Exhibit 10.a
Amended and Restated Master Repurchase Agreement
September 1996 Version
Dated as of April 5, 2001
Between:
Merrill Lynch Mortgage Capital Inc. ("Buyer")
And
Green Tree Finance Corp. - Three ("Seller")
1. Applicability
From time to time the parties hereto may enter into transactions in which
one party ("Seller") agrees to transfer to the other ("Buyer") securities
or other assets ("Securities") against the transfer of funds by Buyer, with
a simultaneous agreement by Buyer to transfer to Seller such Securities at
a date certain or on demand, against the transfer of funds by Seller. Each
such transaction shall be referred to herein as a "Transaction" and, unless
otherwise agreed in writing, shall be governed by this Agreement, including
any supplemental terms or conditions contained in Annex I hereto and in any
other annexes identified herein or therein as applicable hereunder.
2. Definitions
(a) "Act of Insolvency", with respect to any party, (i) the commencement
by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, moratorium,
dissolution, delinquency or similar law, or such party seeking the
appointment or election of a receiver, conservator, trustee, custodian
or similar official for such party or any substantial part of its
property, or the convening of any meeting of creditors for purposes of
commencing any such case or proceeding or seeking such an appointment
or election, (ii) the commencement of any such case or proceeding
against such party, or another seeking such an appointment or
election, or the filing against a party of an application for a
protective decree under the provisions of the Securities Investor
Protection Act of 1970, which (A) is consented to or not timely
contested by such party, (B) results in the entry of an order for
relief, such an appointment or election, the issuance of such a
protective decree or the entry of an order having a similar effect, or
(C) is not dismissed within 15 days, (iii) the making by such party of
a general assignment for the benefit of creditors, or (iv) the
admission in writing by such party of such party's inability to pay
such party's debts as they become due;
(b) "Additional Purchased Securities", Securities provided by Seller to
Buyer pursuant to Paragraph 4 (a) hereof;
(c) "Buyer"s Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Buyer's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(d) "Buyer's Margin Percentage', with respect to any Transaction as of any
date, a percentage (which may be equal to the Seller's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value
of the Purchased Securities on the Purchase Date by the Purchase Price
on the Purchase Date for such Transaction;
(e) "Confirmation", the meaning specified in Paragraph 3 (b) hereof,
(f) "Income", with respect to any Security at any time, any principal
thereof and all interest, dividends or other distributions thereon;
(g) "Margin Deficit", the meaning specified in Paragraph 4 (a) hereof;
(h) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(i) "Margin Notice Deadline", the time agreed to by the parties in the
relevant Confirmation, Annex I hereto or otherwise as the deadline for
giving notice requiring same-day satisfaction of margin maintenance
obligations as provided in Paragraph 4 hereof (or, in the absence of
any such agreement, the deadline for such purposes established in
accordance with market practice);
(j) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally
recognized source agreed to by the parties or the most recent closing
bid quotation from such a source, plus accrued Income to the extent
not included therein (other than any Income credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) as of such date (unless contrary to market practice for such
Securities);
(k) "Price Differential", with respect to any Transaction as of any date,
the aggregate amount obtained by daily application of the Pricing Rate
for such Transaction to the Purchase Price for such Transaction on a
360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction
and ending on (but excluding) the date of determination (reduced by
any amount of such Price Differential previously paid by Seller to
Buyer with respect to such Transaction);
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(l) "Pricing Rate", the per annum percentage rate for determination of the
Price Differential;
(m) "Prime Rate", the prime rate of U.S. commercial banks as published in
The Wall Street Journal (or, if more than one such rate is published,
the average of such rates);
(n) "Purchase Date", the date on which Purchased Securities are to be
transferred by Seller to Buyer;
(o) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii)
thereafter, except where Buyer and Seller agree otherwise, such price
increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4 (b) hereof and decreased by the amount of any
cash transferred by Seller to Buyer pursuant to Paragraph 4 (a) hereof
or applied to reduce Seller's obligations under clause (ii) of
Paragraph 5 hereof;
(p) "Purchased Securities", the Securities transferred by Seller to Buyer
in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities"
with respect to any Transaction at any time also shall include
Additional Purchased Securities delivered pursuant to Paragraph 4 (a)
hereof and shall exclude Securities returned pursuant to Paragraph
4(b) hereof;
(q) "Repurchase Date", the date on which Seller is to repurchase the
Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraph 3 (c) or 11 hereof;
(r) "Repurchase Price", the price at which Purchased Securities are to be
transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Purchase Price and the Price
Differential as of the date of such determination;
(s) "Seller's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of the Seller's Margin
Percentage to the Repurchase Price for such Transaction as of such
date;
(t) "Seller's Margin Percentage", with respect to any Transaction as of
any date, a percentage (which may be equal to the Buyer's Margin
Percentage) agreed to by Buyer and Seller or, in the absence of any
such agreement, the percentage obtained by dividing the Market Value
of the Purchased Securities on the Purchase Date by the Purchase Price
on the Purchase Date for such Transaction.
3. Initiation; Confirmation; Termination
(a) An agreement to enter into a Transaction may be made orally or in
writing at the initiation of either Buyer or Seller. On the Purchase
Date for the Transaction, the Purchased Securities shall be
transferred to Buyer or its agent against the transfer of the Purchase
Price to an account of Seller.
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(b) Upon agreeing to enter into a Transaction hereunder, Buyer or Seller
(or both), as shall be agreed, shall promptly deliver to the other
party a written confirmation of each Transaction (a "Confirmation").
The Confirmation shall describe the Purchased Securities (including
CUSIP number, if any), identify Buyer and Seller and set forth (i) the
Purchase Date, (ii) the Purchase Price, (iii) the Repurchase Date,
unless the Transaction is to be terminable on demand, (iv) the Pricing
Rate or Repurchase Price applicable to the Transaction, and (v) any
additional terms or conditions of the Transaction not inconsistent
with this Agreement. The Confirmation, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between Buyer
and Seller with respect to the Transaction to which the Confirmation
relates, unless with respect to the Confirmation specific objection is
made promptly after receipt thereof. In the event of any conflict
between the terms of such Confirmation and this Agreement, this
Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such demand shall
be made by Buyer or Seller, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior
to the business day on which such termination will be effective. On
the date specified in such demand, or on the date fixed for
termination in the case of Transactions having a fixed term,
termination of the Transaction will be effected by transfer to Seller
or its agent of the Purchased Securities and any Income in respect
thereof received by Buyer (and not previously credited or transferred
to, or applied to the obligations of, Seller pursuant to Paragraph 5
hereof) against the transfer of the Repurchase Price to an account of
Buyer.
4. Margin Maintenance
(a) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice
to Seller require Seller in such Transactions, at Seller's option, to
transfer to Buyer cash or additional Securities reasonably acceptable
to Buyer ("Additional Purchased Securities"), so that the cash and
aggregate Market Value of the Purchased Securities, including any such
Additional Purchased Securities, will thereupon equal or exceed such
aggregate Buyer's Margin Amount (decreased by the amount of any Margin
Deficit as of such date arising from any Transactions in which such
Buyer is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased Securities
subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller's Margin Amount for all
such Transactions at such time (a "Margin Excess"), then Seller may by
notice to Buyer require Buyer in such Transactions, at Buyer's option,
to transfer cash or Purchased Securities to Seller, so that the
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aggregate Market Value of the Purchased Securities, after deduction of
any such cash or any Purchased Securities so transferred, will
thereupon not exceed such aggregate Seller's Margin Amount (increased
by the amount of any Margin Excess as of such date arising from any
Transactions in which such Seller is acting as Buyer).
(c) If any notice is given by Buyer or Seller under subparagraph (a) or
(b) of this Paragraph at or before the Margin Notice Deadline on any
business day, the party receiving such notice shall transfer cash or
Additional Purchased Securities as provided in such subparagraph no
later than the close of business in the relevant market on such day.
If any such notice is given after the Margin Notice Deadline, the
party receiving such notice shall transfer such cash or Securities no
later than the close of business in the relevant market on the next
business day following such notice.
(d) Any cash transferred pursuant to this Paragraph shall be attributed to
such Transactions as shall be agreed upon by Buyer and Seller.
(e) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer or Seller (or both)
under subparagraphs (a) and (b) of this Paragraph may be exercised
only where a Margin Deficit or Margin Excess, as the case may be,
exceeds a specified dollar amount or a specified percentage of the
Repurchase Prices for such Transactions (which amount or percentage
shall be agreed to by Buyer and Seller prior to entering into any such
Transactions).
(f) Seller and Buyer may agree, with respect to any or all Transactions
hereunder, that the respective rights of Buyer and Seller under
subparagraphs (a) and (b) of this Paragraph to require the elimination
of a Margin Deficit or a Margin Excess, as the case may be, may be
exercised whenever such a Margin Deficit or Margin Excess exists with
respect to any single Transaction hereunder (calculated without regard
to any other Transaction outstanding under this Agreement).
5. Income Payments
Seller shall be entitled to receive an amount equal to all Income paid or
distributed on or in respect of the Securities that is not otherwise
received by Seller, to the full extent it would be so entitled if the
Securities had not been sold to Buyer. Buyer shall, as the parties may
agree with respect to any Transaction (or, in the absence of any such
agreement, as Buyer shall reasonably determine in its discretion), on the
date such Income is paid or distributed either (i) transfer to or credit to
the account of Seller such Income with respect to any Purchased Securities
subject to such Transaction or (ii) with respect to Income paid in cash,
apply the Income payment or payments to reduce the amount, if any, to be
transferred to Buyer by Seller upon termination of such Transaction. Buyer
shall not be obligated to take any action pursuant to the preceding
sentence (A) to the extent that such action would result in the creation of
a Margin Deficit, unless prior thereto or simultaneously therewith Seller
transfers to Buyer cash or Additional Purchased Securities sufficient to
eliminate such Margin Deficit, or (B) if an Event of Default with respect
to Seller has occurred and is then continuing at the time such Income is
paid or distributed.
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6. Security Interest
Although the parties intend that all Transactions hereunder be sales and
purchases and not loans, in the event any such Transactions are deemed to
be loans, Seller shall be deemed to have pledged to Buyer as security for
the performance by Seller of its obligations under each such Transaction,
and shall be deemed to have granted to Buyer a security interest in, all of
the Purchased Securities with respect to all Transactions hereunder and all
Income thereon and other proceeds thereof.
7. Payment and Transfer
Unless otherwise mutually agreed, all transfers of funds hereunder shall be
in immediately available funds. All Securities transferred by one party
hereto to the other party (i) shall be in suitable form for transfer or
shall be accompanied by duly executed instruments of transfer or assignment
in blank and such other documentation as the party receiving possession may
reasonably request, (ii) shall be transferred on the book-entry system of a
Federal Reserve Bank, or (iii) shall be transferred by any other method
mutually acceptable to Seller and Buyer.
8. Segregation of Purchased Securities
To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its
possession and shall be identified as subject to this Agreement.
Segregation may be accomplished by appropriate identification on the books
and records of the holder, including a financial or securities intermediary
or a clearing corporation. All of Seller's interest in the Purchased
Securities shall pass to Buyer on the Purchase Date and, unless otherwise
agreed by Buyer and Seller, nothing in this Agreement shall preclude Buyer
from engaging in repurchase transactions with the Purchased Securities or
otherwise selling, transferring, pledging or hypothecating the Purchased
Securities, but no such transaction shall relieve Buyer of its obligations
to transfer Purchased Securities to Seller pursuant to Paragraph 3, 4 or 11
hereof, or of Buyer's obligation to credit or pay Income to, or apply
Income to the obligations of, Seller pursuant to Paragraph 5 hereof.
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Required Disclosure for Transactions in Which the Seller
Retains Custody of the Purchased Securities
Seller is not permitted to substitute other securities for those subject to
this Agreement and therefore must keep Buyer's securities segregated at all
times, unless in this Agreement Buyer grants Seller the right to substitute
other securities. If Buyer grants the right to substitute, this means that
Buyer's securities will likely be commingled with Seller's own securities
during the trading day. Buyer is advised that, during any trading day that
Buyer's securities are commingled with Seller's securities, they [will] *
[may] ** be subject to liens granted by Seller to [its clearing bank] *
[third parties] ** and may be used by Seller for deliveries on other
securities transactions. Whenever the securities are commingled, Seller's
ability to resegregate substitute securities for Buyer will be subject to
Seller's ability to satisfy [the clearing] * [any]** lien or to obtain
substitute securities.
* Language to be used under 17 C.F.R. (beta)403.4 (e) if Seller is a
government securities broker or dealer other than a financial
institution.
** Language to be used under 17 C.F.R. (beta)403.5(d) if Seller is a
financial institution.
9. Substitution
(a) Seller may, subject to agreement with and acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such
substitution shall be made by transfer to Buyer of such other
Securities and transfer to Seller of such Purchased Securities. After
substitution, the substituted Securities shall be deemed to be
Purchased Securities.
(b) In Transactions in which Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed,
for purposes of subparagraph (a) of this Paragraph, to have agreed to
and accepted in this Agreement substitution by Seller of other
Securities for Purchased Securities; provided, however, that such
other Securities shall have a Market Value at least equal to the
Market Value of the Purchased Securities for which they are
substituted.
10. Representations
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into
Transactions contemplated hereunder and to perform its obligations
hereunder and has taken all necessary action to authorize such execution,
delivery and performance, (ii) it will engage in such Transactions as
principal (or, if agreed in writing, in the form of an annex hereto or
otherwise, in advance of any Transaction by the other party hereto, as
agent for a disclosed principal), (iii) the person signing this Agreement
on its behalf is duly authorized to do so on its behalf (or on behalf of
any such disclosed principal), (iv) it has obtained all authorizations of
any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect
and (v) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law
or rule applicable to it or any agreement by which it is bound or by which
any of its assets are affected. On the Purchase Date for any Transaction
Buyer and Seller shall each be deemed to repeat all the foregoing
representations made by it.
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11. Events of Default
In the event that (i) Seller fails to transfer or Buyer fails to purchase
Purchased Securities upon the applicable Purchase Date, (ii) Seller fails
to repurchase or Buyer fails to transfer Purchased Securities upon the
applicable Repurchase Date, (iii) Seller or Buyer fails to comply with
Paragraph 4 hereof, (iv) Buyer fails, after one business day's notice, to
comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with
respect to Seller or Buyer, (vi) any representation made by Seller or Buyer
shall have been incorrect or untrue in any material respect when made or
repeated or deemed to have been made or repeated, or (vii) Seller or Buyer
shall admit to the other its inability to, or its intention not to, perform
any of its obligations hereunder (each an "Event of Default"):
(a) The nondefaulting party may, at its option (which option shall be
deemed to have been exercised immediately upon the occurrence of an
Act of Insolvency), declare an Event of Default to have occurred
hereunder and, upon the exercise or deemed exercise of such option,
the Repurchase Date for each Transaction hereunder shall, if it has
not already occurred, be deemed immediately to occur (except that, in
the event that the Purchase Date for any Transaction has not yet
occurred as of the date of such exercise or deemed exercise, such
Transaction shall be deemed immediately canceled). The nondefaulting
party shall (except upon the occurrence of an Act of Insolvency) give
notice to the defaulting party of the exercise of such option as
promptly as practicable.
(b) In all Transactions in which the defaulting party is acting as Seller,
if the nondefaulting party exercises or is deemed to have exercised
the option referred to in subparagraph (a) of this Paragraph, (i) the
defaulting party's obligations in such Transactions to repurchase all
Purchased Securities, at the Repurchase Price therefor on the
Repurchase Date determined in accordance with subparagraph (a) of this
Paragraph, shall thereupon become immediately due and payable, (ii)
all Income paid after such exercise or deemed exercise shall be
retained by the nondefaulting party and applied to the aggregate
unpaid Repurchase Prices and any other amounts owing by the defaulting
party hereunder, and (iii) the defaulting party shall immediately
deliver to the nondefaulting party any Purchased Securities subject to
such Transactions then in the defaulting party's possession or
control.
(c) In all Transactions in which the defaulting party is acting as Buyer,
upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, all right, title and
interest in and entitlement to all Purchased Securities subject to
such Transactions shall be deemed transferred to the nondefaulting
party, and the defaulting party shall deliver all such Purchased
Securities to the nondefaulting party.
(d) If the nondefaulting party exercises or is deemed to have exercised
the option referred to in subparagraph (a) of this Paragraph, the
nondefaulting party, without prior notice to the defaulting party,
may:
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(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Securities subject to such
Transactions and apply the proceeds thereof to the aggregate
unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder or (B) in its sole discretion elect,
in lieu of selling all or a portion of such Purchased Securities,
to give the defaulting party credit for such Purchased Securities
in an amount equal to the price therefor on such date, obtained
from a generally recognized source or the most recent closing bid
quotation from such a source, against the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting
party hereunder; and
(ii) as to Transactions in which the defaulting party is acting as
Buyer, (A) immediately purchase, in a recognized market (or
otherwise in a commercially reasonable manner) at such price or
prices as the nondefaulting party may reasonably deem
satisfactory, securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not
delivered by the defaulting party to the nondefaulting party as
required hereunder or (B) in its sole discretion elect, in lieu
of purchasing Replacement Securities, to be deemed to have
purchased Replacement Securities at the price therefor on such
date, obtained from a generally recognized source or the most
recent closing offer quotation from such a source.
Unless otherwise provided in Annex I, the parties acknowledge and
agree that (1) the Securities subject to any Transaction hereunder are
instruments traded in a recognized market, (2) in the absence of a
generally recognized source for prices or bid or offer quotations for
any Security, the nondefaulting party may establish the source
therefor in its sole discretion and (3) all prices, bids and offers
shall be determined together with accrued Income (except to the extent
contrary to market practice with respect to the relevant Securities).
(e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party for
any excess of the price paid (or deemed paid) by the nondefaulting
party for Replacement Securities over the Repurchase Price for the
Purchased Securities replaced thereby and for any amounts payable by
the defaulting party under Paragraph 5 hereof or otherwise hereunder.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is
acting as Buyer shall not increase above the amount of such Repurchase
Price for such Transaction determined as of the date of the exercise
or deemed exercise by the nondefaulting party of the option referred
to in subparagraph (a) of this Paragraph.
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(g) The defaulting party shall be liable to the nondefaulting party for
(i) the amount of all reasonable legal or other expenses incurred by
the nondefaulting party in connection with or as a result of an Event
of Default, (ii) damages in an amount equal to the cost (including all
fees, expenses and commissions) of entering into replacement
transactions and entering into or terminating hedge transactions in
connection with or as a result of an Event of Default, and (iii) any
other loss, damage, cost or expense directly arising or resulting from
the occurrence of an Event of Default in respect of a Transaction.
(h) To the extent permitted by applicable law, the defaulting party shall
be liable to the nondefaulting party for interest on any amounts owing
by the defaulting party hereunder, from the date the defaulting party
becomes liable for such amounts hereunder until such amounts are (i)
paid in full by the defaulting party or (ii) satisfied in full by the
exercise of the nondefaulting party's rights hereunder. Interest on
any sum payable by the defaulting party to the nondefaulting party
under this Paragraph 11 (h) shall be at a rate equal to the greater of
the Pricing Rate for the relevant Transaction or the Prime Rate.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other
agreement or applicable law.
12. Single Agreement
Buyer and Seller acknowledge that, and have entered hereinto and will enter
into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be
entitled to set off claims and apply property held by them in respect of
any Transaction against obligations owing to them in respect of any other
Transactions hereunder and (iii) that payments, deliveries and other
transfers made by either of them in respect of any Transaction shall be
deemed to have been made in consideration of payments, deliveries and other
transfers in respect of any other Transactions hereunder, and the
obligations to make any such payments, deliveries and other transfers may
be applied against each other and netted.
13. Notices and Other Communications
Any and all notices, statements, demands or other communications hereunder
may be given by a party to the other by mail, facsimile, telegraph,
messenger or otherwise to the address specified in Annex II hereto, or so
sent to such party at any other place specified in a notice of change of
address hereafter received by the other. All notices, demands and requests
hereunder may be made orally, to be confirmed promptly in writing, or by
other communication as specified in the preceding sentence.
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14. Entire Agreement; Severability
This Agreement shall supersede any existing agreements between the parties
containing general terms and conditions for repurchase transactions. Each
provision and agreement herein shall be treated as separate and independent
from any other provision or agreement herein and shall be enforceable
notwithstanding the unenforceability of any such other provision or
agreement.
15. Non-assignability; Termination
(a) The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without
the prior written consent of the other party, and any such assignment
without the prior written consent of the other party shall be null and
void. Subject to the foregoing, this Agreement and any Transactions
shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns. This Agreement may be
terminated by either party upon giving written notice to the other,
except that this Agreement shall, notwithstanding such notice, remain
applicable to any Transactions then outstanding.
(b) Subparagraph (a) of this Paragraph 15 shall not preclude a party from
assigning, charging or otherwise dealing with all or any part of its
interest in any sum payable to it under Paragraph 11 hereof.
16. Governing Law
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
17. No Waivers, Etc.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and
duly executed by both of the parties hereto. Without limitation on any of
the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or
4(b) hereof will not constitute a waiver of any right to do so at a later
date.
18. Use of Employee Plan Assets
(a) If assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") are intended
to be used by either party hereto (the "Plan Party") in a Transaction,
the Plan Party shall so notify the other party prior to the
Transaction. The Plan Party shall represent in writing to the other
party that the Transaction does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the
other party may proceed in reliance thereon but shall not be required
so to proceed.
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(b) Subject to the last sentence of subparagraph (a) of this Paragraph,
any such Transaction shall proceed only if Seller furnishes or has
furnished to Buyer its most recent available audited statement of its
financial condition and its most recent subsequent unaudited statement
of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller
shall be deemed (i) to represent to Buyer that since the date of
Seller's latest such financial statements, there has been no material
adverse change in Seller's financial condition which Seller has not
disclosed to Buyer, and (ii) to agree to provide Buyer with future
audited and unaudited statements of its financial condition as they
are issued, so long as it is a Seller in any outstanding Transaction
involving a Plan Party.
19. Intent
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the
United States Code, as amended (except insofar as the type of
Securities subject to such Transaction or the term of such Transaction
would render such definition inapplicable), and a "securities
contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended (except insofar as the type of assets
subject to such Transaction would render such definition
inapplicable).
(b) It is understood that either party's right to liquidate Securities
delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Paragraph 11 hereof is a
contractual right to liquidate such Transaction as described in
Sections 555 and 559 of Title 11 of the United States Code, as
amended.
(c) The parties agree and acknowledge that if a party hereto is an
"insured depository institution," as such term is defined in the
Federal Deposit Insurance Act, as amended ("FDIA"), then each
Transaction hereunder is a "qualified financial contract," as that
term is defined in FDIA and any rules, orders or policy statements
thereunder (except insofar as the type of assets subject to such
Transaction would render such definition inapplicable).
(d) It is understood that this Agreement constitutes a "netting contract"
as defined in and subject to Title IV of the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") and each payment
entitlement and payment obligation under any Transaction hereunder
shall constitute a "covered contractual payment entitlement" or
"covered contractual payment obligation", respectively, as defined in
and subject to FDICIA (except insofar as one or both of the parties is
not a "financial institution" as that term is defined In FDICIA).
12
20. Disclosure Relating to Certain Federal Protections
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a broker or
dealer registered with the Securities and Exchange Commission ("SEC")
under Section 15 of the Securities Exchange Act of 1934 ("1934 Act"),
the Securities Investor Protection Corporation has taken the position
that the provisions of the Securities Investor Protection Act of 1970
("SIPA") do not protect the other party with respect to any
Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any
Transaction hereunder; and
13
(c) in the case of Transactions in which one of the parties is a financial
institution, funds held by the financial institution pursuant to a
Transaction hereunder are not a deposit and therefore are not insured
by the Federal Deposit Insurance Corporation or the National Credit
Union Share Insurance Fund, as applicable.
Merrill Lynch Mortgage Capital Inc. Green Tree Finance Corp. -- Three
By: /s/ James B. Cason By: /s/ Phyllis a. Knight
------------------------------- ----------------------------
Title: Director Title: Senior Vice Pres & Treas.
---------------------------- -------------------------
Date: 4/5/01 Date: 4/5/01
----------------------------- --------------------------
Conseco Finance Corp.,
solely for purposes of confirming
its obligations under Paragraphs 19
and 23 of Annex I
By: /s/ Phyllis A. Knight
-------------------------------
Title: Senior Vice Pres. & Treas.
----------------------------
Date: 4/5/01
-----------------------------
14
ANNEX I
SUPPLEMENTAL TERMS TO
THIRD AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT,
DATED AS OF APRIL 5, 2001, BETWEEN
MERRILL LYNCH MORTGAGE CAPITAL INC. AND
GREEN TREE FINANCE CORP.--THREE
1. APPLICABILITY. These Supplemental Terms (the "Supplemental Terms") to
the Master Repurchase Agreement (the "Master Repurchase Agreement",
and collectively with these Supplemental Terms, the "Agreement")
modify the terms and conditions under which the parties hereto, from
time to time, enter into Transactions.
2. ADDITIONAL DEFINITIONS.
(a) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Master Repurchase Agreement.
(b) "Adjusted Tangible Net Worth" means, at any date, the sum of (a)
GAAP Net Worth plus (b) the amount of intercompany Indebtedness
converted to preferred stock effective September 22, 2000 (to the
extent such preferred stock is not included in GAAP Net Worth),
plus (c) writedowns on or after September 22, 2000 of all
Interest Only Securities and capitalized servicing rights of
Conseco Finance and its Subsidiaries, in an aggregate amount not
to exceed $450,000,000, minus (d) any Indebtedness owing by
Conseco Inc. or any of its Affiliates (other than Conseco Finance
or any Subsidiary thereof) to Conseco Finance or any Subsidiary
thereof as of such date, minus (e) any amount that would be
included on the consolidated balance sheet of Conseco Finance as
goodwill and deferred charges in accordance with GAAP.
(c) "Affiliate", with respect to any Person, refers to a spouse of
such Person, any relative (by blood, adoption or marriage) of
such person within the third degree, any director, officer,
employee or partner of such Person, and any other Person,
directly or indirectly controlling, controlled by or under common
control with such Person, and any Affiliate of any of the
foregoing. The term "control" mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management policies of the Person, whether through the ownership
of securities, by contract or otherwise.
(d) "Buyer" shall refer to Merrill Lynch Mortgage Capital Inc.
(e) "Business Day" means any day other than (a) a Saturday or a
Sunday or (b) another day on which banking institutions in the
States of Minnesota or New York are authorized or obligated by
law, executive order, or governmental decree to be closed; all
references to "business day" in the Master Repurchase Agreement
shall be deemed to be references to Business Day.
(f) "Cash Equivalents" means (a) securities issued or fully
guaranteed or insured by the United States government or any
agency thereof, (b) certificates of deposit, eurodollar time
deposits, overnight bank deposits and bankers' acceptances of any
commercial bank organized under the laws of the United States,
any state thereof, the District of Columbia, any foreign bank, or
its branches or agencies (fully protected against currency
fluctuations) which, at the time of acquisition, are rated at
least "A-1" by Standard & Poor's Rating Services ("S&P") or "P-1"
by Moody's Investors Services, Inc. ("Moody's"), (c) commercial
paper of an issuer rated at least "A-1" by S&P or "P-1" by
Moody's, and (d) shares of any money market fund that (i) has at
least 95% of its assets invested continuously in the types of
investments referred to in clauses (a) through (c) above, (ii)
has net assets of not less than $500,000,000 and (iii) is rated
at least "A-1" by S&P or "P-1" by Moody's; provided, however,
that the maturities of all obligations of the type specified in
clauses (a) through (c) above shall not exceed 180 days.
(g) "Change of Control" means any acquisition by any Person, or two
or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act) of 30% or more, in the case of
Conseco, Inc., 45% or more, in the case of Conseco Finance, and
100% in the case of Seller, of the outstanding shares of voting
stock of the applicable entity (other than an acquisition by any
Person or Persons who are officers or directors of the subject
entity on the date hereof or any Affiliate thereof controlled by
the relevant officer or director).
(h) "Chattel Paper" refers to a MH Contract that does not constitute
a Land-and-Home Contract.
(i) "Conseco Finance" refers to Conseco Finance Corp.
(j) "Custodial Agreement" shall refer to the amended and restated
reverse repurchase tri-party custodial agreement dated as of even
date herewith, between the parties having ownership interests in
the related Securities and the party named as custodian therein,
providing for the maintenance of ownership records relating to
the Securities.
(k) "Custodian" refers to the party named as custodian in the
Custodial Agreement, or any permitted successor thereto.
(l) "Electronic Ledger" refers to the electronic master record of
installment sale contracts of the Seller.
(m) "Exchange Act" means the Securities Exchange Act of 1934 and the
regulations promulgated thereunder.
(n) "FHA" shall refer to the Federal Housing Administration of HUD.
(o) "Fiscal Quarter" means any fiscal quarter of a Fiscal Year.
2
(p) "Fiscal Year" means any period of twelve consecutive calendar
months ending on December 31.
(q) "Fixed Charge Coverage Ratio" means, for any period, the ratio of
(a) Pre Tax Operating Income for such period to (b) Interest
Expense for such period.
(r) "GAAP" means generally accepted accounting principles
consistently applied.
(s) "GAAP Net Worth" means, at any date, the stockholders' equity
that would be reflected on a consolidated balance sheet of
Conseco Finance and its Subsidiaries at such date prepared in
accordance with GAAP, inclusive of preferred stock, to the extent
such preferred stock is not included in stockholders' equity in
accordance with GAAP.
(t) "Guarantor" shall refer to Conseco Finance.
(u) "Guaranty" shall refer to the guaranty by Guarantor of the
obligations of Seller under the Agreement in the form of Exhibit
E hereto.
(v) "High LTV HELOC Loans" shall refer to Home Equity Loans having a
loan-to-value ratio of not greater than 115% and a minimum FICO
score of 670.
(w) "Home Equity Loans" shall refer to the home equity loans secured
by first or second liens on single family residential real
property (including, without limitation, condominiums and planned
unit developments), the ownership of which is evidenced by a
Trust Receipt.
(x) "Home Improvement Loans" refers to home improvement installment
loan contracts and promissory notes, the ownership of which is
evidenced by a Trust Receipt. Each Home Improvement Loan shall be
secured by a first, second or third lien on single family
residential real property (including, without limitation,
condominiums and planned unit developments).
(y) "HUD" shall refer to the Department of Housing and Urban
Development.
(z) "Indebtedness" of Conseco Finance means Conseco Finance's (a)
obligations for borrowed money, (b) obligations representing the
deferred purchase price of property (whether real or personal,
tangible or intangible) or services (other than accounts payable
arising in the ordinary course of such Conseco Finance's business
payable on terms customary in the trade), (c) obligations,
whether or not assumed, secured by liens or payable out of the
proceeds or production from property now or hereafter owned or
acquired by Conseco Finance, (d) obligations which are evidenced
by notes, acceptances, or similar instruments, (e) capitalized
lease obligations, (f) rate hedging obligations, (g) contingent
obligations of any type, (h) obligations for which Conseco
Finance is obligated pursuant to or in respect of a letter of
credit or similar instrument and (i) repurchase obligations or
liabilities of Conseco Finance with respect to accounts or notes
receivable and chattel paper sold by such Person.
3
(aa) "Interest Expense" means, for any period, all interest paid or
accrued during such period by Conseco Finance and its
Subsidiaries on a consolidated basis, determined in accordance
with GAAP.
(bb) "Interest Only Security" means any interest retained by Seller or
its Affiliate relating to the sale or securitization of loans,
leases, receivables or installment contracts, which constitutes
an interest only security asset in accordance with GAAP.
(cc) "Land-and-Home Contract" refers to a MH Contract that is secured
by a mortgage or deed of trust on real estate on which the
related manufactured home is situated, and which manufactured
home is considered or classified as part of the real estate under
the laws of the jurisdiction in which it is located.
(dd) "List of Home Equity Loans" shall mean a detailed listing of Home
Equity Loans provided by Seller to Buyer.
(ee) "List of Home Improvement Loans" shall mean a detailed listing of
Home Improvement Loans provided by Seller to Buyer.
(ff) "List of MH Contracts" shall mean a detailed listing of MH
Contracts provided by Seller to Buyer.
(gg) "Loan File" shall have the meaning set forth in the Custodial
Agreement.
(hh) "Market Value" shall, in addition to the definition set forth in
the Master Repurchase Agreement, provide that:
(i) the Market Value of any Security shall be determined solely
by Buyer;
(ii) the Market Value of a Security shall be determined by
valuing such Security net of any applicable servicing fee;
(iii) except as otherwise agreed to by Buyer in its sole
discretion, a value of zero shall be assigned to:
(1) any Security is more than thirty (30) days past its due
date;
(2) any Wet Security other than Wet Chattel Paper with
respect to which the related Loan File has not been
delivered to the Custodian within ten (10) Business
Days of the Purchase Date thereof with respect to the
first $100,000,000 of Wet Securities outstanding and
seven (7) Business Days for all Wet Securities in
excess of such $100,000,000 threshold;
(3) any Wet Chattel Paper with respect to which the Loan
File has not been delivered to the Custodian within
twenty-one (21) days of the Purchase Date thereof;
4
(4) any Security that remains subject to this Agreement for
more than 270 days, unless such Security is subject to
a forward purchase commitment by a third-party
purchaser and in a form acceptable to Buyer in its sole
discretion, shall have a Market Value of zero;
(5) any Security that was originated more than 180 days
prior to its initial Purchase hereunder other than as
provided in Paragraph 12 (i) hereof;
(6) any Security determined by Buyer in its reasonable
business judgment not to be eligible for whole loan
sale or securitization in a transaction consistent with
prevailing standards in the asset sale and
securitization industry;
(7) any Security would, in the reasonable judgment of
Buyer, be classified as "predatory" under applicable
consumer lending laws or would cause Buyer to violate
any order, agreement or other contractual arrangement
to which Buyer is subject to or is a party to; and
(iv) in no event shall the Market Value of a Security exceed the
outstanding principal amount thereof.
(ii) "MH Contract" refers to a first lien manufactured housing
conditional sales contract, including any Land-and-Home Contract
and Chattel Paper, the ownership of which is evidenced by a Trust
Receipt.
(jj) "Net Income" means, for any period, with respect to Conseco
Finance and its Subsidiaries on a consolidated basis (other than
any Subsidiary which is prohibited from declaring or paying
dividends or otherwise advancing funds to its parent whether by
contract or otherwise), cumulative net income earned during such
period as determined in accordance with GAAP.
(kk) "Non-Warehouse Debt" means, at any time, all Indebtedness of
Conseco Finance for borrowed money (including without limitation
all liabilities in respect of deposit products, notes payable,
notes payable to Conseco Inc. (net of receivables due from
Conseco Inc.), bonds and other Indebtedness) less the sum of
Unrestricted Cash and Cash Equivalents at such time plus the book
value of all finance receivables and plus 85% of servicing
advance receivables.
(ll) "Operating Cash Flow" means, for any period, cash flow from the
operations of Conseco Finance for such period (as reported under
"Cash Flow From Operations" in Conseco Finance's statements of
cash flow filed with the Securities and Exchange Commission) for
such period.
(mm) "Owner" shall have the meaning set forth in the Custodial
Agreement.
5
(nn) "Person" refers to a corporation, association, partnership,
organization, business, trust, individual, a government or
political subdivision thereof, any governmental agency or any
other entity.
(oo) "Pre Tax Operating Income" means, for any period, Net Income for
such period, plus (a) income and franchise taxes paid or accrued
during such period, (b) Interest Expense, (c) losses derived from
discontinued operations of Conseco Finance and its Subsidiaries
during such period and (d) extraordinary losses and non-recurring
losses of Conseco Finance and its Subsidiaries in an amount with
respect to Interest Only Securities and capitalized servicing
rights of Conseco Finance and its Subsidiaries not to exceed
$450,000,000 in the aggregate minus (a) income derived from
discontinued operations of Conseco Finance and its subsidiaries
during such period and (b) extraordinary gains and non-recurring
gains of Conseco Finance and its Subsidiaries.
(pp) "Purchase Agreement" means the form of purchase agreement
attached hereto as Exhibit E.
(qq) "Securities" shall refer to MH Contracts, Home Improvement Loans
and Home Equity Loans; provided, however, that such MH Contracts,
Home Improvement Loans and Home Equity Loans shall not be deemed
to be securities for any federal securities law or state blue sky
law purposes; provided, further, that in the event Merrill Lynch
Capital Markets is not selected to be, or has resigned as, the
lead manager or a co-manager for the securitization of any of the
MH Contracts, Home Improvement Loans or Home Equity Loans, such
MH Contracts, Home Improvement Loans or Home Equity Loans shall,
at the election of Buyer in its discretion, be deemed not to be
eligible for purchase by Buyer hereunder.
(rr) "Seller" shall refer to Green Tree Finance Corp.--Three.
(ss) "Step-Up Rate Contract" shall refer to any MH Contract bearing
interest during an initial period at a fixed rate that is lower
than the fixed rate borne thereafter.
(tt) "Structured Transaction" means an asset-backed or mortgage-backed
securitization.
(uu) "Subsidiary" means (a) any corporation more than 50% of the
outstanding securities having ordinary voting power of which
shall at the time be owned or controlled, directly or indirectly,
by Conseco Finance or by one or more of its Subsidiaries, or (b)
any partnership, limited liability company, association, joint
venture or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall
at the time be so owned or controlled.
(vv) "Total Managed Receivables" means, for any period, the "averaged
managed receivables", as such term is reported in the related
filing with the Securities and Exchange Commission for such
period.
6
(ww) "Transaction" shall, in addition to the definition set forth in
the Master Repurchase Agreement, refer to deliveries of
Securities or cash pursuant to Paragraph 4(a) of the Master
Repurchase Agreement and substitutions pursuant to Paragraph 9 of
the Master Repurchase Agreement.
(xx) "Trust Receipt" means a receipt issued by the Custodian under the
Custodial Agreement.
(yy) "UCC" refers to the Uniform Commercial Code as in effect in the
applicable jurisdiction.
(zz) "Unrestricted Cash" means, at any date, all available cash on
deposit in bank accounts of Conseco Finance, provided the
accounts into which such cash is deposited are not subject to any
lien, security interest or control agreement or otherwise
encumbered (excluding customary rights of set-off) or restricted
in any way.
(aaa) "Wet Chattel Paper" means Chattel Paper for which the related
Loan Files have not been delivered to the Custodian as of the
Purchase Date.
(bbb) "Wet MH Contracts" means those Land-and-Home Contracts for which
the related Loan Files have not been delivered to the Custodian
as of the Purchase Date.
(ccc) "Wet Home Equity Loans" means those Home Equity Loans for which
the related Loan Files have not been delivered to the Custodian
as of the Purchase Date.
(ddd) "Wet Home Improvement Loans" means those Home Improvement Loans
for which the related Loan Files have not been delivered to the
Custodian as of the Purchase Date.
(eee) "Wet Security" means a Wet Home Improvement Loan, Wet Home
Equity Loan and/or Wet MH Contract.
3. CONFIRMATIONS. Each Confirmation shall be binding upon the parties
hereto unless written notice of objection is given by the objecting
party to the other party within two (2) business days after the
objecting party's receipt of such Confirmation.
4. INCOME PAYMENTS. So long as no Event of Default shall have occurred
and be continuing, Seller shall be entitled to all payments of
principal and interest and principal prepayments payable to the holder
of the Purchased Securities.
5. SECURITY INTEREST.
(a) In the event, for any reason, any Transaction is construed by any
court as a secured loan rather than a purchase and sale, the
parties intend that Buyer shall have a perfected first priority
security interest in all of the Purchased Securities.
7
(b) Seller shall pay all fees and expenses associated with perfecting
such security interest including, without limitation, the cost of
filing financing statements under the UCC.
(c) In the event that Buyer elects to engage in repurchase
transactions with the Purchased Securities or otherwise elects to
pledge or hypothecate the Purchased Securities, Seller shall, at
the request of Buyer and at the expense of Seller, provide
Buyer's counterparty in such repurchase transaction with an
opinion of counsel to the effect that such counterparty has
either an ownership interest or a perfected first priority
security interest in such Purchased Securities.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) Each party represents and warrants, and shall on and as of the
Purchase Date of any Transaction be deemed to represent and
warrant, as follows:
(i) the execution, delivery and performance of the Agreement and
the performance of each Transaction do not and will not
result in or require the creation of any lien, security
interest or other charge or encumbrance (other than pursuant
hereto) upon or with respect to any of its properties; and
(ii) the Agreement is, and each Transaction when entered into
under the Agreement will be, a legal, valid and binding
obligation of it enforceable against it in accordance with
the terms of the Agreement.
(b) Seller represents and warrants to Buyer, and shall on and as of
the Purchase Date of any Transaction be deemed to represent and
warrant, as follows:
(i) the documents disclosed by Seller to Buyer pursuant Section
18 of these Supplemental Terms are either original documents
or genuine and true copies thereof;
(ii) Seller is a separate and independent corporate entity from
the custodian named in the Custodial Agreement or any
sub-custodian for any Purchased Securities, Seller does not
own a controlling interest in such custodian or any such
sub-custodian either directly or through Affiliates and no
director or officer of Seller is also a director or officer
of such custodian or any such sub-custodian;
(iii) Seller shall be at the time it delivers any Purchased
Securities for any Transaction, and shall continue to be,
through the Purchase Date relating to each such Transaction,
the legal and beneficial owner of such Purchased Securities
free and clear of any lien, security interest, option or
encumbrance except for the security interest created by the
Agreement;
(iv) each Purchased Security was originated by Conseco Finance
directly or through its correspondent network in its
ordinary course of business and has not been purchased in
any bulk transaction, unless otherwise expressly approved by
Buyer in writing;
8
(v) each Purchased Security was underwritten in accordance with
the written underwriting standards of Conseco Finance
furnished by Seller to Buyer, and no material change to such
underwriting standards has occurred since the date of the
last written revision to such standards was furnished to
Buyer by Seller;
(vi) except for the effect of the representations and warranties
made hereunder, no adverse selection procedures have been
employed in selecting the Purchased Securities for
Transactions hereunder;
(vii) since the date of the most recent financial statement of
Seller, delivered by it pursuant to Paragraph 10 hereof,
there has been no material adverse change in the financial
condition or results or operations of Seller;
(viii) Seller has capital in an amount at least equal to
$1,000,000 in the form of cash or U.S. Treasury bills;
(ix) Seller is in possession of a note of Conseco Finance, made
payable to Seller in the amount of at least $1,000,000,
which note is subordinated to all outstanding debt of
Conseco Finance; and
(x) the Purchased Securities conform to the type of Home Equity
Loans, Home Improvement Loans and MH Contracts that are
acceptable for securitization under prevailing market
standards in Buyer's reasonable business judgment based
upon, but not limited to, the criteria of loan to value
ratio, combined loan to value ratio, debt to income ratio,
note rate and credit score.
(c) Seller makes the representations and warranties to Buyer
concerning the MH Contracts, and shall as of the Purchase Date of
any Transaction be deemed to make such representations and
warranties, as are set forth at Exhibit A-1 hereto, with respect
to those MH Contracts constituting Chattel Paper, and Exhibit A-2
hereto, with respect to those MH Contracts constituting
Land-and-Home Contracts. Seller further represents and warrants
to Buyer that the Exhibit A-1 and A-2 representations and
warranties, as applicable, shall continue to be true for all MH
Contracts through the Repurchase Date of the related Transaction.
The representations and warranties set forth at Exhibits A-1 and
A-2 hereto are incorporated herein in their entirety.
(d) Seller makes the representations and warranties to Buyer
concerning the Home Equity Loans, and shall as of the Purchase
Date of any Transaction be deemed to make such representations
and warranties, as are set forth at Exhibit B hereto. Seller
further represents and warrants to Buyer that the Exhibit B
representations and warranties shall continue to be true for all
Home Equity Loans through the Repurchase Date of the related
Transactions. The representations and warranties set forth at
Exhibit B hereto are incorporated herein in their entirety.
9
(e) Seller makes the representations and warranties to Buyer
concerning the Home Improvement Loans, and shall as of the
Purchase Date of any Transaction be deemed to make such
representations and warranties, as are set forth at Exhibit C
hereto. Seller further represents and warrants to Buyer that the
Exhibit C representations and warranties shall continue to be
true for all Home Improvement Loans through the Repurchase Date
of the related Transactions. The representations and warranties
set forth at Exhibit C hereto are incorporated herein in their
entirety.
(f) Seller covenants and agrees to indemnify and hold harmless Buyer
for all costs and expenses incurred by Buyer:
(i) in the event that applicable law or regulations governing
Transactions shall change so as to increase Buyer's
transaction costs or impose taxes or any withholding
requirement on Buyer; or
(ii) in the event that Seller terminates any Transaction prior to
its agreed upon Repurchase Date, which costs shall include,
without limitation, (A) Buyer's actual cost (including all
fees, expenses and commissions) of (i) entering into
replacement transactions; (ii) entering into or terminating
hedge transactions; and/or (ii) terminating transactions or
substituting securities in like transactions with third
parties in connection with or as a result of such
substitution or termination, and (B) to the extent Buyer
determines not to enter into replacement transactions, the
loss incurred by Buyer directly arising or resulting from
such termination.
The foregoing amounts shall be solely determined and calculated by
Buyer in good faith.
7. EVENTS OF DEFAULT.
(a) The term "Event of Default" shall, in addition to the definition
set forth in the Master Repurchase Agreement, include the
following events:
(i) any governmental or self-regulatory authority shall take
possession of Buyer or Seller or its property or appoint any
receiver, conservator or other official, or such party shall
take any action to authorize any of the actions set forth in
this clause (i);
(ii) Buyer shall have reasonably determined that Seller is or
will be unable to meet its commitments under the Agreement,
shall have notified Seller of such determination and Seller
shall not have responded with appropriate information to the
contrary to the satisfaction of Buyer within twenty-four
(24) hours;
10
(iii) the Agreement shall for any reason cease to create either
an ownership interest (which ownership interest shall be
confirmed upon request of Buyer in an opinion of counsel
provided by Seller) or a valid, first priority security
interest in any of the Purchased Securities purported to be
covered thereby;
(iv) a final judgment by any competent court in the United States
of America for the payment of money in an amount of at least
$1,000,000 is rendered against the defaulting party, and the
same remains undischarged for a period of 60 days during
which execution of such judgment is not effectively stayed;
(v) any representation or warranty made by Seller or Buyer in
the Agreement or the Custodial Agreement shall have been
incorrect or untrue when made or repeated or when deemed to
have been made or repeated or, in the case of continuing
representations, shall be untrue in any material respect
during the term of any Transaction under the Agreement;
(vi) The capitalization of Seller shall at any time fail to
comply with the structure set forth in Sections 6(b)(viii)
and (ix) herein;
(vii) Seller, Conseco Finance, Conseco, Inc. or CIHC Inc. (the
"Conseco Entities") shall have caused an Event of Default
(as defined therein) under (a) the Agreement, (b) any swap,
hedge or International Swap Dealers Association agreement
(an "ISDA" Agreement) with the Buyer or any Affiliate of the
Buyer which results in a net settlement payment (on a
contract -by-contract basis) payable by any Conseco Entity
of $10,000,000 or more, or (c) the Conseco, Inc. Bank
Facilities, each dated as of September 22,2000; provided
however, that a breach of the financial covenants under the
agreements described in subclause (a) and (c) shall not
constitute an Event of Default hereunder unless there is a
failure on the part of such Conseco Entity to repay
indebtedness or to make a net settlement payment (on a
contract-by-contract basis) under such swap, hedge or ISDA
Agreement with a party other than Buyer or an Affiliate of
Buyer of, in each case, at least $50,000,000;
(viii) The Guarantor shall no longer be a duly organized and
validly existing corporation in good standing under the laws
of the state of its incorporation with the power and
authority to enter into and perform its obligations under
the Guaranty;
(ix) The Guaranty is no longer in full force and effect; and
(x) Conseco Finance shall fail to maintain on a consolidated
basis:
(1) minimum Adjusted Tangible Net Worth of at least
$1,950,000,000;
11
(2) GAAP Net Worth to Total Managed Receivables of not
less than 4:100;
(3) a ratio of Non-Warehouse Debt to GAAP Net Worth of
not more than 1:2 as measured on a quarterly basis;
(4) for the six-month period ending on the last day of
the Fiscal Quarter ending March 31, 2001, the nine-month
period ending on the last day of the Fiscal Quarter ending
June 30, 2001, the twelve-month period ending on the last
day of the Fiscal Quarter ending September 30, 2001, and the
twelve-month period ending on the last day of each
subsequent Fiscal Quarter, a Fixed Charge Coverage Ratio of
not less than 1.0:1.0; and
(5) for the six-month period ending on the last day of
the Fiscal Quarter ending March 31, 2001, the nine-month
period ending on the last day of the Fiscal Quarter ending
June 30, 2001, the twelve-month period ending on the last
day of the Fiscal Quarter ending September 30, 2001, and the
twelve-month period ending on the last day of each
subsequent Fiscal Quarter, a positive Operating Cash Flow.
(b) Upon the occurrence and during the continuance of an Event of
Default by Seller:
(i) all rights of Seller to receive payments which it would
otherwise be authorized to receive pursuant to Section 4 of
these Supplemental Terms shall cease, and all such rights
shall thereupon become vested in Buyer, which shall
thereupon have the sole right to receive such payments and
apply them to the aggregate unpaid Repurchase Prices owed by
Seller;
(ii) all payments which are received by Seller contrary to the
provisions of the preceding clause (i) shall be received in
trust for the benefit of Buyer and shall be segregated from
other funds of Seller;
(iii) if requested by Buyer, Seller shall establish a lock-box
account for receipt of payments on the Purchased Securities;
and
(iv) Buyer shall have the right but not the obligation to
purchase under the Purchase Agreement or other mutually
agreeable document the Purchased Securities from Seller for
a price net of amounts owed to Buyer hereunder.
(c) Any sale of Purchased Securities under Paragraph 11 of the Master
Repurchase Agreement shall be conducted in a commercially
reasonable manner.
(d) Expenses incurred in connection with an Event of Default shall
include without limitation those costs and expenses incurred by
the nondefaulting party as a result of the early termination of
any repurchase agreement or reverse repurchase agreement entered
into by the nondefaulting party in connection with the
Transaction then in default.
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8. ADDITIONAL EVENTS OF TERMINATION.
(a) At the option of Buyer, exercised by written notice to Seller and
Conseco Finance, the Repurchase Date for each Transaction under
the Agreement shall be deemed to immediately occur in the event
that:
(i) in the judgment of Buyer a material adverse change shall
have occurred in the business, operations, properties,
prospects or condition (financial or otherwise) of Conseco
Finance or Seller; provided, however, that this event shall
cause the Repurchase Dates to immediately occur only for
Transactions that were not the subject of a pre-existing
written commitment between Buyer and Seller;
(ii) Buyer shall request written assurances as to the financial
well-being of Conseco Finance or Seller and such assurances
shall not have been provided within twenty-four (24) hours
of such request;
(iii) The senior debt obligations or short-term debt obligations
of Merrill Lynch & Co., Inc. shall be rated below the four
highest grades by any nationally recognized statistical
rating organization;
(iv) A Change of Control of Conseco Finance shall occur; or
(v) A Change of Control of Conseco, Inc. shall occur.
(b) The events specified in Section 8(a) of these Supplemental Terms
which may, at the option of Buyer, cause an acceleration of the
Repurchase Date for each Transaction shall be in addition to any
other rights of Buyer to cause such an acceleration under the
Agreement.
9. SUBSTITUTION. Paragraph 9 of the Master Repurchase Agreement is
amended by adding at the end of the last subparagraph the following
subparagraphs (c) and (d):
(c) In the case of any Transaction for which the Repurchase Date is
other than the business day immediately following the Purchase Date
and with respect to which Seller does not have any existing right to
substitute substantially the same Securities for the Purchased
Securities (securities shall be deemed to be substantially the same as
Purchased Securities only if they are of the same or higher credit
quality as the Purchased Securities, unless otherwise agreed to by the
Buyer), Seller shall have the right, subject to the proviso to this
sentence, upon ten (10) business days' prior written notice to Buyer,
which notice shall be given at or prior to 10:00 a.m. (New York time),
to substitute substantially the same Securities for any Purchased
Securities; provided, however, that Buyer may elect not to accept such
substitution. In the event such substitution is accepted by Buyer,
such substitution shall be made by Seller's transfer to Buyer of such
other Securities and Buyer's transfer to Seller of such Purchased
Securities, and after substitution, the substituted Securities shall
be deemed to be Purchased Securities. In the event Buyer elects not to
accept such substitution, Buyer shall offer Seller the right to
terminate the Transaction subject to subparagraph (d) below.
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(d) In the event Seller exercises its right to substitute or terminate
under sub-paragraph (c), Seller shall be obligated to pay to Buyer, by
the close of the business day of such substitution or termination, as
the case may be, an amount equal to (A) Buyer's actual cost (including
all fees, expenses and commissions) of (i) entering into replacement
transactions; (ii) entering into or terminating hedge transactions;
(iii) terminating transactions or substituting securities in like
transactions with third parties in connection with or as a result of
such substitution or termination; and/or (iv) performing due diligence
with respect to substituted Securities, and (B) to the extent Buyer
determines not to enter replacement transactions, the loss incurred by
Buyer directly arising or resulting from such substitution or
termination. The foregoing amounts shall be solely determined and
calculated by Buyer in good faith.
10. FINANCIAL STATEMENTS. Seller shall cause Conseco Finance to furnish to
Buyer the following:
(a) Monthly. (i) As soon as available but not later than 30 days
after the end of each month commencing with March 2001 financial
information regarding Conseco Finance consisting of consolidated
unaudited balance sheets as of the close of such month and the
related statements of income and cash flow for such month, in
each case certified by the chief executive officer, chief
operating officer, chief financial officer or treasurer, or any
other officer having substantially the same authority and
responsibility, including any vice president with responsibility
for or knowledge of financial matters (a "Responsible Officer"),
of Conseco Finance as fairly presenting the consolidated
financial position of Conseco Finance and its subsidiaries as at
the dates indicated and the results of their operations and cash
flow for the periods indicated in accordance with generally
accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession),
which are applicable to the circumstances as of the date of
determination ("GAAP"); (ii) as soon as available but not later
than 15 days after the end of each month commencing with March
2001, a budget forecast for cash use by Conseco Finance for the
two month period then commencing, setting forth sources and uses
of such cash by Conseco Finance for such period, certified by a
Responsible Officer of Conseco Finance; (iii) as soon as
available but not later than 15 days after the end of each month
commencing March 2001, a certificate of a Responsible Officer of
Conseco Finance stating that, to the best knowledge of such
officer, no Default or Event of Default has occurred and is
continuing, or if a Default or an Event of Default has occurred
and is continuing, stating the nature thereof and the action
which Conseco Finance proposes to take with respect thereto; and
(iv) as soon as available but not later than the 20th day in each
calendar month commencing with March 2001, an analysis of the
aging (or other applicable measurement as agreed to by the
parties) by each category of asset for all Purchased Securities;
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(b) Quarterly. (i) As soon as available but not later than 60 days
after the end of each fiscal quarter of each of the first three
fiscal quarters of each fiscal year, (A) financial information
regarding Conseco Finance and its subsidiaries consisting of
consolidated unaudited balance sheets as of the close of such
quarter and the related statements of income and cash flow for
such quarter and that portion of the fiscal year ending as of the
close of such quarter, setting forth in comparative form the
figures for the corresponding period in the prior year, in each
case certified by a Responsible Officer of Conseco Finance as
fairly presenting the consolidated financial position of Conseco
Finance and its subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods
indicated in accordance with GAAP, (B) forecasts prepared by
management of Conseco Finance for each of the succeeding months
for a twelve month period setting forth in reasonable detail the
projected origination level, operating cost and estimate of the
net interest margin assumptions and resulting cash flow, balance
sheet and income statement as at the end of each such month and
such twelve-month period, together with a statement of all the
material assumptions on which such forecasts are based; and (C) a
compliance certificate of a Responsible Officer of Conseco
Finance setting forth in reasonable detail the calculations used
in determining the financial covenants set forth in Paragraph 7
and demonstrating compliance with all such financial covenants;
(c) Annual. As soon as available but not later than 120 days after
the end of each fiscal year of Conseco Finance, (i) copies of the
audited consolidated balance sheet of Conseco Finance and its
subsidiaries and the unaudited consolidated balance sheet of
Conseco Finance and its subsidiaries as at the end of such year
and the related consolidated statements of earnings,
shareholders' equity and cash flows for such year, setting forth
in the case of the audited consolidated statements in comparative
form the figures for the previous fiscal year, and accompanied by
an opinion of PricewaterhouseCoopers or another nationally
recognized independent accounting firm which report shall state
such audited consolidated financial statements present fairly the
financial positions and result of operations of Conseco Finance
and its subsidiaries for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years, except as
stated therein, (such opinion shall not be qualified or limited
because of a restricted or limited examination by such auditors
of any material portion of Conseco Finance's or any subsidiary's
records); and (ii) a compliance certificate of a Responsible
Officer of Conseco Finance setting forth in reasonable detail the
calculations used in determining the financial covenants set
forth in Paragraph 7 and demonstrating compliance with all such
financial covenants for all applicable periods during such fiscal
year.
11. USE OF PROCEEDS. Seller represents, warrants and covenants that the
Purchase Price for any Purchased Securities will only be used for
expenses directly related to Seller's core business.
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12. MINIMUM AND MAXIMUM TRANSACTION AMOUNTS. The parties hereto agree and
acknowledge that Transactions hereunder will be entered into by Buyer
in its sole discretion and that Buyer is under no obligation to enter
into any Transaction with Seller except to the extent otherwise
provided in a written agreement between Buyer and Seller. With respect
to any Transaction and without limiting the discretion of Buyer
referred to in the foregoing sentence and in Paragraph 17 of these
Supplemental Terms:
(a) the minimum amount of any Transaction under this Agreement shall
have a Purchase Price of $5,000,000;
(b) the aggregate outstanding Purchase Price for all Purchased
Securities shall not exceed $1,250,000,000 at any one time;
(c) the aggregate outstanding Purchase Price for Purchased Securities
that are Home Equity Loans shall not exceed $750,000,000 at any
one time;
(d) the aggregate outstanding Purchase Price for Purchased Securities
that are MH Contracts shall not exceed $500,000,000 at any one
time;
(e) the aggregate outstanding Purchase Price for all Purchased
Securities that are Home Improvement Loans shall not exceed
$750,000,000;
(f) the aggregate outstanding Purchase Price for all Purchased
Securities that are Home Improvement Loans that are third lien
positions shall not exceed $25,000,000;
(g) the aggregate outstanding Purchase Price for all Purchased
Securities that are Wet MH Contracts, Wet Home Equity Loans and
Wet Home Improvement Loans shall not exceed $250,000,000;
provided, however, that in no event shall such Purchase Price
exceed 30% of the aggregate outstanding Purchase Price for all
Purchased Securities for a period of more than ten (10)
consecutive business days;
(h) the aggregate outstanding Purchase Price for all Purchased
Securities that have been re-purchased pursuant to clean-up calls
under Structured Transactions shall not exceed $50,000,000;
(i) the aggregate outstanding Purchase Price for all second lien Home
Equity Loans and all second lien Home Improvement Loans at any
time shall not exceed 20% of aggregate outstanding Purchase Price
for all Home Equity Loans and Home Improvement Loans;
(j) the aggregate outstanding Purchase Price for all Wet Chattel
Paper shall not exceed $300,000,000; and
(k) the aggregate outstanding Purchase Price for all High LTV HELOC
Loans shall not exceed $20,000,000; and
(l) the aggregate outstanding Purchase Price for all loans subject to
Section 226.32 of Regulation Z shall not exceed $62,500,000, with
the first $31,250,000 at any time counted against the Committed
Amount.
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13. REPURCHASE PRICE; PRICE DIFFERENTIAL. The Repurchase Price as of any
date shall include that portion of the Price Differential that has
accrued but has not been paid. The Price Differential shall accrue and
be calculated on a daily basis for each Purchased Security (such
calculation to be made on the basis of a 360-day year and the actual
number of days elapsed). The Price Differential shall be payable
weekly in arrears to Buyer with respect to each Purchased Security on
the earlier of Friday of each week or the termination date for the
related Transaction. The Price Differential for any Purchased Security
shall be equal to the product of (i) the Purchase Price and (ii) the
prevailing overnight rate on Federal funds (as reported on Page 5 of
Telerate) existing at the opening of business on the date of
calculation. Payment of the Price Differential to Buyer shall be made
by wire transfer in immediately available funds.
14. ADDITIONAL INFORMATION.
(a) At any reasonable time, Seller shall permit Buyer, its agents or
attorneys, to inspect and copy any and all documents and data in
their possession pertaining to each Purchased Security that is
the subject of such Transaction. Such inspection shall occur upon
the request of Buyer at a mutually agreeable location during
regular business hours and on a date not more than two (2)
business days after the date of such request.
(b) Seller agrees to provide Buyer from time to time with such
information concerning Seller of a financial or operational
nature as Buyer may request.
(c) Seller shall provide Buyer with copies of all filings made by or
on behalf of Seller or its parent with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, promptly upon making such filings.
(d) Seller shall, upon Buyer's request, provide Buyer with up to date
performance data on all Securities owned by Seller in such detail
as Buyer shall reasonably request.
15. TERMINATION. Notwithstanding Paragraph 15 of the Master Repurchase
Agreement and except as otherwise agreed in writing, this Agreement
and all Transactions outstanding hereunder shall terminate
automatically without any requirement for notice on the date occurring
one year after the date as of which this Agreement is entered into;
provided, however, that this Agreement and any Transaction outstanding
hereunder may be extended by mutual agreement of Buyer, Seller and
Conseco Finance; and provided further, however, that no such party
shall be obligated to agree to such an extension.
16. MARGIN MAINTENANCE.
(a) Paragraph 4(a) of the Master Repurchase Agreement is hereby
modified to provide that if the notice to be given by Buyer to
Seller under such paragraph is given at or prior to 10:00 a.m.
New York City time, Seller shall transfer the Additional
Purchased Securities or cash to Buyer prior to the close of
business in New York City on the date of such notice, and if such
notice is given after 10:00 a.m. New York City time, Seller shall
transfer the Additional Purchased Securities or cash prior to the
close of business in New York City on the business day following
the date of such notice.
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(b) Additional Purchased Securities that are transferred by Seller to
Buyer pursuant to Paragraph 4(a) of the Master Repurchase
Agreement shall be transferred to the Custodian for the benefit
of Buyer pursuant to the provisions of the Custodial Agreement.
Any cash transferred by Seller to Buyer shall be sent via wire
transfer in immediately available funds to the account designated
by Buyer.
17. TRANSACTIONS OPTIONAL. Except as otherwise agreed in writing, Buyer
shall be under no obligation to enter into Transactions with Seller
and the initiation of each Transaction is subject to the approval of
Buyer in its sole discretion.
18. ADDITIONAL CONDITIONS. Prior to entering into the initial Transaction
under this Agreement, Seller shall cause each of the following
conditions to occur:
(a) A Custodial Agreement relating to the Securities, in form and
substance satisfactory to Buyer, shall have been executed and
delivered by the parties thereto;
(b) Seller shall have disclosed information satisfactory to Buyer
with respect to the scheduled maturities and termination
provisions of all outstanding credit facilities and debt of
Seller;
(c) Seller shall, on the Purchase Date of the first Transaction
hereunder and, upon the request of Buyer, on the Purchase Date of
any subsequent Transaction, cause to be delivered to Buyer, with
reliance thereon permitted as to any person or entity that
purchases the Securities from Buyer in a repurchase transaction,
an opinion of counsel, in form and substance satisfactory to
Buyer and its counsel, concerning (i) the authorization and
authority of Seller to enter into the Agreement and the Custodial
Agreement and Transactions thereunder, (ii) the ownership
interest or perfected security interest of Buyer or its agent in
the Purchased Securities and (iii) such other matters as Buyer
may reasonably require;
(d) Seller shall deliver to Buyer a fully executed Guaranty;
(e) A copy of Conseco Finance's underwriting guidelines, current as
of the date hereof; and
(f) A copy of Seller's articles of incorporation certified by the
Secretary of State of the State of Minnesota as of a recent date.
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19. SERVICING ARRANGEMENTS.
(a) The parties hereto agree and acknowledge that, notwithstanding
the purchase and sale of the Securities contemplated hereby,
Seller shall cause Conseco Finance or an Affiliate of Conseco
Finance to continue to service the Securities for the benefit of
Buyer and, if Buyer shall exercise its rights to sell the
Securities pursuant to this Agreement prior to the related
Repurchase Date, Buyer's assigns; provided, however, that the
obligation of Conseco Finance, or its Affiliate, to service the
Securities for the benefit of Buyer as aforesaid shall cease upon
the payment to Buyer of the Repurchase Price therefor.
(b) Conseco Finance, or its Affiliate, shall provide servicing
reports to Buyer on a monthly basis or with such greater
frequency as Buyer may require.
(c) Conseco Finance, or its Affiliate, shall service the Securities
and shall enforce its rights and the rights of the beneficial
owner thereunder in accordance with the standards of a prudent
lender in the manufactured housing industry, the home equity loan
industry and the consumer finance industry, as applicable.
(d) Conseco Finance, or its Affiliate, shall service all FHA/VA MH
Contracts and all FHA/VA Home Equity and Home Improvement Loans
in a manner such that such insurance or guarantee will not be
impaired and will remain in full force and effect.
(e) Buyer may, in its sole discretion if an Event of Default (or any
breach of a representation, warranty or covenant that does not
constitute an event of default), shall have occurred and be
continuing, without payment of any termination fee or any other
amount to any party and after the expiration of a cure period of
10 days, (i) sell its right to the Securities on a servicing
released basis or (ii) terminate Conseco Finance, or its
Affiliate, as servicer of the Securities with or without cause.
20. TRANSFERS TO THIRD PARTIES. Buyer and Seller agree that,
notwithstanding any provision of the Agreement or the Custodial
Agreement to the contrary, Buyer may engage in repurchase transactions
with the Purchased Securities and may otherwise pledge or hypothecate
the Purchased Securities, provided that no such transaction shall
relieve Buyer of its obligations under the Agreement.
21. SINGLE AGREEMENT. Paragraph 12 of the Master Repurchase Agreement is
amended by adding at the end thereof the following:
"Buyer and Seller agree that, upon an Act of Insolvency by Buyer,
on the one hand, or Seller or any of its Affiliates, on the other
hand, or the default by Buyer, on the one hand, or Seller or any
of its Affiliates, on the other hand, under any transaction with
the other party hereto (the party to which such Act of Insolvency
or default relates being herein referred to as "Party A" and the
other party being referred to herein as "Party B"), Party B may:
(a) liquidate any transaction between Party A and Party B, (b)
reduce any amounts due and owing to Party A under this or any
other transactions between Party A and Party B by setting off
against such amounts any amounts due and owing to Party B by
Party A, and (c) treat all security for any transactions between
Party A and Party B as security for all transactions between
Party A and Party B.
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22. NEW YORK JURISDICTION; WAIVER OF JURY TRIAL. Buyer and Seller hereby
agree to submit to the courts of the State of New York in any action
or proceeding arising out of this Agreement. Buyer and Seller each
hereby waives the right of trial by jury in any litigation arising
hereunder.
23. CROSS-COLLATERALIZATION; RIGHT OF SET-OFF. Buyer may, in its sole
discretion upon the occurrence and during the continuation of an Event
of Default hereunder, proceed against any assets of Seller held by
Buyer or any Affiliate under any agreement and shall have a right of
set-off against any amounts owed by Buyer or any Affiliate to Seller
under any agreement. In addition, the parties agree that Buyer may, in
its sole discretion upon the occurrence and during the continuation of
an event of default under any other agreement to which Seller and
Buyer or any of its Affiliates are parties, proceed against any assets
held by Buyer hereunder and shall have a right of set-off against any
amounts owed by Buyer to Seller.
24. EXPENSES.
Seller shall pay its own expenses and all reasonable out-of-pocket
costs and expenses (including fees and disbursements of counsel) of
Buyer incident to: (1) the preparation and negotiation of the
Agreement, the Custodial Agreement, any documents relating thereto,
any amendments or waivers thereto, (2) the protection of the rights of
Buyer thereunder, (3) Buyer's due diligence review of the Mortgage
Loans and the books and records of Seller relating thereto; up to a
maximum amount of $35,000 per calendar year, and (4) the enforcement
of payment of amounts due under the Agreement or the Custodial
Agreement, whether by judicial proceedings or otherwise, including,
without limitation, in connection with bankruptcy, insolvency,
liquidation, reorganization, moratorium or other similar proceedings
involving Seller.
Seller agrees to pay the fees and expenses of Buyer's counsel by wire
transfer in immediately available funds simultaneously with the
effectiveness of the Agreement in an amount equal to $75,000. The
parties agree that the Agreement shall not become effective until the
condition set forth in the preceding sentence is satisfied.
Notwithstanding any provision hereof to the contrary, the obligations
of Seller under this Section 24 shall be effective and enforceable
whether or not any Transaction remains outstanding and shall survive
payment of all other obligations owed by Seller to Buyer.
25. ASSIGNMENT. This Agreement shall be binding upon and shall inure to
the benefit of each of the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement
nor any rights or other obligations hereunder may be assigned by
Seller without prior written consent of Buyer or by Buyer without the
consent of the Seller and any attempted or purported assignment hereof
or thereof shall be void. Notwithstanding the foregoing, Buyer may,
subject to the applicable law, assign any or all of its rights, but
not its obligations hereunder, without consent of Seller, to an
Affiliate of Buyer. In addition, nothing in this Paragraph 25 shall be
construed to limit Buyer's right to pledge its interest in the
Purchased Securities pursuant to Paragraph 20 without the consent of
Seller provided that such right shall at all times remain subject to
applicable law.
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26. CONFIDENTIALITY. Seller and Conseco Finance each acknowledge that the
Agreement, the Custodial Agreement and all related documents are
confidential in nature and each agrees that, unless otherwise directed
by a court of competent jurisdiction or as may be required by federal
or state law (which determination as to federal or state law shall be
based upon written advice of counsel), it shall limit the distribution
of such documents to its officers, employees, attorneys, accountants
and agents as required in order to conduct its business with Buyer.
27. BINDING TERMS. All of the covenants, stipulations, promises and
agreements in the Agreement shall bind the successors and assigns of
the parties hereto, whether expressed or not.
28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
29. INCORPORATION OF TERMS. The Master Repurchase Agreement as
supplemented by this Annex I and by Exhibits A-1, A-2, B, C and D and
E shall be read, taken and construed as one and the same instrument.
30. OPINIONS OF COUNSEL. Seller shall, on the date of the first
Transaction hereunder and, upon the request of Buyer, on the date on
any subsequent Transaction, cause to be delivered to Buyer, with
reliance thereon permitted as to any person or entity that purchases
the Contracts from Buyer in a repurchase transaction, opinions of
counsel relating to this Agreement and the Guaranty reasonably
satisfactory to Buyer.
EXHIBIT A-1
Representations with respect to Chattel Paper
For purposes of this Exhibit A-1, references to MH Contracts shall be
deemed to be references to Chattel Paper.
A. Payments. The scheduled payment of principal and interest for the
most recent Due Date was made by or on behalf of the obligor (without any
advance from Conseco Finance or any Person acting at the request of Conseco
Finance) or was not delinquent for more than 30 days.
B. No Waivers. The terms of the MH Contract have not been waived,
altered or modified in any respect, except by instruments or documents
identified in the MH Contract file.
C. Binding Obligation. The MH Contract is the legal, valid and binding
obligation of the obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights general.
D. No Defenses. The MH Contract is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the MH Contract or the exercise of any
right thereunder will not render the MH Contract unenforceable in whole or in
part or subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
E. Insurance. Conseco Finance or its agent has monitored the existence
of a hazard insurance policy with respect to the manufactured home securing a MH
Contract and if the Conseco Finance has determined that no such policy exists,
Conseco Finance has arranged for such insurance and has billed the related
obligor through its loan account.
F. Origination. Each MH Contract was originated by a manufactured
housing dealer or Conseco Finance in the regular course of its business and, if
originated by a manufactured housing dealer, was purchased by Conseco Finance in
the regular course of its business.
G. Lawful Assignment. The MH Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the MH Contract to the Custodian or the ownership of the MH Contracts by the
Owner unlawful.
H. Compliance with Law. All requirements of any federal, state or
local law, including, without limitation, usury, truth in lending and equal
credit opportunity laws, applicable to the MH Contract have been complied with
and such compliance is not affected by the holding of the MH Contracts by the
Custodian or the Owner's ownership of the MH Contracts, and Conseco Finance
shall maintain in its possession, available for the Buyer's inspection, and
shall deliver to the Buyer upon demand, evidence of compliance with all such
requirements.
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I. MH Contract in Force. The MH Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the manufactured home
securing the MH Contract has not been released from the lien of the MH Contract
in whole or in part.
J. Valid Security Interest. Each MH Contract creates a valid and
enforceable perfected first priority security interest in favor of Conseco
Finance in the manufactured home covered thereby as security for payment of the
outstanding principal balance of such MH Contract and all other obligations of
the obligor under such MH Contract. Each such security interest has been
assigned by Conseco Finance to the Custodian, and the Custodian has and will, on
behalf of the Owners of the MH Contracts, have a valid and perfected and
enforceable first priority security interest in such manufactured home.
K. Capacity of Parties. All parties to the MH Contract had capacity to
execute the MH Contract.
L. Good Title. In the case of a MH Contract purchased from a
manufactured housing dealer, Conseco Finance purchased the MH Contract for fair
value and took possession thereof in the ordinary course of its business,
without knowledge that the MH Contract was subject to a security interest.
Conseco Finance has not sold, assigned or pledged the MH Contract to any Person
other than the Custodian.
M. No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the MH Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such MH
Contract. Conseco Finance has not waived any such default, breach, violation or
event permitting acceleration.
N. No Liens. There are, to the best of Conseco Finance's knowledge, no
liens or claims which have been filed for work, labor or materials affecting the
manufactured home securing the MH Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the MH Contract.
O. Equal Installments. The MH Contract either has a fixed rate or is a
Step-Up Rate Contract and provides for level monthly payments which fully
amortize the loan over its term.
P. Enforceability. The MH Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.
Q. One Original. There is only one original executed MH Contract,
which is held by the Custodian.
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R. Loan-to-Value Ratio. At the time of its origination each MH
Contract had a Loan-to-Value Ratio not greater than 100%; if the related
manufactured home was new at the time such MH Contract was originated, the
original principal balance of such MH Contract was not in excess of that
permitted by Conseco Finance's underwriting guidelines in effect at the time the
MH Contract was originated.
S. Primary Resident. At the time of origination of the MH Contract the
obligor was the primary resident of the related manufactured home or the primary
resident was the child of the obligor.
T. Not Real Estate. The related manufactured home is not considered or
classified as part of the real estate on which it is located under the laws of
the jurisdiction in which it is located and such manufactured home is, to the
best of Conseco Finance's knowledge, free of damage and in good repair.
U. Notation of Security Interest. If the related manufactured home is
located in a state in which notation of a security interest on the title
document is required or permitted to perfect such security interest, the title
document shows, or if a new or replacement title document with respect to such
manufactured home is being applied for such title document will be issued within
180 days and will show, Conseco Finance as the holder of a first priority
security interest in such manufactured home. If the related manufactured home is
located in a state in which the filing of a financing statement under the UCC is
required to perfect a security interest in manufactured housing, such filings or
recordings have been duly made and show Conseco Finance as secured party. In
either case, the Custodian has the same rights as the secured party of record
would have (if such secured party were still the owner of the MH Contract)
against all Persons claiming an interest in such manufactured home.
V. Qualified Mortgage for REMIC. Each MH Contract is a "qualified
mortgage" under Section 860G(a)(3) of the Code, and the related manufactured
home is "manufactured housing" within the meaning of Section 25(e)(10) of the
Code.
W. FHA/VA MH Contracts. If the MH Contract is a FHA/VA MH Contract,
the MH Contract has been serviced in accordance with the FHA/VA regulations, the
insurance or guarantee of the MH Contract under FHA/VA regulations and related
laws is in full force and effect, and no event has occurred which, with or
without notice or lapse of time or both, would impair such insurance or
guarantee.
X. No Adverse Selection. Except for the effect of the representations
and warranties made hereunder, no adverse selection procedures have been
employed in selecting the MH Contracts.
Y. Origination and Servicing. Each MH Contract was originated or
purchased by Conseco Finance and is serviced by Conseco Finance or an Affiliate
of Conseco Finance.
24
EXHIBIT A-2
Representations with respect to Land-and-Home Contracts
For purposes of this Exhibit A-2 references to MH Contracts shall be deemed to
be references to Land-and-Home Contracts.
A. Payments. The scheduled payment of principal and interest for the
most recent Due Date was made by or on behalf of the obligor (without any
advance from Conseco Finance or any Person acting at the request of Conseco
Finance) or was not more than 30 days past due.
B. No Waivers. The terms of the MH Contract have not been waived,
altered or modified in any respect, except by instruments or documents
identified in the MH Contract file.
C. Binding Obligation. The MH Contract is the legal, valid and binding
obligation of the obligor thereunder and is enforceable in accordance with its
terms, except as such enforceability may be limited by laws affecting the
enforcement of creditors' rights general.
D. No Defenses. The MH Contract is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of usury, and
the operation of any of the terms of the MH Contract or the exercise of any
right thereunder will not render the MH Contract unenforceable in whole or in
part or subject to any right of rescission, setoff, counterclaim or defense,
including the defense of usury, and no such right of rescission, setoff,
counterclaim or defense has been asserted with respect thereto.
E. Insurance. Conseco Finance or its agent has monitored the existence
of a hazard insurance policy with respect to the manufactured home securing a MH
Contract and if the Conseco Finance has determined that no such policy exists,
Conseco Finance has arranged for such insurance and has billed the related
obligor through its loan account
F. Origination. Each MH Contract was originated by a manufactured
housing dealer or Conseco Finance in the regular course of its business and, if
originated by a manufactured housing dealer, was purchased by Conseco Finance in
the regular course of its business.
G. Lawful Assignment. The MH Contract was not originated in and is not
subject to the laws of any jurisdiction whose laws would make the transfer of
the MH Contract to the Custodian or the ownership of the MH Contracts by the
Owner unlawful.
H. Compliance with Law. All requirements of any federal, state or
local law, including, without limitation, usury, truth in lending and equal
credit opportunity laws, applicable to the MH Contract have been complied with
and such compliance is not affected by the holding of the MH Contracts by the
Custodian or the Owner's ownership of the MH Contracts, and Conseco Finance
shall maintain in its possession, available for the Buyer's inspection, and
shall deliver to the Buyer upon demand, evidence of compliance with all such
requirements.
25
I. MH Contract in Force. The MH Contract has not been satisfied or
subordinated in whole or in part or rescinded, and the manufactured home
securing the MH Contract has not been released from the lien of the MH Contract
in whole or in part.
J. Interest in Real Property. Each mortgage related to a MH Contract
is a valid first lien in favor of Conseco Finance on real property securing the
amount owed by the obligor under the related MH Contract subject only to (i) the
lien of current real property taxes and assessments, (ii) covenants, conditions
and restrictions, rights of way, easements and other matters of public record as
of the date of recording of such mortgage, such exceptions appearing of record
being acceptable to mortgage lending institutions generally in the area wherein
the property subject to the mortgage is located or specifically reflected in the
appraisal obtained in connection with the origination of the related MH Contract
obtained by Conseco Finance and (iii) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by such Mortgage. Conseco Finance has assigned
all of its right, title and interest in such MH Contract and related mortgage,
including the security interest in the manufactured home covered thereby, to the
Custodian. The Custodian has and will have a valid and perfected and enforceable
first priority security interest in such MH Contract. The MH Contract creates a
valid and enforceable perfected first priority security interest in favor of
Conseco Finance in the manufactured home covered thereby (to the extent such
manufactured home is not considered real property) as security for payment of
the outstanding principal balance of such MH Contract and all other obligations
of the obligor under such MH Contract; such security interest has been assigned
by Conseco Finance to the Custodian, and the Custodian has and will, on behalf
of the Owners of the MH Contracts, have a valid and perfected and enforceable
first priority security interest in such manufactured home.
K. Capacity of Parties. All parties to the MH Contract had capacity to
execute the MH Contract.
L. Good Title. In the case of a MH Contract purchased from a
manufactured housing dealer, Conseco Finance purchased the MH Contract for fair
value and took possession thereof in the ordinary course of its business,
without knowledge that the MH Contract was subject to a security interest.
Conseco Finance has not sold, assigned or pledged the MH Contract to any Person
other than the Custodian.
M. No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the MH Contract and no event which, with
notice and the expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such MH
Contract. Conseco Finance has not waived any such default, breach, violation or
event permitting acceleration.
N. No Liens. There are, to the best of Conseco Finance's knowledge, no
liens or claims which have been filed for work, labor or materials affecting the
manufactured home securing the MH Contract which are or may be liens prior to,
or equal or coordinate with, the lien of the MH Contract.
26
O. Equal Installments. The MH Contract either has a fixed rate or is a
Step-Up Rate Contract and provides for level monthly payments which fully
amortize the loan over its term.
P. Enforceability. The MH Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the collateral of the benefits of the
security.
Q. One Original. There is only one original executed MH Contract,
which is held by Custodian.
R. Loan-to-Value Ratio. At the time of its origination each MH
Contract had a Loan-to-Value Ratio not greater than 100%; if the related
manufactured home was new at the time such MH Contract was originated, the
original principal balance of such MH Contract was not in excess of that
permitted by Conseco Finance's underwriting guidelines in effect at the time the
MH Contract was originated.
S. Primary Resident. At the time of origination of the MH Contract the
obligor was the primary resident of the related manufactured home or the primary
resident was the child of the obligor.
T. Good Repair. The related manufactured home is, to the best of
Conseco Finance's knowledge, free of damage and in good repair.
U. Qualified Mortgage for REMIC. Each MH Contract is a "qualified
mortgage" under Section 860G(a)(3) of the Code, and the related manufactured
home is "manufactured housing" within the meaning of Section 25(e)(10) of the
Code.
V. FHA/VA MH Contracts. If the MH Contract is a FHA/VA MH Contract,
the MH Contract has been serviced in accordance with the FHA/VA regulations, the
insurance or guarantee of the MH Contract under FHA/VA regulations and related
laws is in full force and effect, and no event has occurred which, with or
without notice or lapse of time or both, would impair such insurance or
guarantee.
W. No Adverse Selection. Except for the effect of the representations
and warranties made hereunder, no adverse selection procedures have been
employed in selecting the MH Contracts.
X. Origination and Servicing. Each MH Contract was originated by
Conseco Finance and is serviced by Conseco Finance or an Affiliate of Conseco
Finance and such related MH Contract is owned by Conseco Finance or an Affiliate
of Conseco Finance.
27
EXHIBIT B
Representations with respect
to Home Equity Loans
-----------------------
A. Payments. The scheduled payment of principal and interest due under
the Home Equity Loan with respect to the prior Due Date was made on or before
such Due Date by or on behalf of the obligor (without any advance from Conseco
Finance or any Person acting at the request of Conseco Finance) or was not
delinquent for more than 30 days after such Due Date.
B. No Waivers. The terms of the Home Equity Loan have not been waived,
altered or modified in any respect, except by instruments or documents
identified in the Home Equity Loan File. All costs, fees and expenses incurred
in making, closing and perfecting the lien and/or security interest, as
applicable, of the Home Equity Loan have been paid.
C. Binding Obligation. The Home Equity 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. Conseco Finance has delivered,
or caused to be delivered, to the Custodian the original Mortgage, with evidence
of recording thereon, or if the original Mortgage has not yet been returned from
the recording office, a true copy of the Mortgage which has been delivered for
recording in the appropriate recording office of the jurisdiction in which the
real property is located.
D. No Defenses. The Home Equity Loan is not subject to any right of
rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Home Equity Loan or the exercise of
any right thereunder will not render the Home Equity Loan unenforceable in whole
or in part or subject to any right of rescission, set off, counterclaim or
defense, including the defense of usury, and no such right of rescission, set
off, counterclaim or defense has been asserted with respect thereto.
E. Insurance. All improvements on the related real property are
covered by a hazard insurance policy. All premiums due on such insurance have
been paid in full.
F. Origination. The Home Equity Loan was originated by a home equity
lender or Conseco Finance in the regular course of its business and, if
originated by a home equity lender, was purchased by Conseco Finance in the
regular course of its business.
G. Lawful Assignment. The Home Equity Loan was not originated in and
is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Home Equity Loan to Custodian or the ownership of the Home
Equity Loans by the Owner thereof unlawful or make the Home Equity Loan
unenforceable.
28
H. Compliance with Law. All requirements of any federal, state or
local law, including, without limitation, usury, truth in lending and equal
credit opportunity laws, applicable to the Home Equity Loan have been complied
with and such compliance is not affected by the holding of the Home Equity Loans
by Custodian or the Owners' ownership of the Home Equity Loans, and Conseco
Finance shall for at least the period of this Agreement, maintain in its
possession, available for Custodian's inspection, and shall deliver to Custodian
upon demand, evidence of compliance with all such requirements.
I. Home Equity Loan in Force. The Home Equity Loan has not been
satisfied or subordinated in whole or in part or rescinded, and the real
property securing the Home Equity Loan has not been released from the lien of
the Home Equity Loan in whole or in part.
J. Valid Lien. The Home Equity Loan has been duly executed and
delivered by the obligor and the related Mortgage is a valid and subsisting
first or second lien on the property therein described; any related Mortgage has
been assigned by Conseco Finance to Custodian, and Custodian has and will have,
on behalf of the Owners of the Home Equity Loans, a valid and subsisting lien on
the property therein described. Conseco Finance has full right to sell and
assign the Home Equity Loans to Custodian.
K. Capacity of Parties. All parties to the Home Equity Loan had
capacity to execute the Home Equity Loan.
L. Good Title. Prior to transfer to Custodian, Conseco Finance is the
sole owner of the Home Equity Loan and has the authority to sell, transfer and
assign the Home Equity Loan. Conseco Finance has not sold, assigned or pledged
the Home Equity Loan to any Person other than the Custodian.
M. No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the Home Equity 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
Home Equity Loan. Conseco Finance has not waived any such default, breach,
violation or event permitting acceleration.
N. No Liens. There are, to the best of Conseco Finance's knowledge, no
liens or claims which have been filed for work, labor or materials affecting the
real property securing the Home Equity Loan which are or may be liens prior to,
or equal or coordinate with, the lien of the Home Equity Loan.
O. Equal Installments. The Home Equity Loan has a fixed rate and
provides for level monthly payments which fully amortize the loan over its term.
P. Enforceability. The Home Equity Loan contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security provided thereby.
29
Q. One Original. There is only one original executed Home Equity Loan
note, and it has been delivered to the Custodian.
R. Primary Resident. At the time of origination of the Home Equity
Loan, the obligor was the primary resident of the related real property.
S. Qualified Mortgage for REMIC. Each Home Equity Loan that is secured
by a Mortgage on the property described therein is a "qualified mortgage" under
Section 860G(a)(3) of the Code.
T. Proceedings. There is no proceeding pending or, to Conseco
Finance's knowledge, threatened for the total or partial condemnation of
collateral securing a Home Equity Loan.
U. Marking Records. Conseco Finance has caused the portions of the
Electronic Ledger relating to the Mortgage Loans to be clearly and unambiguously
marked to indicate that such Home Equity Loans are owned by Custodian in
accordance with the terms of the related Custodial Agreement.
V. No Adverse Selection. Except for the effect of the representations
and warranties made hereunder, no adverse selection procedures have been
employed in selecting the Home Equity Loans.
W. Real Property. Each mortgaged property is improved by a single
family dwelling which constitutes real property under state law and is the
principal residence of the obligor.
30
EXHIBIT C
Representations with respect
to Home Improvement Loans
A. Payments. The scheduled payment of principal and interest due under
the Home Improvement Loan with respect to the prior Due Date was made on or
before such Due Date by or on behalf of the obligor (without any advance from
Seller or any Person acting at the request of Seller) or was not delinquent for
more than 30 days after such Due Date.
B. No Waivers. The terms of the Home Improvement Loan have not been
waived, altered or modified in any respect, except by instruments or documents
identified in the Home Improvement Loan File (as defined in the Custodial
Agreement). All costs, fees and expenses incurred in making, closing and
perfecting the lien and/or security interest, as applicable, of the Home
Improvement Loan have been paid.
C. Binding Obligation. The Home Improvement 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. Seller has delivered,
or caused to be delivered, to the Custodian the original Mortgage, with evidence
of recording thereon, or if the original Mortgage has not yet been returned from
the recording office, a true copy of the Mortgage which has been delivered for
recording in the appropriate recording office of the jurisdiction in which the
real property is located.
D. No Defenses. The Home Improvement Loan is not subject to any right
of rescission, set off, counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Home Improvement Loan or the
exercise of any right thereunder will not render the Home Improvement Loan
unenforceable in whole or in part or subject to any right of rescission, set
off, counterclaim or defense, including the defense of usury, and no such right
of rescission, set off, counterclaim or defense has been asserted with respect
thereto.
E. Insurance. In the case of Home Improvement Loans, all improvements
on the related real property are covered by a hazard insurance policy. All
premiums due on such insurance have been paid in full.
F. Origination. The Home Improvement Loan was originated by a home
improvement contractor or Seller in the regular course of its business and, if
originated by a home improvement contractor, was purchased by Seller in the
regular course of its business.
G. Lawful Assignment. The Home Improvement Loan was not originated in
and is not subject to the laws of any jurisdiction whose laws would make the
transfer of the Home Improvement Loan to Custodian or the ownership of the Home
Improvement Loans by the Owner thereof unlawful or make the Home Improvement
Loan unenforceable.
31
H. Compliance with Law. All requirements of any federal, state or
local law, including, without limitation, usury, truth in lending and equal
credit opportunity laws and the FHA regulations, applicable to the Home
Improvement Loan have been complied with and such compliance is not affected by
the holding of the Home Improvement Loans by Custodian or the Owner's ownership
of the Home Improvement Loans, and Seller shall for at least the period of this
Agreement, maintain in its possession, available for Custodian's inspection, and
shall deliver to Custodian upon demand, evidence of compliance with all such
requirements.
I. Home Improvement Loan in Force. The Home Improvement Loan has not
been satisfied or subordinated (except for such subordination as may be allowed
under FHA regulations) in whole or in part or rescinded, and the real property
securing the Home Improvement Loan has not been released from the lien of the
Home Improvement Loan in whole or in part.
J. Valid Lien. The Home Improvement Loan has been duly executed and
delivered by the obligor and either the related Mortgage is a valid and
subsisting first, second or third lien on the property therein described or the
Home Improvement Loan is an unsecured borrowing of the obligor; any related
Mortgage has been assigned by Seller to Custodian, and Custodian has and will
have, on behalf of the Owners of the Home Improvement Loans, a valid and
subsisting lien on the property therein described. Seller has full right to sell
and assign the Home Improvement Loans to Custodian.
K. Capacity of Parties. All parties to the Home Improvement Loan had
capacity to execute the Home Improvement Loan.
L. Good Title. Prior to transfer to Custodian, Seller is the sole
owner of the Home Improvement Loan and has the authority to sell, transfer and
assign the Home Improvement Loan. Seller has not sold, assigned or pledged the
Home Improvement Loan to any Person other than the Custodian.
M. No Defaults. There was no default, breach, violation or event
permitting acceleration existing under the Home Improvement 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 Home Improvement Loan. Seller has not waived any such default,
breach, violation or event permitting acceleration.
N. No Liens. There are, to the best of Seller's knowledge, no liens or
claims which have been filed for work, labor or materials affecting the real
property securing the Home Improvement Loan which are or may be liens prior to,
or equal or coordinate with, the lien of the Home Improvement Loan.
O. Equal Installments. The Home Improvement Loan has a fixed rate and
provides for level monthly payments which fully amortize the loan over its term.
32
P. Enforceability. The Home Improvement Loan contains customary and
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the collateral of the benefits of
the security provided thereby.
Q. One Original. There is only one original executed Home Improvement
Loan contract and note, each of which has been delivered to the Custodian.
R. Primary Resident. At the time of origination of the Home
Improvement Loan, the obligor was the primary resident of the
related real property.
S. Qualified Mortgage for REMIC. Each Home Improvement Loan that is
secured by a Mortgage on the property described therein is a "qualified
mortgage" under Section 860G(a)(3) of the Code.
T. Proceedings. There is no proceeding pending or, to Seller's
knowledge, threatened for the total or partial condemnation of collateral
securing a Home Improvement Loan.
U. Marking Records. Seller has caused the portions of the Electronic
Ledger relating to the Mortgage Loans to be clearly and unambiguously marked to
indicate that such Home Improvement Loans are owned by Custodian in accordance
with the terms of the related Custodial Agreement.
V. No Adverse Selection. Except for the effect of the representations
and warranties made hereunder, no adverse selection procedures have been
employed in selecting the Home Improvement Loans.
33
EXHIBIT D
CONSECO FINANCE CORP.
April __, 2001
Merrill Lynch Mortgage Capital Inc.
Merrill Lynch World Headquarters
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
This letter will confirm that Conseco Finance Corp. ("Guarantor"),
agrees to absolutely and unconditionally guaranty to Merrill Lynch Mortgage
Capital Inc. ("Buyer"), and any of its assignees (together with Buyer, the
"Beneficiary"), the full and prompt payment and performance of up to ten (10%)
percent of all of the obligations, undertakings and liabilities of Green Tree
Finance Corp. - Three ("Seller") arising under the terms and provisions of a
Master Repurchase Agreement (the "Master Repurchase Agreement"), dated as of
April __, 2001, as amended from time to time, by and between Seller and Buyer
(such obligations, undertakings and liabilities are herein referred to as the
"Guarantied Obligations"). Guarantor hereby expressly consents to any amendment
to the Master Repurchase Agreement as may be agreed upon by Seller and Buyer and
waives notice of any such amendment. Capitalized terms used and not otherwise
defined herein shall have the meanings assigned in the Master Repurchase
Agreement.
Guarantor hereby represents and warrants to you that Seller is an
indirect wholly-owned subsidiary of Guarantor.
Guarantor hereby agrees that if Seller shall fail at any time to make
due and punctual payment to the Beneficiary of any Guarantied Obligation or if
Seller shall fail at any time to perform any other Guarantied Obligation to the
Beneficiary, Guarantor will immediately forthwith pay such amount and perform
such obligation upon verbal or written demand therefor.
Guarantor covenants and agrees to immediately notify Buyer if a
representation, warranty or covenant of Seller under the Master Repurchase
Agreement has been breached or if an Event of Default shall have occurred.
Guarantor hereby waives any requirement that the Beneficiary take
legal action against Seller before enforcing this guaranty; agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Guarantied Obligations or the dissolution,
liquidation, reorganization or other change regarding the Seller or the Seller
seeking protection, or having a case or proceeding commenced against it, under
any law for the protection of debtors or creditors; waives diligence,
presentment, demand for payment or performance, protest or notice or other
34
formality of any kind whatsoever; waives filing of claims with any court in case
of the insolvency, reorganization or bankruptcy of the Seller; waives any fact,
event or circumstance that might otherwise constitute a legal or equitable
defense to or discharge of Guarantor, including (but without typifying or
limiting this waiver) failure by the Beneficiary to perfect a security interest
in any collateral securing performance of any Guarantied Obligation and any
delay by the Beneficiary in exercising any of its rights hereunder, Guarantor
covenants that this guaranty will not be discharged except by full and final
payment and performance to the Beneficiary of all Guarantied Obligations
incurred while it is effective, and agrees that this guaranty shall continue to
be effective or be reinstated (as the case may be) if at any time all or any
part of any payment or interest thereon or other performance by Seller is
avoided or must otherwise be restored by the Beneficiary. Guarantor hereby
further consents to any renewal or modification of any Guarantied Obligation or
any extension of the time within which such is to be performed and to any other
indulgences, whether before or after the date of this guaranty.
Guarantor agrees to pay on demand all reasonable out-of-pocket
expenses (including legal fees and disbursements) incurred by the Beneficiary in
connection with the enforcement and protection of its rights hereunder.
This is a continuing guaranty and will remain in effect until thirty
(30) days after written notice of termination is received by Merrill Lynch
Mortgage Capital Inc., Merrill Lynch World Headquarters, World Financial Center,
North Tower, 22nd Floor, New York, New York 10281, Attention: James B. Cason.
Any such termination shall not affect or reduce Guarantor's obligations
hereunder for any liability of Seller that arose prior to the expiration of said
thirty-day period. This guaranty shall terminate and shall be of no further
force or effect upon full payment of all amounts due to Buyer under the Master
Repurchase Agreement. This guaranty shall inure to the benefit of any successor
of the Beneficiary and be binding on any successor or Buyer of Guarantor.
This guaranty shall be governed by and construed in accordance with
the laws of the State of New York. Guarantor hereby agrees that (i) any dispute
or controversy arising out of or relating to this guaranty, the Master
Repurchase Agreement or the Note shall be submitted to arbitration before the
American Arbitration Association, (ii) the arbitration proceedings shall be
conducted in New York, New York and (iii) the decision of the arbitrators shall
be final and judgment may be entered on the award. In the event that such
arbitration is unavailable, Guarantor hereby submits to the jurisdiction of the
United States Federal and New York State courts situated in the City, County,
and State of New York and hereby agrees that any litigation arising out of or
relating to this guaranty, the Master Repurchase Agreement or the Note shall be
brought in such courts. Each provision and agreement herein shall be treated as
separate and independent from any other provision or agreement herein and shall
be enforceable notwithstanding the non-enforceability of any such other
provision or agreement.
35
Any demand by Buyer for payment or performance by Guarantor shall be
by a written demand to Guarantor, which shall be deemed to have been duly given
if made by facsimile transmission to Conseco Finance Corp., [ADDRESS],
Attention: Cheryl Collins, Phone: (651) 293-3410, Fax: (651) 293-5696 or if
personally delivered at or upon the fifth day after deposit in the mails, mailed
by registered mail, postage prepaid, to Attention: Cheryl Collins.
Very truly yours,
CONSECO FINANCE CORP.
By: ________________________________________
Name: ______________________________________
Title: _____________________________________