS WHEREOF, Conseco Finance Home Equity Loan Trust 2002-B has
caused this Certificate to be duly executed by the manual signature of a duly
authorized officer of the Trustee.
Dated: _________________________
CONSECO FINANCE HOME EQUITY
LOAN TRUST 2002-B
By: U.S. BANK NATIONAL ASSOCIATION
By: ________________________________
Authorized Officer
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FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ____________________________ the within Certificate for Home Equity Loans,
Series 2002-B, and does hereby irrevocably constitute and appoint
____________________________ Attorney to transfer the said certificate on the
Certificate Register maintained by the Trustee, with full power of substitution
in the premises.
Dated: ______________________
By: _____________________________________
Signature
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